IRA agent says impeached governor and wife awash in debt, spent lavishly on tailored suits

By Mike Robinson, AP
Thursday, July 1, 2010

Blagojevich and wife spent lavishly on clothes

CHICAGO — Rod and Patti Blagojevich were awash in more than $200,000 in consumer debt when the former Illinois governor was arrested, following a lavish, six-year shopping spree on custom-tailored suits and other luxury clothing, a federal agent testified Thursday.

Blagojevich and his wife spent more than $400,000 on clothes, mainly for themselves and not their children, from 2002 through December 2008 when he was arrested, Internal Revenue Service agent Shari Schindler told Blagojevich’s federal corruption trial.

“Sometimes they used credit cards to pay for other credit cards,” Schindler said.

Prosecutors were plainly suggesting that the staggering mound of debt facing the impeached Illinois governor and his wife could explain his alleged plan to get a Cabinet post or high-paying labor union or foundation job in exchange for filling the U.S. Senate seat Barack Obama was leaving to become president.

They spotlighted Blagojevich’s urgent concern about money, later playing a tape of an angry, profanity-laced tantrum in which the governor tells advisers, “We’re struggling here.”

“I’m stuck,” Blagojevich says, his voice rising. “The whole world is passing me by and I’m stuck in the job of governor.” Somebody asks who is passing him by.

“Everybody!” he shouts. “Everybody!”

“I’ve got to figure out a way to take some financial stress off my family,” he says, sounding increasingly frantic. He says he believes he is letting his family down. “I can’t afford college for my daughter.”

He grumbles that Obama won’t make a deal for the Senate seat.

“So what can I get from him? For Patti and me? Nothing,” he says, dejected.

Blagojevich, 53, has pleaded not guilty to scheming to receive a high-paying job or other financial benefit in exchange for the Senate seat. He also has pleaded not guilty to scheming to launch a racketeering operation in the governor’s office. If convicted, he could face up to $6 million in fines and a sentence of 415 years in prison, though he is sure to get much less time under federal guidelines.

His brother, Nashville, Tenn., businessman Robert Blagojevich, 54, has pleaded not guilty to taking part in the alleged scheme to sell the Senate seat and plotting to illegally pressure a racetrack owner for a $100,000 campaign contribution.

Blagojevich looked uncomfortable, shifting in his chair and managing a weak smile at times, as Schindler read off payment after payment he made for expensive ties and suits. Jurors followed the credit card statements projected on a screen, some looking down to jot notes. Patti Blagojevich, who entered the courtroom in the morning wearing a fashionable pink outfit, left the room before testimony about the family finances began.

Schindler said the Blagojeviches had eight or nine credit cards and their debt shot up drastically from $170,000 to more than $200,000 in the year before his arrest when they started to tap a home equity line of credit.

A former chief of staff, Alonzo Monk, testified during the first week of the trial that the governor had frequently visited his tailor and been known to order as many as nine suits at a time.

Next to their mortgage payments — $392,000 — their second-biggest payment from 2002 to nearly the end of 2008 was $205,000 on Tom James/Oxxford custom clothes, Schindler said.

Blagojevich frequently bought custom shirts and ties and in April 2006 spent $1,302.53 on ties in one day, said Schindler, who went through numerous Blagojevich tax returns, credit card statement and other documents in analyzing their finances.

The couple shopped at upscale stores such as Neiman Marcus and Saks Fifth Avenue, and Patti Blagojevich spent $1,847 on a designer dress in one day and $2,264 on a jacket, among other examples Schindler gave.

Several entries, Schindler said, showed Blagojevich spent more than $10,000 a day on suits. One tie, a basket-weave tie from Saks, cost $179.85. Around the same time, she said, he spent $2,590 in a single store on shirts. A charge on Patti Blagojevich’s card showed a payment of $3,800 for furs.

The couple displayed a special fondness for Saks Fifth Avenue, spending around $57,000 there over the six-year period — the fifth-largest itemized expense; they spent $28,000 at Neiman Marcus, the 11th largest. By comparison, in the same period, they spent less than $50,000 on childcare and less than $100,000 on groceries.

Schindler has long been one of the federal government’s top Chicago based analysts of financial corruption and was a witness at the trial that sent former Gov. George Ryan to prison for racketeering and fraud and many other cases involving taxes and credit cards.

(This version corrects typo in IRS in headline).)

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