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By then the feds were on to Kelly. The U.S. attorney’s office was looking at the Blagojevich administration, and as the tendrils of that investigation began to spread, they wound around a number of associates close to the governor, including Tony Rezko; his chief of staff, Lon Monk; Stuart Levine, a millionaire campaign donor who would eventually plead guilty to using his seats on two state boards to cash in on millions of dollars in kickbacks; William Cellini, the Illinois power broker who would be indicted for allegedly shaking down a capital investment firm to raise funds for Blagojevich; and Joseph Cari, a high-powered fundraising consultant who would plead guilty to attempted extortion.
Kelly himself was in the cross hairs. His downfall started with, of all things, two pizza companies. According to the 2007 indictment, Kelly arranged for a wire transfer in 2005 of $45,000 to his bookie from an unnamed pizza company in Chicago. Later he tried to pay his bookie through multiple checks written from a second pizza company. (The indictment doesn’t make clear Kelly’s relationship to the pizza companies.)
Kelly grew more brazen. To hide money from the government, he wrote several checks from his business to himself, his children, his wife, and cash—all just under the $10,000 amount that triggers a government report. He also enlisted the help of a friend, writing one check to the friend’s four-year-old child. On at least one occasion, Kelly paid a Las Vegas casino by making it appear that the payment was a legitimate business expense incurred by his company as part of a roofing contract for an airline. What’s more, in fraudulent tax returns filed between 2000 and 2005, he recorded as business expenses more than $70,000 in home electronics and moving costs, nearly $40,000 in landscaping, nearly $20,000 for home-theatre equipment, $6,000 for hardwood floors, and $7,000 for drapes.
In his professional life, Kelly showed an equal disdain for the law, according to the feds. For example, a 76-page FBI affidavit filed with Blagojevich’s 2009 indictment charged that in 2004 Kelly offered Joseph Cari “whatever he wanted” in the way of state business if Cari would help Blagojevich raise funds for a potential presidential bid. (Chicago was unable to reach Cari.)
Kelly was also implicated (along with William Cellini, Stuart Levine, and Tony Rezko) in an alleged 2004 scheme to strong-arm a Hollywood producer named Thomas Rosenberg into coughing up a campaign contribution to Blagojevich. The alleged scheme backfired when Rosenberg—best known for the Oscar-winning movie Million Dollar Baby—threatened to expose the plot.
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By 2006, the walls were closing in. On the surface, Kelly maintained the façade of the high roller. He was ensconced in a turreted, many-gabled mini-mansion in Burr Ridge with his wife and three children, and he still moved among the power elite of Illinois politics.
But privately, his gambling debts were mounting. Rumors that he and others in the Blagojevich administration were under the microscope had hardened into open speculation. In fact, before federal prosecutors first indicted Kelly in 2007, they approached him, seeking his cooperation in the broadening Blagojevich probe. It would be the only official overture by the feds, a source said, and when Kelly refused, as he would until the end, he knew he was painting a bull’s-eye on his back.
At the same time, pressures were also mounting in his personal life. Aside from the gambling debts—and the dangerous web he was weaving to cover them—his marriage was failing, as evidenced by the affair he had begun with Clarissa Flores-Buhelos. A former basketball star at Northwestern University, Flores-Buhelos was a dark-haired beauty in her late twenties.
Her husband, Peter Buhelos (pronounced BYOO-liss), owner of Wally’s Restaurant in Park Ridge, was, like Kelly, some 20 years older than Flores-Buhelos. Shortly after they married in 2005, Buhelos says, he staked his wife in her own real-estate business. When that fizzled, he invested on her behalf in a Logan Square nightclub called VLive. Within two years, however, the marriage had hit the skids.
Buhelos’s first inkling of the affair with Kelly came when he discovered in his home a Las Vegas boarding pass from 2007 bearing Kelly’s name. Buhelos had never heard of him. When Buhelos confronted his wife, he says, “she just said she accidentally picked it up.”
Buhelos says his suspicions were confirmed when he found a love letter to his wife from Kelly. “That’s when I really went berserk,” he says. “And that’s when she knew the jig was up, and she filed for divorce against me.” (As this story went to press, Peter Buhelos and his wife were in the final stages of divorce.) Later, after the two had separated, Buhelos discovered that Kelly, too, had invested in VLive. (An attorney representing the nightclub did not return calls.)
The final act of the Chris Kelly tragedy began in December 2007 with the first indictment: a 12-count set of tax-fraud charges. At the time, Blagojevich backed his old pal. “Chris Kelly is my friend,” Blagojevich said in a statement. “I am saddened to hear these allegations about Chris’s personal life. . . . In fairness to Chris, I believe it is important to let the legal process play out and not rush to judgment.”
Almost immediately, however, Kelly was exiled from the Blagojevich camp, joining several other insiders who had left following indictments. Tainted and toxic to potential clients, Kelly watched his business begin to crumble. Meanwhile, although the feds did not overtly approach him again about rolling over on Blagojevich, Kelly believed he was getting a loud and clear message from them: Cooperate or we will keep coming after you. In January 2009, he pleaded guilty to the tax charges, and barely a month later he was indicted a second time—on this occasion, in connection with the O’Hare bid-rigging scheme.
Though Kelly remained free on bond, the outlook grew grimmer. In March 2009, the City of Chicago banned him from ever doing business with the city. In April, he was indicted yet again—this time on racketeering and extortion charges as part of the indictment of Blagojevich that had just been filed.
Publicly defiant, Kelly nonetheless began to collapse under the relentless pursuit. “I don’t think anyone appreciates the pressure that one indictment can put on someone, let alone three separate indictments,” his lawyer, Michael Monico, says. “The amount of pressure he was feeling was tremendous.”
Kelly showed signs of the strain at his June 2009 sentencing hearing on the tax charges. “Is there a reason you’re whispering?” the U.S. district judge Charles Norgle asked at one point. Later, when Norgle asked Kelly whether he had been coerced in any way, Kelly responded that he was acting freely, but he added, “I would be remiss if I didn’t say that there was a great deal of pressure in my life right now.” Norgle sentenced Kelly to just over three years in prison but allowed him to remain free on bond pending his September trial on the O’Hare bid-rigging scheme. That same day, Old Second National Bank filed a $2.1-million foreclosure notice against Kelly’s Burr Ridge home.
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