Patrick Fitzgerald: Intrepid Crime Fighter? Or, Politically-Driven Leaker? Saving Jesse Jr. (Part 4)

Hugo Floriani, Investigative Reporter

As the FBI planned the arrest of Blago, most of the serious wantabees lobbying for appointment to Obama’s Senate seat had backed off the pursuit, no doubt realizing that association with Hot Rod was about to become toxic.

But, there was still one candidate with his eyes on the prize.  Right up to the day of Blago’s arrest, Candidate #5’s people were working hard to put a package together to buy their guy the seat. Had Fitzpatrick waited a bit longer to pull the trigger on Blago, Candidate #5 might have been swept up in Fitz’s rush to stop a “corruption crime spree” in progress.

But it wasn’t to be, because the precise timing of the arrest of Blago was really about saving Jesse Jackson Junior’ political career.  And maybe even his freedom.

The Designated Bundler: Raghuveer Nayak

A prominent member of the Chicago Indian business community plays a key role in this story.

Here’s how the Chicago Tribune described Raghuveer Nayak in a December 10, 2008 article:

Nayak, 54, is a political and community leader in Chicago's Indian community who has raised hundreds of thousands of dollars for Blagojevich, including more than $200,000 from Nayak, his wife and his various corporations. Nayak and his wife have donated more than $22,000 to Jackson, federal records show, and raised more for the congressman.

Nayak owns a series of surgery centers on Chicago's North Side. He also founded and until recently retained an ownership stake in a drug testing laboratory with millions of dollars in Illinois public aid contracts.

The Fund Raising Event

According to that same Tribune article, Nayak and Jessie Jackson Junior’s brother, Jonathan Jackson, co-hosted an October 31, 2008 “Blagojevich fundraiser” in Elmhurst. “According to several people who were there, Nayak and Jonathan Jackson go back years and the two even went into business together years ago as part of a land purchase on the South Side.”

So the Jacksons and Nayak were long-time buds.

Joliet pharmacist Harish Bhatt was among those attending the event. More on him later.

The December 10, 2008 Tribune also reported that:

Two businessmen who attended the meeting and spoke to the Tribune on the condition of anonymity said that Nayak and Blagojevich aide Rajinder Bedi {remember his name, too} privately told many of the more than two dozen attendees the fundraising effort was aimed at supporting Jackson's bid for the Senate.

A year-and-a-later, on July 7, 2010, a Chicagobreakingnews.com article reported that:

A supporter of U.S. Rep. Jesse Jackson Jr. told the Democratic congressman in 2008 that he would raise $1 million in return for then-Gov. Rod Blagojevich naming Jackson to the U.S. Senate, a federal prosecutor said today.

The allegation, made on a busy day at Blagojevich's federal corruption trial, was the first time authorities publicly suggested Jackson was aware of efforts by his allies to swap campaign cash for his appointment to the Senate seat vacated by President-elect Barack Obama.

Prosecutors also played a rapid-fire sequence of secret wiretap recordings that show Blagojevich reluctantly warming to Jackson as a Senate pick after first profanely ripping him as a non-starter.”

Nearly three months later after the Chicagobreakingnews.com piece, on September 21, 2010, the Chicago Sun-Times (article available here) followed suit with,

Rep. Jesse Jackson Jr. directed a major political fund-raiser to offer former Gov. Rod Blagojevich millions of dollars in campaign cash in return for an appointment to the U.S. Senate, sources said the fund-raiser has told federal authorities.

The allegation by Oak Brook businessman Raghuveer Nayak counters public statements made as recently as last week by Jackson that he never authorized any deal to attempt to buy the Senate seat.

The FBI interviewed that acquaintance -- a Washington, D.C., restaurant hostess named Giovana Huidobro {with whom JJ Junior was having an affair} -- about a year ago as part of its corruption probe of Blagojevich. Authorities were trying to determine whether Jackson had asked Nayak to offer Blagojevich campaign cash in exchange for the then-governor appointing Jackson to the seat once held by President Obama, according to sources with knowledge of the probe.

Huidobro, Jackson and Nayak all dined together on Oct. 8, 2008 {about three weeks before the Oct 30 Elmhurst fundraiser} -- the same day that Nayak has told authorities he had a key conversation with Jackson about the Senate appointment, sources said. The three then ended up at Ozio, the restaurant and club where Huidobro works and where Jackson has held fund-raisers.

Before he dined with Huidobro and Jackson on Oct. 8, 2008, Nayak said he had a critical conversation with the congressman about the seat while the two were alone. Nayak, also a former Blagojevich fund-raiser, said that Jackson asked him to tell Blagojevich that if the then-governor appointed Jackson to the U.S. Senate, Chicago's Indian community would raise $1 million for Blagojevich and -- after Jackson was appointed -- Jackson would raise $5 million for the then-governor.

Here’s a version of J.J. Junior’s “public statement” mentioned in the second paragraph above:

A concise account of the ramp-up among Blago and his advisors concerning the possibility of appointing J.J. Junior to the Senate also appears in the July 7 Chicagobreakingnews.com piece linked above.

Here’s the setting: During the first Blago trial, Rajinder Bedi was being questioned by Assistant U.S. Attorney Christopher Niewoehner.

Bedi testified he met with Jackson and another important Indian businessman, Raghuveer Nayak, at a Loop restaurant on Oct. 28, 2008, and Jackson expressed his interest in Obama's Senate seat.

At that point, U.S. District Judge James Zagel sent jurors out of the room, then asked Niewoehner to explain where the testimony was headed.

Nayak says to Jackson in Bedi's presence, “I will raise a million if he appoints you to the Senate seat,” Niewoehner explained.

Zagel barred Niewoehner from asking Bedi about that part of the conversation before jurors, but Bedi did testify that both Jackson's interest in the seat and fundraising were discussed with Jackson sitting at the table. Prosecutors then played wiretaps of conversations in which Blagojevich and his brother, Robert, appeared aware of the approach involving Jackson. {one such transcript is below}.

In one, recorded the same day as that restaurant meeting, Robert Blagojevich told the governor that Bedi had filled him in on the details, including Nayak's offer to do "some accelerated fundraising" on the governor's behalf if Jackson got the Senate nod.

Three days later, Gov. Blagojevich was recorded talking about overtures for Jackson in a conversation with one of his deputy governors, Robert Greenlee.

"I'm tellin' ya that guy's shameless," Greenlee said.

"Unbelievable isn't it," responded Blagojevich. "Then I, we were approached, pay to play. That, you know he'd raise me 500 grand, an emissary came, then the other guy would raise a million, if I made him a senator."

In a Dec. 4 telephone call with one of his advisers, Fred Yang, Blagojevich said he was now keeping an open mind on "clearly somethin' I would never have considered and that's Jesse Jr."

The thought was repugnant, Blagojevich said, but "just between you and me, they've offered a whole bunch of different things they wanna do for me." Those things included fundraising, Blagojevich said on the recording, asking Yang to think about the politics of making a pick that was sure to be unpopular with the Washington establishment.

A couple of hours later, the governor was on the phone with his brother, filling him in on the idea that he had elevated Jackson to the top of the list of candidates he was considering to replace Obama. He wasn't going to tolerate making a pick and getting nothing in return, he said on the recording.

"And I can cut a better political deal with these Jacksons and, and most of it you probably can't believe, but some of it can be tangible upfront," Blagojevich said to his brother.

He directed Robert Blagojevich to get in touch with Nayak and explain that Jackson was a realistic pick, but the promised help had to start coming in immediately. And he warned him to be careful how that message was delivered.

Blago wasn’t keen on appointing J.J. Junior to the Senate, but the more the money-talk heated up, the more he warmed to the idea.

On December 6, the Blagojevich brothers had this brief conversation.

Date: 12/6/08

Time: 12:39 pm

Robert Blagojevich Cell Phone

Session: 2615

Speakers:

ROBERT BLAGOJEVICH

ROD BLAGOJEVICH

ROBERT BLAGOJEVICH {The Governor’s brother} Well, here’s one, uh that’s    pending tonight, possibly, with Raghu {Nayak}.  And all I’m thinking, all I’m thinking about saying is, you know, your guy’s meeting with Rod on Monday.  That’s all I’m gonna say, and I’ll leave it at that. Based on what you told me, correct? 

ROD BLAGOJEVICH Yeah, that’s all. You know, if he says, I can do a lot more money, say, that’s you know, you answer that and just say, uh, look one, you know, that’s, that’s your decision…

 ROBERT BLAGOJEVICH One is not tied to the other. One is not tied to the other.  And if you want to, obviously, we want to help you do that.”

 ROD BLAGOJEVICH Yeah, that’s good. I like that. But you..yeah, that’s good.

 ROBERT BLAGOJEVICH Alright, well, I hear your caution, and I’m not being defensive, I’m just trying to be explanatory, that’s all.  Alright, look, I’m freezing my ass off.  I’ve got to get in the shower here.

 ROD BLAGOJEVICH I’ll see you.

 ROBERT BLAGOJEVICH Alright bye.

 ROD BLAGOJEVICH Bye.

On Monday, December 8, JJ Junior and Blago met for 90 minutes during which J.J. Junior said, later, that he merely laid out his qualifications as a potential Senator.  No pay-to-play was discussed, he claimed.

On Tuesday, December 9, the FBI arrested Blago at his home.

Nayak, Harish, and Bedi – What’s become of them?

Raghu has had his own problems with a federal grand jury.

A federal grand jury has subpoenaed dozens of doctors in the Chicago area as part of a probe into a wealthy Indian-American fund-raiser who owns surgical centers — and has ties to U.S. Rep. Jesse Jackson Jr. and former Gov. Rod Blagojevich, sources told the Chicago Sun-Times.

While the FBI and IRS investigation is centered on businessman and political fund-raiser Raghuveer Nayak, who owns surgical centers in Illinois and Indiana, the feds have cast a wide net: Sources said at least 30 doctors received grand jury subpoenas, and more than 10 of Nayak’s employees have also been subpoenaed.

In addition, two of Nayak’s surgery centers in Chicago were hit with search warrants in late January, and at least half a dozen doctors have been offered immunity or been granted immunity for their testimony, sources with knowledge of the investigation say.

Federal authorities are investigating whether Nayak made improper payments to the doctors in order to draw their surgeries to his centers. Under the allegations, while private insurers paid doctors and the centers for surgeries performed, Nayak is under investigation for allegedly separately paying doctors hundreds of dollars for every surgery brought to the centers. Doctors who perform out-patient surgeries, including chiropractors and podiatrists, practice at the centers and can choose to bring their work to the centers rather than a hospital.

Harish was visited by the FBI.

FBI agents on Thursday searched two Joliet drugstores owned by a major fundraiser for Gov. Rod Blagojevich who was the focus of a state investigation into whether campaign donations were made in exchange for regulatory favors.

Agents took records from the Basinger's Pharmacy stores but declined to say what they were investigating. FBI spokesman Ross Rice confirmed search warrants were executed and said no arrests were made.

The pharmacies are owned by Harish M. Bhatt, a prominent Indian businessman who helped the state's top pharmacy regulator win his job. The Tribune reported last year that state pharmacy auditors probing allegations of Medicaid fraud at Basinger’s complained that their bosses thwarted the investigation.

Bhatt denied he exerted any improper influence and said the investigation stalled for lack of evidence. State police and federal corruption investigators reopened the Bhatt investigation after Tribune reports.

And Bedi got arrested for shoplifting.  Back in April 2009, Bedi was fired from his $100K-plus job at the Illinois Department of Commerce and Economic Opportunity, so maybe he was short on cash.

Jesse Jackson Junior – What’s become of him?

Well, nothing so far.  He continues to be a United States Congressman. In the wake of his affair becoming public and lingering doubts surrounding his activities as Candidate #5, he decided not to run for Mayor of Chicago.  Nowadays, he keeps a relatively low profile.

Best of all, for him, is that he didn’t get indicted for trying to buy a seat in the United States Senate. For that he has the U.S. Attorney for the Northeastern District of Illinois to thank.

So why would Patrick Fitzgerald want to step in, at the 11^th hour, to stop J.J. Junior from stepping on a political and criminal landmine?