A commercial real-estate appraiser testified Monday that the secretary of state’s office under George Ryan paid hundreds of thousands of dollars above market rental rates on leases for three licensing facilities allegedly steered to friends of Ryan’s.
However, on cross-examination, the appraiser, Linas Norusis, acknowledged that his admittedly subjective analysis did not consider the specific needs of the secretary of state’s office. He also never inspected the interiors of the three buildings, Norusis conceded.
Meanwhile, prosecutors objected to informing jurors that Ryan’s defense is being provided free but said if the information is allowed that Ryan’s high-powered lawyers reveal how much state business they won while he held office.
Norusis, an expert witness who charged prosecutors more than $25,000, concluded that for three key leases at the heart of the case, the state paid $900,000 above the fair-market rental rate over a decade.
Prosecutors allege Ryan steered the leases to two friends, co-defendant Lawrence Warner and Harry Klein. Warner held hidden ownership interests in buildings in Joliet and Bellwood, and Klein owned a South Holland building that Ryan’s office leased in 1997 for a truck-licensing facility. Klein was Ryan’s host on free annual trips at his plush Jamaican villa.
Norusis testified that the U.S. attorney’s office hired him in 2002 to conduct a “retrospective analysis” of the three leases to try to determine what market rental rates were in the mid-1990s, when the secretary of state signed off on the deals with Ryan’s friends.
Norusis concluded that the market value for the Joliet building, located beside a railroad yard, was $8 per square foot, $4.15 less than what the secretary of state’s office paid.
For the Bellwood building, leased in 1993 to house the secretary of state’s police force, Ryan’s office paid $6.50 more than the market rate of $10 per square foot, Norusis said. The South Holland property cost the state $14.22 per square foot, about double the market rate, he said.
On cross-examination by Warner’s attorney, Edward Genson, Norusis acknowledged that determining fair rental rates, especially retrospectively, is subjective and more art than science.
Last month Ryan’s legal team, concerned that jurors will conclude he is wealthy because of the many lawyers defending him, proposed informing jurors that Ryan is being represented for free. The law firm of Winston & Strawn, one of Chicago’s most prominent, said its legal fees in the case have surpassed $10 million.
With prosecutors making Ryan’s use of cash a central theme of their case, Ryan’s attorneys said, it would be unfair to let jurors wrongly assume the former governor is footing the bill for his lawyers.
But in a written response Monday, prosecutors said they haven’t brought out the size or cost of Ryan’s defense team at the trial, making it unnecessary for the jury to hear about the issue.
To go that route, prosecutors warned, would open the door to inquiries about how Ryan spent millions of dollars in campaign funds to pay legal fees for himself, his campaign committee and dozens of associates before his indictment.
Furthermore, if jurors are told of Ryan’s free defense, prosecutors proposed, Winston & Strawn should reveal the reasons for that decision and produce documents to show how much the defense has cost the firm, prosecutors said.
In addition, the government said the law firm should disclose records of how much it and its clients obtained in business while Ryan headed the governor’s and secretary of state’s offices.
“There obviously were a number of circumstances that led to George Ryan’s receiving essentially free legal services from one of the most expensive law firms in the country,” the government said in its motion.
In other testimony Monday, a former commercial real-estate agent said he assisted Warner in finding buildings in Bellwood and Joliet that were to house secretary of state facilities.
Ronald Meyers, formerly of Jameson Realty, said Warner wanted the Joliet building purchased in his secretary’s name, but the deal fell through when the owner backed out. Another Joliet facility was picked without Meyers’ assistance.
Also Monday, Anne McGuire, Warner’s former secretary and office manager, said she didn’t recall signing a proposed contract to buy the Joliet building. She said that from time to time Warner would ask her to sign paperwork, and it was her normal practice to sign without question.
Dennis Culloton, Ryan’s press secretary during much of his tenure as governor, is expected to testify Tuesday that Ryan coordinated responses to press stories about the Operation Safe Road investigation that ultimately led to his indictment.
Some of those responses, particularly about Warner’s involvement in leases, were false, according to prosecutors.
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mo’connor@tribune.com
rrbush@tribune.com
