CHICAGO — Ali D. Ata, the former head of the state’s largest conduit issuer, entered a not guilty plea yesterday to charges that he used his position at the helm of the Illinois Finance Authority to assist indicted businessman and political fundraiser Antoin Rezko in a fraudulent business deal. “We intend to vigorously defend against the charges,” Ata’s lawyer Thomas McQueen said after his client’s arraignment before U.S. District Court Judge James Zagel in Chicago yesterday. Ata surrendered his passport and remains free on his own recognizance. U.S. attorney Patrick Fitzgerald announced the indictment handed down by a federal grand jury against Ata, 55, last Thursday, adding him as a co-defendant in a pending case against Rezko, once a top adviser and fundraiser to Illinois Gov. Rod Blagojevich. Rezko is accused of attempting to fraudulently obtain more than $10 million in loans for pizza restaurants in the Chicago and Milwaukee areas and of defrauding investors in the franchises. The new indictment adds a third count to the Rezko case first announced last October and charges Ata with one count of aiding and abetting wire fraud for his alleged role. Rezko appeared before Zagel on Tuesday and pleaded not guilty to the new count as he had previously done on two other counts. The indictment outlines a scheme under which Rezko sought more than $10 million in loans from Bellevue, Wash.-based General Electric Capital Corp. after submitting fraudulent financial information in order to finance the sales of two different groups of Papa John’s pizza restaurants located in the Chicago region and in Wisconsin. Ata, a longtime friend and business associate of Rezko, is accused of signing a false letter on IFA letterhead in February 2004 saying that an unnamed investor had applied for a loan from the IFA to purchase Rezko’s pizza businesses in order to inflate the worth of the businesses and obtain the loans from GEEC. The proposed transactions were a sham, according to the indictment. The letter was addressed to an unnamed investor “but Ata knew that Rezko intended to present the letter to GECC,” the indictment reads. The letter stated that the investor’s financing request would be recommended for approval to the IFA board on March 15, 2004, and that the IFA would guarantee 50 % of the total acquisition cost of $16 million.
Ata allegedly knew at the time that the investor had not submitted an application to the IFA and that no such transaction was proposed. Under its current statutes, the IFA could not have provided such a loan guarantee for a business located out of Illinois although legislation is pending that would permit it to enter into cross-border transactions.The indictments of both Rezko and Ata, a resident of the Chicago suburb of Lemont, are part of an ongoing public corruption probe into alleged influence-peddling and kickbacks involving state government boards and agencies. If convicted, Ata faces a maximum penalty of 20 years in prison on the one count of wire fraud. A status hearing was set for December. An IFA spokeswoman yesterday said of Ata’s indictment, “The Illinois Finance Authority is not named in the indictment. The authority is fully cooperating with and will continue to fully cooperate with the United States Attorney’s Office. We have no additional comment at this time.” The indictment alleges that Ata maintained investments in business ventures controlled by Rezko, but the depth of their ties is not clear. Ata, who has a corporate marketing management background, was a surprise appointment to lead the IFA when it was created in January 2004 as part of a controversial consolidation of a five active statewide conduits. He resigned the next year, saying it was always his intention to remain at the authority for only a year. It was widely speculated that Rezko, who at the time held great sway with the governor in recommending board appointments, sought Ata’s appointment to the board. Ata is also a campaign contributor to Blagojevich. Board chairman David Gustman had praised his tenure, saying Ata’s marketing skills helped promote the agency statewide. A critical state audit issued later in 2005 showed numerous accounting and reporting problems during the agency’s first year. The IFA blamed the 14 “findings” on the difficult process of merging existing agencies. Some market participants countered, however, that it proved their private assessment that the state had faltered in assigning top managers — such as Ata — with little relevant experience.The IFA is the state’s largest conduit and last year led the pack among Midwestern issuers, selling more than $2 billion of new money and refunding bonds in 69 issues on behalf of the state’s nonprofit hospitals, private schools, and economic development borrowers in addition to providing loans and venture capital for businesses.The authority has sold nearly $1 billion of debt so far this year, according to Thomson Corp. In 2005, it sold more than $2.8 billion and in its first year of operations it sold nearly $2.7 billion.
