In an unusual transaction, retiring Illinois Senate President John Cullerton obtained a personal loan from a politically connected Chicago bank by using money from his campaign fund as collateral, the Chicago Sun-Times has learned.
The deal allowed Cullerton to sidestep campaign finance disclosure requirements that would have been triggered if he had borrowed or withdrawn the money directly from his campaign fund.
While Cullerton answered some questions from the Sun-Times about the deal, he declined to make available records of the transaction. The maneuver does not appear to violate Illinois ethics laws, based on the information provided by Cullerton.
In response to questions, Cullerton confirmed by email he took out a personal line of credit for $75,000 on Oct. 20, 2014, from Belmont Bank & Trust Co., where Cullerton’s friend and business partner, former state Sen. James DeLeo, is a member of the board of directors.
Six months earlier, Cullerton had deposited $100,000 in campaign money held by his Citizens for John Cullerton fund into a certificate of deposit with the bank.
Cullerton said the certificate of deposit was used as collateral to secure his personal line of credit. The bank later increased the line of credit to $110,000, he said.
The senator said he used the loan to pay for “family expenditures” but provided no specifics.
As of April 5, 2019, the line of credit was paid off in full, Cullerton said. He said he used his own funds to repay it.
“I complied fully with the law; any suggestion to the contrary would be false,” Cullerton wrote this week in his email to the newspaper.
Cullerton said he is entitled to make personal use of the $100,000 CD under the Legislature’s 1998 rewrite of the state’s ethics laws, which sought to restrict how Illinois politicians’ use their campaign funds.
The law prohibited elected officials or candidates from using campaign funds to pay themselves or family members unless for compensation for “services actually rendered by that person.”
But it also created a grandfather clause that allows anyone with a campaign fund at the time the law was enacted to convert to personal use an amount equal to their fund balance as of June 30, 1998.
Cullerton had $107,867 in his campaign accounts on that date, which he would be allowed to keep for personal purposes under the grandfather clause. Officials are required to pay income taxes on any converted campaign funds.
Most elected officials who qualify under the exemption wait until after they leave office to take the money, in part because of the potential political fallout. When they withdraw the funds, they must publicly disclose doing so.
In Cullerton’s case, there was no requirement for him to disclose using the campaign funds as collateral because his certificate of deposit remained with the bank.
Similarly, Cullerton would have been allowed under state law to borrow the money directly from his campaign fund, although that also would have triggered a disclosure requirement.
State law prohibits politicians from using campaign funds to “repay personal loans.” It also bars them from using campaign funds to repay any debts relating to a personal residence. It even forbids them from using campaign funds as “collateral for home mortgages.”
But there is no explicit prohibition on politicians using campaign funds to take out personal loans or on using campaign funds as collateral for personal loans.
Matt Dietrich, spokesman for the Illinois State Board of Elections, noted that several state legislators chose to borrow from their campaign funds during the state budget impasse with former Gov. Bruce Rauner, when the state comptroller’s office blocked them from receiving their paychecks.
Cullerton announced last month that he will retire in January, ending a four-decade career in the Legislature. Cullerton, 71, became Senate president in 2009.
DeLeo, who retired from the state Senate in 2010, has had a close relationship with Cullerton for many years. He and Cullerton are among the investors in Tavern on Rush. DeLeo is a partner with Cullerton’s wife in a title company.
In addition to DeLeo, the Belmont Bank’s clout includes its chairman James Banks, a zoning lawyer who is the nephew of former Ald. William J.P. Banks.
DeLeo couldn’t be reached for comment.
Cullerton declined to reveal the exact terms of his line of credit with Belmont Bank but said it was “at market terms and rates.” He said he made monthly payments “when I owed anything.”
Asked why he had taken out the loan using his campaign fund instead of borrowing against his properties or other personal assets, Cullerton answered: “Convenience.”
Cullerton took out the loan about four months before the wedding of his daughter, Maggie, in February 2015 at the Bridgeport Art Center’s Skyline Loft.
Maggie Cullerton was deputy finance director from 2017 until early this year for the Illinois Senate Democratic Victory Fund, another campaign fund controlled by her father. She was then hired by the Emanuel administration as deputy commissioner for Cultural Affairs and Special Events.
Maggie Cullerton’s husband, Brian Hooper, a former professional poker player, started a new job with the Illinois treasurer a month before their marriage after listing John Cullerton as a reference on his employment application. Hooper left state employment in 2017.
In 2016 John Cullerton and his wife helped their daughter buy a home in Albany Park, taking out a one-year loan from the Belmont Bank that they replaced with a mortgage from another bank the following year.
In the two months before Cullerton said he closed out the Belmont Bank revolving line of credit in April, the senator sold two pieces of residential real estate in which he held an interest, records show.