CHICAGO (CN) - Illinois casinos may sue two state horseracing associations for allegedly bribing former Gov. Rod Blagojevich in exchange for his signing a 2008 law taxing their revenues to benefit the racetracks, the 7th Circuit ruled.
"This case requires us once again to decide whether some shenanigans in the Illinois General Assembly and governor's office crossed the line from the merely unseemly to the unlawful," Judge Diane Wood said, writing for the three-judge panel.
As governor in 2006 and 2008, Blagojevich signed two laws that imposed a 3 percent revenue tax on Illinois casinos earning more than $200 million per year, and placed the money into a trust for the benefit of the horseracing industry.
After the 2006 bill was passed, horseracing executive John Johnston and his colleagues contributed $125,000 to Blagojevich's campaign fund.
Two years later, Blagojevich stalled on signing a renewal until Johnston promised to donate $100,000, a scheme revealed by conversations recorded in a federal investigation of the former governor.
Over the next few months, an intermediary repeatedly needled Johnston about following through on the pledge. In one conversation recorded by federal authorities, court documents say, an exasperated Johnston is heard telling him, "Look, tell the big guy [Blagojevich] I'm good for it. ... I'm just figuring out which accounts to pull the checks from."
Blagojevich signed the bill after he was indicted on corruption charges, although Johnston never delivered the money.
The impacted casinos then filed a racketeering suit against the racetracks and Blagojevich seeking a return of their money, plus damages.
The 7th Circuit ruled last week that "the casinos have not pointed to evidence that would allow a factfinder to conclude that the Racetracks' alleged bribery scheme caused the legislature to pass the '06 Act."
An Illinois House member opined when it was passed that "promises have been made to support this bill," but the casinos have no evidence of any bribery or attempted bribery.
But the circumstances in 2008 present a very different picture, the court found.
"After the FBI recorded Monk and Blagojevich scheming about getting Johnston to pay, Monk met with Johnston and, according to Monk, delivered the message that the bill would not be signed until he paid," the 22-page opinion says. "According to Monk, Johnston countered with an offer to pay half the money at once and half later. Monk called Blagojevich immediately after the meeting with Johnston to report his belief that Johnston would soon pay."
In addition, Johnston testified against Blagojevich only after signing an immunity agreement acknowledging that he had information that "may tend to incriminate" him.
Therefore, a reasonable jury could find that "the '08 Act became law as a direct result of the alleged agreement to trade money for one person's action - the governor's signature," Wood said.