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Altheimer & Gray is known around Chicago for its high-level political connections. Up until a few months ago, that was an enviable thing. Altheimer’s representation of the campaign fund of Illinois Gov. George Ryan has been enviable indeed, at least in terms of billings. The 300-lawyer firm pulled in as much as $800,000 in fees from the campaign in the last two years, according to campaign filings. Then along came “Operation Safe Road.” The federal probe began four years ago, with an investigation of the Illinois secretary of state’s office, which Ryan headed for two terms, from 1991 to 1999, before he was elected governor. In that phase of Safe Road, dozens of state employees were eventually convicted for their involvement in a bribes-for-driver’s-licenses scandal and related cover-ups. The investigation led to charges that Ryan’s campaign used state workers and tax dollars to do campaign work. Ryan, who has announced he is not running for reelection this year, has not personally been accused of any wrongdoing. Altheimer has played a lead role throughout the investigations and indictments. The firm conducted an internal investigation for Ryan’s secretary of state’s office, and then later represented state employees who were asked to testify in front of the grand jury and questioned by FBI agents. Soon after the broadest indictment to date was handed up — a racketeering case in April against the Citizens for George Ryan campaign fund and two top Ryan aides — prosecutors took aim at Altheimer itself, claiming that multiple conflicts of interest should disqualify the firm from any involvement in the case. The strategy worked. In June, U.S. District Court Judge Rebecca Pallmeyer of the Northern District of Illinois disqualified Altheimer from continuing to represent the campaign fund in the criminal case. The firm is now deciding on its next move, says managing partner Jeffrey Smith. “Frankly,” Smith adds, “the government’s motion and strategy is a litigation tactic aimed at strengthening their position as they head into the trial.” The disqualification fight came down to an argument over which conflicts were explicitly waived and which of the many players — the campaign, the defendants, and the witnesses — might end up on opposite sides. Score one for U.S. Attorney Patrick Fitzgerald, the hard-driving Bush appointee who made his bones in New York with cases against the mob and terrorists. As an assistant U.S. attorney in Manhattan, Fitzgerald in 1995 helped convict Sheik Omar Abdel Rahman and a group of Islamic fundamentalists who plotted to bomb the World Trade Center and United Nations. He also prosecuted the terrorists responsible for the bombings of two U.S. embassies in East Africa. Fitzgerald, however, comes late to this grudge match. While he was chasing Osama bin Laden, his predecessor, Scott Lassar, took on Altheimer over conflicts in the same Illinois scandal investigation. The result was identical: A different judge disqualified the firm from representing five witnesses in the grand jury investigation. The firm’s point man in the latest disqualification fight was an Altheimer executive committee member, Jeremy Margolis, a heavyweight white-collar defense litigator. Not surprisingly, Margolis — a former state inspector general and director of the state police — is a confidant of the governor’s. Ryan first tapped Margolis in 1998, to review the internal investigations of his secretary of state’s office. Margolis found no wrongdoing, despite all of the subsequent convictions. Margolis had represented Ryan campaign manager Scott Fawell at the grand jury. Fawell is one of the aides now charged in the new racketeering indictment. He is accused of shredding documents and deleting files from state computers. (His deputy, Richard Juliano, pleaded guilty to one count of mail fraud and is cooperating with prosecutors, says his lawyer, James Montana of Chicago’s Vedder, Price, Kaufman & Kammholz.) The indictment also accuses Fawell of lying in his first grand jury testimony in 1998, at a time when he was represented by Altheimer. Besides Fawell, Altheimer lawyers accompanied about 40 other witnesses to the grand jury, work that was paid for by the Ryan gubernatorial campaign. One of the witnesses turned over incriminating evidence after switching to new counsel — even though an Altheimer lawyer had previously claimed that the witness didn’t possess evidence of a crime. Not to worry, though. This is Chicago, and getting accused of being too plugged-in as lawyers in a money-soaked political scandal is hardly a death sentence.

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