Wednesday, August 31, 2005

more shame for jan

Congresswoman's spouse admits fraud

By Laurie Cohen and Rick Pearson
Tribune staff reporters
Published August 31, 2005, 8:31 PM CDT

Robert Creamer, a leading Democratic consultant and the husband of U.S. Rep. Jan Schakowsky (D-Ill.), pleaded guilty Wednesday to a federal bank fraud charge for engineering an elaborate check-kiting scheme to keep afloat the Illinois consumer group he formerly headed.

In addition to the bank fraud charge involving Illinois Public Action, Creamer also pleaded guilty to a federal tax violation for failing to make income-tax withholding payments.

Federal prosecutors plan to seek a prison sentence of 41 to 51 months when Creamer is sentenced on Dec. 21. Creamer's attorney, Ted Poulos, said he hopes his client can avoid prison and instead serve his sentence another way, such as in home confinement.

After a brief hearing before U.S. District Judge James Moran, Creamer, with Schakowsky by his side, apologized for what he described as "serious errors in judgment."

Creamer said his mistakes were caused by "my burning desire to create an organization that empowered ordinary people" and that no banks lost money because of his actions.

But prosecutors said Creamer carried out the check-kiting scheme to finance his salary of about $100,000 as the group's executive director and to further his public policy goals. Creamer "stole money from banks"--more than $2.5 million--in the form of unintended, interest-free loans, said Assistant U.S. Atty. Joseph Ferguson.

Creamer's consumer-advocacy mission "brought him to a place where the ends came to justify the means, without regard to the fact that the means were violations of law," Ferguson said.

Creamer, 58, of Evanston, helped turn Public Action into the state's biggest consumer organization. The group was known for its door-to-door canvassers who sought contributions for liberal, Democratic-backed causes, like universal health insurance.

To prop up the group's perennially shaky finances, Creamer relied on fundraising techniques such as telephone sales of credit-card insurance, which triggered complaints from consumers. The Tribune first reported on the group's controversial funding practices in 1993.

The group closed its doors four years later amid mounting financial problems and a federal probe into its banking activities.

Within the last decade, Creamer melded the field organization tactics of his consumer group into a political consulting business that had many Chicago area clients.

Records show the firm netted $1.4 million over the last seven years locally, including more than a half-million dollars from Gov. Rod Blagojevich's campaign fund. Other Creamer clients included Chicago Mayor Richard Daley, Ald. Joe Moore (49th), Cook County Circuit Clerk Dorothy Brown and Cook County Commissioners Larry Suffredin, Forrest Claypool and Mike Quigley.

But the scope of Creamer's political consulting expanded nationally in recent years, aided by the rising stature of his wife in the Democratic congressional campaign hierarchy.

Elected in 1998 from the heavily Democratic 9th Congressional District on the North Shore, Schakowsky has been an effective fundraiser for her Democratic colleagues and a leading liberal spokeswoman. She holds the title of chief deputy whip for minority Democrats in the House.

Schakowsky said the events in federal court would not prevent her from seeking re-election next year or moving forward in her race to become vice chair of the House Democratic caucus.

"If you can't take a hit, this is not the business for you," she said. "I've withstood those things for a long time, and I can hit back too."

When Creamer was indicted last year, Schakowsky had maintained his innocence and questioned whether the charges were political retaliation for her criticism of President Bush's administration and former U.S. Atty. Gen. John Ashcroft.

On Wednesday she acknowledged Creamer had "made mistakes along the way" but said they should not "define or diminish this good man."

Schakowsky formerly worked for Public Action and served as a member of its policy board but has said she was unaware of its financial affairs. She was not charged with any wrongdoing.

In exchange for Creamer's guilty plea to one count of bank fraud and one count of failing to pay federal withholding taxes, authorities agreed to drop the other charges in the 34-count indictment. Moran had previously dismissed six of the charges.

Creamer specifically pleaded guilty to a check-kiting scheme in 1997, in which he directed the consumer group's employees to shuffle check and wire deposits among accounts at three banks, including Cole Taylor Bank, to artificially inflate bank balances.

He told workers to deposit insufficiently funded checks in automated teller machines that weren't connected with Cole Taylor, so that it would take more time for the bank to request payment on the checks. When Cole Taylor Bank froze the group's account in March 1997, there was a shortfall of almost $2.4 million.

Creamer also admitted to engaging in similar bank-kiting schemes in 1993 and 1996.

The group eventually covered its bank debts. But prosecutors contend that the banks still lost money because the scheme, in effect, gave Creamer's organization interest-free loans.

Creamer also pleaded guilty to failing to pay the government $1,892 in withholding taxes in 1998 on wages he paid to himself as president of a consulting firm. The money instead went to pay off debts of his consumer group.

He also admitted to failing to pay an additional $48,114 in withholding taxes from 1998 to 2000. All the tax debts have since been paid, the government said.

Tribune staff reporters Ray Gibson and Rudolph Bush contributed to this report.

Copyright © 2005, Chicago Tribune


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