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Federal prosecutors investigating corruption at a state pension fund in Illinois have subpoenaed records concerning $4.5 million in fees a Washington-based investment firm is paying the new treasurer of the Republican National Committee, government sources confirmed Tuesday. The subpoena calls for documents related to the fund, the Carlyle Group and Robert Kjellander, said sources familiar with the investigation who spoke only on condition of anonymity, saying prosecutors want details of the probe kept secret. Kjellander, a lobbyist who headed President Bush’s re-election campaign in three states, was named the RNC’s treasurer over the weekend. Illinois Teachers Retirement System officials expressed concern about the amount of finders fees Carlyle offered Kjellander for helping to land business with the pension fund — $3.1 million paid and $1.4 million due. “I believe that we were all taken aback when we learned of the size of his compensation for services to the Carlyle Group,” said Jon Bauman, executive director of the pension fund. He said the amount would not be unusual if paid to a major firm but is extraordinary for a small operation. Neither the Carlyle Group nor Kjellander and his Springfield Consulting Group have been accused of wrongdoing. Kjellander did not immediately return calls to his Springfield office Tuesday. The subpoena was part of an ongoing federal investigation of corruption involving the fund, which pays the pensions of retired teachers. A former fund trustee and two attorneys already are under indictment. One of the lawyers, Joseph Cari Jr., is a former finance chairman of the Democratic National Committee. Carlyle spokesman Christopher Ullman said Kjellander’s fees aren’t unusual and the pension fund’s investment is simply smart business. “The average return on these funds is 45 percent per year,” he said. “You’re not going to get that out of an S&P fund. The pensioners and board are doing very well investing in Carlyle.” He said Kjellander represents Carlyle before eight other public bodies in Illinois but declined to name them or say whether they had invested with the firm. RNC spokesman Danny Diaz said the Republican group was aware of news reports concerning Kjellander and considers him an effective leader who can help advance the agenda of President Bush. Kjellander is also a friend of presidential adviser Karl Rove. “The RNC is privileged to have such an accomplished and experienced individual in the treasurer’s position,” Diaz said. Kjellander raised eyebrows in 2003 when he received an $809,000 consulting fee from Bear, Stearns Inc. after Democratic Gov. Rod Blagojevich picked that investment house to handle $10 billion in pension fund bonds. The firm received $8 million for handling the bond issue. Kjellander has not said what his role in the placement was. Associated Press Writer Dennis Conrad contributed to this report from Washington. Copyright 2005 Associated Press. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed.

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