It could have been worse, I guess.


Gov. Rod Blagojevich wasn't named or even alluded to in last week's federal tax fraud indictment of one of his best friends, closest advisers and biggest fundraisers Chris Kelly. Blagojevich does appear to be fingered in a different indictment, but that got lost in the shuffle.


Whatever, last week wasn't good. Blagojevich is now in the awkward position of pushing for a massive gambling expansion while the political world discovers that the last time the governor did so, in 2003, he put his buddy Kelly in charge of the project.


According to the feds, Kelly placed millions of dollars in bets with Illinois bookies on sports contests during that period. He allegedly hid some of those winnings and losses from the Internal Revenue Service, and in one case Kelly allegedly disguised a payment to a bookie as a loan from his company, BCI Commercial Roofing.


With all that in mind, House Speaker Michael Madigan's gaming reform ideas look pretty prescient. Madigan's proposal would remove the governor as much as possible from directly choosing Gaming Board Members, and prevent Blagojevich from having almost any contact with those members once they're seated. The speaker said weeks ago that he wouldn't approve any gaming expansion, including a Chicago owned casino and slots at horse racing facilities, unless his reforms are part of the deal.


Madigan saw how Kelly operated in 2003, when the governor flip-flopped on his promise not to expand gaming, but then dispatched Kelly to cut a deal. Kelly rode herd over the Illinois Gaming Board, for instance, to get them to do the governor's bidding, including where new casinos would be sited. Madigan has also seen how the governor has conducted business over the years and didn't want to take any chances. There are nine or so federal and state investigations of this governor that we know of. There may be more, but I lost count a long time go.


But even with Madigan's demanded safeguards - and they appear pretty ironclad - it's now going to appear awful seamy to push a new Blagojevich-backed gaming expansion bill through the General Assembly in the wake of Kelly's indictment.


The indictment probably won't completely stop the bill's progress - the hunger for a multibillion dollar state construction plan funded by gaming dollars is just too great - but it will certainly give legislators pause. And that's probably a good thing. We're not talking about building an amusement park here. As Kelly's predicament seems to show, even smart guys can have serious weaknesses and get themselves in serious trouble.


Despite his lawyer's repeated claims that Kelly owes no taxes, he is now facing 38 years in a federal prison. Frankly, if it was me, I might make something up about a fellow federal target if I was looking at that much time behind bars. But the most direct threat to the governor wasn't necessarily Kelly's indictment - it was the re-indictment of Nick Hurtgen, a former investment banker.


A federal judge had tossed the first round of indictments against Hurtgen, claiming the government hadn't proved that Hurtgen knew he was involved in an illegal scam to pry kickbacks out of hospital officials in order to allegedly pad Gov. Blagojevich's campaign fund.


This time around, the feds claimed that Hurtgen told a hospital exec that "Public Official A" wanted construction magnate Jacob Kiferbaum to get the contract for Edward Hospital's planned expansion. You don't want to know why the unnamed Official A was backing Kiferbaum's bid, Hurtgen essentially told the exec, adding, though, that it was "all about the money" for Public Official A's campaign fund.  Public Official A has previously been reported as being Gov. Blagojevich.


The feds also added more charges yesterday against former Blagojevich pal, adviser and fundraiser Tony Rezko, whose federal corruption trial begins in February. That trial will be crucial to the US Attorney's apparent efforts to move up the ladder. If they convict Rezko on counts related to Blagojevich and Kelly, that would buttress any case they might have against both of those men.


So, yeah, it could have been worse for the governor last week, but this ain't over yet.





Rich Miller also publishes Capitol Fax, a daily political newsletter, and