Horse-Racing RICO Claim Involving Ex-Gov. Blagojevich Can Proceed - U.S. Seventh Circuit
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Horse-Racing RICO Claim Involving Ex-Gov. Blagojevich Can Proceed

You remember Rod Blagojevich, right? The former governor of Illinois who was convicted of corruption for attempting to sell former U.S. Senator Barack Obama's senate seat? (I wonder what happened to that guy?)

Blagojevich and his awesome hair resurfaced in an opinion from the Seventh Circuit on Friday, where the court found there was sufficient evidence to survive summary judgment on a RICO claim against him.

Playing the Ponies

The case centers on state legislation imposing a 3 percent tax on casinos. No problem there, but the proceeds from the tax would be deposited into a fund expressly for the benefit of the horse-racing industry.

After a bill failed in the Illinois General Assembly, Joe Johnston, a horse-racing executive (and one of the named defendants) started talking to Blago, who threw his support behind the bill. After it passed in 2006, Johnston contributed about $125,000 to Blagojevich's campaign fund. When the bill came up for renewal two years later in 2008, Blagojevich "solicited" campaign donations from Johnston before he would sign the renewal into law. He eventually signed the bill, sans donations, shortly after he was arrested for corruption.

RICO-la!

Several casinos -- "smelling a rat," wrote Chief Judge Diane Wood for a unanimous three-judge panel -- filed a RICO suit against the racetracks and Blagojevich. It was dismissed on summary judgment.

On appeal, the sole issue was whether the conspiracy, which had been found in earlier cases, proximately caused plaintiffs' injury. As to the 2006 legislation, the Seventh Circuit said no: The casinos didn't present enough evidence to show that bribery, conspiracy, or any undue influence by Blagojevich caused the legislature to pass the 2006 act into law. But when it came to the 2008 renewal, the court agreed that there was sufficient evidence showing that Blagojevich intended to sign the bill only when Johnston "ponied up" (did you like that?) about $100,000 in campaign donations.

So, was the conspiracy the proximate cause of the casinos' harm? The court handily answered yes: "The object of the conspiracy was to bring the '08 Act into effect in exchange for a cash bribe; the Act harmed the Casinos to the tune of 3% of their revenue. The Casinos thus sat in the center of the target of the conspiracy."

This particular appeal doesn't name Blagojevich as a party (he was granted immunity from it); it deals only with civil claims for damages incurred by the casinos due to the conspiracy. The case is now remanded for further proceedings.

As for Blagojevich, he is still in prison, though he continues to entertain.

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