Witness Details Alleged Sham Real Estate Payments to Blago's Wife

Rod Blagojevich Trial Extended Coverage >>

Chicago - An IRS agent took the stand to talk about the Blagojevich family finances. Shari Schindler testified Rod and Patti Blagojevich were in debt from 2002 to 2008 and spent over $400,000 on clothes.

Key Points:

• IRS Agent Shari Schindler testified Rod and Patti Blagojevich were in debt from 2002 to 2008 and noted several checks to Patti from Tony Rezko.  She also detailed the family's expenses, noting the Blagojevichs spent $400,000 on clothes in those 6 years and more than $200,000 on custom suits.
• Witnesses Robert WIlliams and Michael Winter both worked with Tony Rezko company Rezmar and testified about payments from Rezko to Patti Blagojevich.
• After Doug Scofield finished testifying, the prosecution called David Keahl, the director of ethics training for Illinois.  He described the training program and testified Blagojevich and his counsel Bill Quinlan took it.
• Scofield testified that Blagojevich talked about trading an appointment to fill the seat in exchange for Blagojevich being appointed to a cabinet position in the Obama administration or for donations to a nonprofit he wanted to fund. The conversations led to the now-famous exchange between Blagojevich and Scofield, caught on an FBI wiretap. Blagojevich said, “I've got this thing and it's (expletive) golden. ….I'm just not giving it up for (expletive) nothing.”
• Blagojevich's defense team tried to argue that Scofield and others around Blagojevich could have done more to shoot down Blagojevich's discussions of a trade but didn't.
• After court wrapped up on Wednesday, the defense filed two motions for a mistrial.  One was for breaking evidence rules , the other for comments made by the judge .

UPDATE:   5:17  p.m.
After a sidebar conversation with the attorneys, Judge Zagel ended court for the week.

Court will re-convene on Tuesday, July 6 with more testimony from Michael Winter.

The prosecution said its case is moving at pace they anticipated and they may rest sometime during the week of July 12.

Blagojevich's defense teams may start presenting their case on as early as July 19th.

The prosecution said the more pressing issue is the number of recordings the defense wants to play. Prosecutors asked Judge Zagel to set a deadline for defense to submit a list of recordings they plan to play.

The judge agreed and set a deadline for July 7.

UPDATE:   4:45  p.m.
Michael Winter began his testimony by saying he was testifying under an immunity grant.

In the spring of 2003, Winter was a consultant for Rezmar. Before that he worked as a banker for 15 years.

Winter said when he started working for Rezmar, he and Rezko talked about him eventually becoming president of the company.

Winter testified he saw Patti Blagojevich at the Rezko offices and that she was paid about $12,000 a month or $150,000 annually.

The prosecution asked how Winter found out Rezmar was paying Blagojevich. Winter answered that Rezko said he was going to hire Patti Blagojevich as a consultant and get her involved in the projects Winter was overseeing so Rezko could "justify" paying for her.

Winter said he told Rezko he paying Patti Blagojevich was a bad idea.

When Patti Blagojevich started getting paid a montly retainer fee, winter talked about it again with Rezko.

Winter said he told Rezko Rezmar's finances were in trouble and it was unfair to pay Patti Blagojevich. Winter testified Rezko said he would move her payments to another one of his companies.

Winter said payments to Blagojevich eventually stopped, but he did not know why.

UPDATE:   4:27  p.m.
Defense attorney Sam Adam, Jr. handled the cross-examination.

Williams said the Blagojeviches paid back the money given to the contractors, plus interest.

On re-direct, the prosecution asked if Williams knows what work Patti Blagojevich would have done for the seller in a deal for a property at Lake Aberdeen. Williams answered "no."

Williams stepped down from the stand.

The next witness: real estate investor Michael Winter.

UPDATE: 3:51 p.m.
After a break, Williams'  testimony continued.

Williams said he recalls seeing a list of bills dated January 22, 2004 that were owed to subcontractors who did work on the Blagojevich home. The list came from Chicago Construction Services, an affiliate of Rezmar.

The first bill, he said, was for a carpentry company, a fireplace contractor, a door supplier, a flooring company, a shelving company, a fine carpentry company and an ornamental railing company. All of these are firms that Rezmar employed but had also done work on the Blagojevich home recently.

Altogether, the bills submitted by these companies came to $39,966.68.

UPDATE: 3:15 p.m.
Willaims said Rezko asked him again in October, 2003 to prepare a check for $12,000 to River Realty, saying Patti Blagojevich would be doing some consulting work for Rezmar pursant to an agreement.

Williams testified he had the check

made for $12,000 and gave it to Rezko to give to River Realty.

Williams testified that Rezko asked him to cut $12,000 checks to river realty approximately seven more times:

• 11/4/2004: $12,000
• 12/3/2003: $12,000
• 1/7/2004: $12, 000
• 2/5/2004: $12,000
• 3/4/2004: $12,000
• 4/1/2004: $12,000
• 5/3/2004: $12,000 

UPDATE: 3:11 p.m.
Next, the prosecution called financier Robert Williams to the stand. Williams said he was testifying under an immuinty order that protects him from criminal prosecution for anything he may say while on the stand.

Williams used to work as chief financial for Rezmar, real estate development company owned in part by Tony Rezko.

Williams testified about the relationship between Rezmar and River Realty, the real estate business of Patti Blagojevich.

Willaims said River Realty was paid $40,000 as part of the closing of a property on Irving Park Road.

Williams said near the time of the closing, Rezko asked him to review a brokerage agreement that would provide an additional commission to be paid to River Realty.

The prosecution introduced the agreement into evidence and Williams examined it. He said the last page of agreement outlines a compensation structure -- how much Rezmar is to pay River Realty based on the sale price.

The Irving Park Road property sold for just under $4 million. Per the agreement, River Realty was to get 2 percent of the price for a total commission of about $79,300. Williams identified a check from Rezmar to River Realty for $79,3000 written on Dec 2, 2002. Willams said this fee was paid outside or in addition to the money Patti Blagojevich got from the seller.

Williams testified that in August, 2003, Rezko said he wanted to get a $15,000 check to Patti Blagojevich but didn't say why. Williams said he told Rezko he would see how they could get the paymenent to her. According to Williamsn, Rezko said he wanted the payment to "be related to one of the projects."

Williams said he looked at their projcts and saw ther was recently a closing for project called St. John's Crossing, and the co-op broker fee was approx $15,000. Williams testified Patti Blagojevich did not work on this project and was not affiliated with it in anyway.

Williams said Rezko instructed him to prepare a check for Patti Blagojevich in the amout of $15,000 payable to River Realty. When the prosceution aksed why Williams did ths, Williams said because Rezko asked him to do so.

UPDATE: 2:22 p.m.
Goldstein asked Schindler how she analyzed the Blagojevichs' credit card debt.

Schindler said the Blagojevichs made purchases via credit card, check or debit card.

When Goldstein asked if Schindler saw Rezko paying any of the Blagojevich bills in her analyisis, Schindler said, "No." when asked if she saw if monk or kelly paid off any blagos bills in her analysis, schindler says no.

Goldstein asked about the Blagojevichs' clothing purchases. She said they were paid for by the Blagojevichs, not by the FOB campaign fund -- and that they didn't try to write off these purchases on their taxes.

Goldstein finished his cross-examination.

The prosecution started its redirect examination.

Schindler said the Blagojevichs made their tax returns public.

UPDATE: 2:13 p.m.
Judge Zagel addressed the prosecution's motion for immunity for witness Robert Williams, who was in court.

Zagel went over it with him to make sure Williams understoon, and the judge said he'd sign the motion granting Williams immunity.

The Blagojevich defense still needs to finish its cross examination of IRS agent Shari Schindler.

The jury returned to the courtroom.

Goldstein asked Schindler if she knows the amount for the home equity loan the Blagojevichs took out on their home on Sunnyside. She said, "No."

Goldstein also asked her about the chart detailing the Blagojevichs' top ten expenditure catagories. Out of the top ten, Schindler said the least amount of money was spent on medical and the most was spent on adult clothing.

UPDATE: 1:53 p.m.
Court is back in session after lunch.

The jury is not yet in the courtroom.

Attorneys for each side are arguing in front of Judge Zagel what questions can be asked of an upcoming witness.

UPDATE: 1:44 p.m.
The prosecution filed a motion (PDF) over the lunch hour asking for immunity for a witness named Robert Williams.

Without immunity, the document said, Williams would take the 5th if called to testify. The Fifth Amendment allows a person the right to not to testify as it might incriminate themsevles.

Judge Zagel needs to sign this order for Williams to get immunity.

UPDATE: 12:50 p.m.
The prosecution then showed a chart illustrating Rod and Patti’s top 10 categories of expenditures from Jan. 2002 to Dec. 9, 2008. They were medical, travel, child care, retail store (Target), private school/tuition, groceries and convenience, house expenses, rental expenses (the Blagojevichs own and rent out a condo in D.C. and in Chicago), debt/mortgage

payments for their Chicago home and clothing. Clothing cost the Blagojevichs over $400,000, mostly on adult clothes. It was the largest expenditure, though no other dollar amounts were given.

The top 15 payees greater than $2,000 for Rod and Patti from 2002 to 2008 were Citibank ($392,000), Oxford Clothing ($205,760), Countrywide home mortgage, their private school, Sax 5th Ave, Jewel, their nanny/child care, U.S. Bank home mortgage, their condo in D.C.,Geneva Custom Shirts, Nieman Marcus, Cash or the ATM, Peoples Gas, and interior decorating company and ComEd.

One American Express bill from Dec. 2006 showed $20,000 was charged to Oxford Clothing. Patti’s credit card bill from Nov. 2006 had a balance of approximately $13,000, including charges to Nieman Marcus, a return to Bloomingdales for $1,082.06, and charges to Maximilian Furs for approximately $7,000 in two purchases on the same day.
On Dec. 19, 2006, Patti charged $9,423.44 for a hotel in Mexico. On Dec. 21, 2006 there were two charges at Sax 5th Ave. for approximately $4,000 on Vera Wang clothes.

Other large charges:

• Dec. 2004: Sax 5th Ave. for $17,704.09
• Dec. 31, 2004: Saks 5th Ave. for $6,000
• Jan. 2006: Geneva Custom Shirts for $2500 and at Oxford Clothing for approximately $8,000.
• April 10, 2006: Saks 5th Ave. for $ 1,000
• May 25, 2006: Geneva Custom Shirts for approximately $2,300
• Oct 30, 2006: Oxford Clothing for $4,900
• Oct. 2007: Oxford Clothing for $12,000 and at Geneva Custom Shirts for $1,970
• Jan. 2008: Oxford Clothing for $13,758

The prosecution was done questioning Schindler. Blagojevich defense attorney Aaron Goldstein cross-examined the witness.

Goldstein asked if the Blagojevichs reported all of their income, to which Schindler said yes.

Cross-examination was paused as the court went on lunch break.

UPDATE: 12:09 p.m.
The prosecution recalled witness IRS Revenue Agent Shari Schindler. She discussed a chart detailing Blagojevich and Patti combined salary income from 2002 to 2008, including tax returns and W2s.

The combined Blagojevich income was, in:

• 2002: $310,000
• 2003: $243,000
• 2004: $392,000
• 2005: $304,000
• 2006: $284,819
• 2007: $238,920
• 2008: $226,000

The prosecution then introduced a chart detailing money River Realty, Patti Blagojevich’s company, received from Tony Rezko. On Dec. 17 2002, money was wired to River Realty from Chicago Title for $47,556.80 regarding a real estate closing. Rezko was the buyer. River Realty also received money from the seller in this deal in the same day.

On Aug. 2003, there was a check from 850 N Ogden LLC, with which Rezko was affiliated. From Oct. 2, 2003 to May 3 2004, there were eight checks from Rezko to Patti for $12,000 each. On Jan. 2, 2004, there was a $40,000 check from Rezmar, Rezko’s company.

The prosecution asked Schindler about the Blagojevichs’ 2004 income tax return. The prosecution asked if by looking at the tax return there was any apparent affiliation with Rezko, and Schindler said no. The prosecution asked the same question of River Realty’s 2004 tax return, and Schindler said no.

Schindler testified on corporate tax returns, if a company reports the money, they don’t have to say who its from.

On Jan. 21, 2004, Chicago Title wrote a check to Rezmar for $40,000. On Jan. 22, Rezmar wrote a check for $40,000 to River Realty. On Jan. 23, River Realty wrote a check to Patti Blagojevich for $40,000, which was deposited into Patti’s personal bank account. Before this check, the balance was approximately $8,000. Following this deposit on the same day, Rod and Patti wrote a series of checks for $38, 010.

Schindler testified from 2002 to 2008 overall, the outflow of money was greater than inflow, meaning the Blagojevichs spent more than they had. The prosecution asked Schindler about a chart showing Rod and Patti’s total credit card debt from Dec. 2002 to Dec. 2008, and Schindler testified they had eight to nine credit cards. The chart showed their credit card debt increased over time, and at times River Realty paid off the balances but their debt kept going up.

The next chart showed from Dec. 2007 to Dec. 2008, overall, their credit balances went up "drastically.” From April 2008 to Dec. 2008, their debt went up from approximately $175,000 to approximately $200,000 because they start drawing on a home equity line of credit on the Blagojevich house.

The breakdown of the finances also showed that over six years, Blagojevich spent $400,000 on suits and shirts.

UPDATE: 10:51 a.m.
Blagojevich defense attorney Sam Adam, Jr. cross-examined Keahl.

Keahl testified the state ethics officer is a member of the governor’s staff, and from 2006 to 2008, Bill Quinlan was the state ethics officer and Blagojevich's legal counsel. Keahl testified Quinlan took ethics training and would be the best person for state employees to talk to if they had ethics questions. Adam, Jr. was then done with cross-examination.

After Keahl testified about state