#613: The Magnificent Seven (Illinois Governors who Faced Criminal Charges)

March 28th, 2016

I’m in crunch time on a top-secret writing project that, for purposes of anonymity and to sound cool, I’m referring to only as “Operation Scalded Armadillo.”

It’ll knock your socks off when complete, but OSA (aka “The Armadills”) hasn’t left me much time for the usual running around, doing stuff and writing about it. To keep your Chicago-based edutainment rolling here on the site, I now give you a small taste of my masterwork in progress.

Most people know about Rod Blagojevich and George Ryan, our last two governors who went to prison. And you might be able to coax an Otto Kerner or Dan Walker out of some more history buff types.

Four convict governors is a sad tally, but those are just the ones convicted. If you add the Illinois governors who beat the rap, who either fought the law and won or who managed to sneak by without charges being filed, the number’s depressingly higher.

Seven. Seven Illinois governors faced fraud or corruption charges.

Let’s meet ‘em.

The first was Joel Matteson, governor in the 1850s.

There’s a lot of backstory and terms like “wildcat banking” and “backed by specie,” but in the late 1830s in Chicago, there was a canal being built and a nationwide depression. That’s really all you need to know.

During that sucky economy, the Canal Commissioners had trouble paying the workers, so they got a series of bank loans. The bank loans came in the form of scrip — think sort of combination blank check and gift card. The workers given the scrip could buy stuff with it, but after the scrip was redeemed, it made its way back to the Canal Commissioners office.

Where a bunch of it was put, uncancelled, in a trunk in the 1830s.

In the 1850s, new governor Matteson found that trunk.

So he took it.

By the time people realized Matteson had been spending the scrip, he had been out of office two years and had spent more than $200,000 of it. That’s more than $5 million in today’s cash.

The state Legislature ordered him pay it back — he sold two of his houses to do so (big sign right there), but still came up $27,000 shy. They figured it was good enough.

Criminal charges were a different matter.

A grand jury was convened and voted they had enough evidence to indict Matteson, but the next day reconsidered and voted NOT to indict him. A lot of people grumbled how messed up it was that the grand jury was — for some reason — made of politicos and courthouse hangers-on rather than random people from the voting rolls like the law required, but Matteson was never charged with a crime and never went to trial.

Matteson, Illinois, in the south suburbs is named after this guy.

The next governor of note is Len Small, a farmer from Kankakee. He was elected governor during the 1920s. Just seven months into his term, he was charged with embezzling millions of dollars during his previous gig as state treasurer. He allegedly deposited state money in a completely fictional bank, lent it out at 8 percent interest, paid the state back at 2 percent and pocketed the difference.

Small was cleared of all charges, but critics would later notice that eight of the 12 jurors got jobs with the state after the trial.

The next was William Stratton, a Republican from Lake County when it too was a farming community. He was governor in the ‘50s. During Stratton’s tenure, a Pulitzer Prize-winning Chicago Daily News investigation revealed state auditor Orville Hodge — from Granite City by St. Louis, so another non-Chicagoan — had embezzled more than $1.5 million.

Stratton’s own charges came in the ‘60s, after he had lost re-election. He was brought up on counts of tax evasion. The IRS accused him of making personal purchases — commissioning oil paintings, building a lodge, buying his daughter a horse — using campaign contributions, exactly what congressman Jesse Jackson Jr. pleaded guilty to a couple years ago.

But under the law at the time, that wasn’t illegal. You could spend campaign contributions on horses and paintings. The IRS was charging Stratton with not reporting the income.

Stratton argued that campaign contributions aren’t taxable, and the court agreed. Stratton was cleared of all charges, although what he did would have put him in prison under today’s laws.

It’s not just Chicago. From top to bottom, Illinois is a messed-up state.

Now if you look to your left…

And that’s your little taste of Operation Scalded Armadillo. I’ll be a little less Secret Squirrel by next Monday and should get back on track with stories from this century shortly after. I should mention that the bank fraud charges against Gov. Dan Walker had nothing to do with his time in office, but his time running a savings and loan in the ’80s. He improperly loaned himself money to, among other things, pay for repairs on his boat.

It was called The Governor’s Lady.


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