Illinois Gov. Otto Kerner and the scandal that did him in

As Judge Otto Kerner was in the midst of a trial in a Chicago courtroom in January 1972, the Daily Herald recalled how a reporter once wrote that he had “perhaps the most erect, ramrod posture in the state.”

Kerner’s bearing reflected a service record that conditioned him to expect to be treated with deference. He saw combat in North Africa and Sicily during World War II and retired from the National Guard as a major general.

Spectators lined up to shake his hand as he walked through that courtroom 50 years ago. But when he sat down, it was not on the bench, but at the defendant’s table.

“Not guilty,” he replied when asked how he pleaded to a charge of having accepted a bribe as Illinois’ governor in the 1960s.

The trial stemmed from a scandal involving Arlington Park, the suburban Chicago horse racing track that shut down last fall.

Former Illinois Gov. Otto Kerner, a US Court of Appeals judge when this news conference was held in December 1969, vigorously denied charges he received stock in a bank in return for influencing court decisions. (Walter Neal/Chicago Tribune)

The Tribune reporter covering the trial noted that Kerner spoke loudly and forcibly, staring directly at the prosecutors, James Thompson and Samuel Skinner. Did that convey patrician contempt? “It has been said of Otto Kerner that he was born with a golden ballot in his mouth,” the New York Times wrote.

Raised in Chicago, Kerner’s father served on the same federal appeals court where his son would later hold forth. Kerner was an Ivy Leaguer who also studied at Cambridge University in England and married the daughter of Anton Cermak, founding father of Chicago’s fabled political machine.

Kerner’s attorney was Edward Bennett Williams, a prominent Washington lawyer with A-list clients, plus a few sketchy ones, like Teamster boss Jimmy Hoffa and Frank Costello, a notorious mob boss.

Until the bribery accusations, Kerner’s long public career had been eminently respectable. He was a partner in his father’s law firm, joined the Young Democrats and was named US attorney for Northern Illinois. He was elected governor for the first of two terms in 1961. It was as governor he crossed paths with Marjorie Lindheimer Everett.

Fated to be Kerner’s nemesis, her more immediate goal was to be known as the Queen of Illinois Horse Racing. She knew that the potential for scandal haunts every track’s paddock, having dropped out of Northwestern University to work at Arlington Park, her father’s racetrack.

Marjorie Lindheimer Everett, joined by Mayor Richard J. Daley, points to a photo of Round Table, one of five thoroughbreds whose winnings have topped $1 million, at the dedication of the Lindheimer Room, honoring her late father, at McCormick Place in 1966. (Chicago Tribune historical photo)

“We’ve thrown out dozens of undesirables, including a bookmaking relative of mine who is racing right now in New Jersey,” she told “Sports Illustrated,” after inheriting Arlington in 1960.

Racing is a spectator sport, but consider this: If tracks didn’t have pari-mutuel windows, would fans be attracted simply by the sight of horses running around an ellipse of 8 furlongs or so?

And where there is betting, is not fixing sure to follow? Trainers are tempted to drug horses, making winners out of also rans. Frank Costello, a client of Kerner’s attorney, reportedly fixed races for FBI chief J. Edgar Hoover.

Everett was betting the millions she spent renovating Arlington as well as Washington Park racetrack in south suburban Homewood, which she also owned.

That made her helden to the Illinois Racing Board, which decided when each track could run races. In hindsight, it was apparent that those decisions weren’t entirely gratis. When the Kerner scandal broke, the Tribune discovered that a track only suitable for warm-weather racing had been given winter dates. Implicit was a price tag for fixing the problem.

The Illinois Racing Board hears testimony from Marjorie Lindheimer Everett as she sought harness racing dates for Aurora Downs for the next winter on Nov. 20, 1970. (Guy Bona/Chicago Today)

Everett sold stock in her racetracks at a fraction of their market value to Kerner and Theodore Isaacs, his campaign manager. She also left a paper trail: On her income tax return, she claimed a deduction for the difference between the stock’s market value and the bargain-basement price she sold it for.

Should an Internal Revenue Service agent stumble on it, wouldn’t he or she wonder: “Why would a sane person sell something for far less than they paid?

But for years the clue lay unexamined in the IRS’ archives. Meanwhile, Kerner got good marks for his governorship.

President Lyndon Johnson picked him to head an investigation of violent and sometimes deadly riots in Chicago, Newark, Detroit and other cities. He took colleagues on walks through inner city neighborhoods so they could sense the desperation and anger that exploded in violence. He distilled the Kerner Commission’s findings into one sentence: “Our nation is moving toward two societies, one black, one white — separate and unequal.”

For his blunt eloquence, LBJ rewarded Kerner with a seat on the US Court of Appeals for the 7th Circuit.

On July 15, 1970, IRS agents came to Kerner’s chambers in the Dirksen Federal Building to give him the notice he was due to be under investigation. IRS audits are randomly generated, and Everett’s taxpayer number had come up. Asked who had bought her discounted stock, she flipped.

Straw-hatted racing fans crowd along the rail at Arlington Park in an undated photo. (Tribune Archive Photo / Chicago Tribune)

With news that Everett avoided prosecution to testify against Kerner, the dam broke and the Tribune wrote a number of stories about political shenanigans connected to horseracing under headlines such as: “All Harness Groups Gave Politicians Big Cut of Stocks.” Even a racing board member held stock in a racetrack, a self-evident no-no.

Kerner’s supporters tried to use those revelations as evidence that he was a scapegoat for other officials’ winking at wrongdoing.

The government acknowledged that proving Kerner’s guilt wouldn’t be easy. “It was a complicated stock deal, not just a matter of cash being handed over the table,” Skinner told the jury.

By the feds’ theory, Everett’s stock came to Kerner through a slush fund used to pay off officials. The fund’s proceeds were doled out by William Miller, head of the racing board, and the stock passed through multiple hands en route to its final recipients.

“The end result of all these transactions was that Isaacs and Kerner had each gained $159,800 from sales and dividends and were each out of pocket only $15,079,” the feds argued.

The trial was reminiscent of “Rashomon,” a Japanese movie that showed alternate versions of the same incident as different participants remembered it.

Former Illinois Gov. Otto Kerner stood in an elevator at the Dirksen Federal Building that took him up to a courtroom in 1973, where he faced a trial on charges of accepting racetrack stock as a bribe while governor. (Chicago Tribune historical photo)

Everett tested: “Mr. Miller, chairman of the Illinois Racing Board, asked that this stock be made available to the governor and his aide, and I didn’t feel that I could gamble at that point by crossing him.”

Miller testified that he told Kerner of Everett’s stock offer, the governor replied: “That’s nice of Marje.”

Thomas Bradley, another racing board head, testified that he was told to take away racing dates from a competitor of Everett’s, Maywood Park. When he declined, Kerner said: “Well, now, Tom, this is an order.”

Kerner was asked if he signed legislation enabling a racetrack owner to run both thoroughbred and harness races because it would benefit Everett. The governor replied: “I didn’t realize it had such great importance until my indictment in 1971.”

His co-defendant, Isaacs, didn’t testify. Nor did the two exchange a word during the seven-week trial. Some courtroom observers read that body language to mean each thought the other was going to blame him for the stock fiasco.

Kerner’s attorney pleaded with the jurors:

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“If you convict him of even one of the many counts in this 64-page indictment — the government has thrown many mud balls, hoping one will stick — you will destroy this man.

On July 30, 1973, Kerner was sentenced to 3 years in prison.

Convicted on bribery charges, former Illinois Gov. Otto Kerner, center, was driven from the Dirksen Federal Building after receiving a 3-year sentence. (Chicago Tribune historical photo)

“This was not easy for him, the judge began, and Kerner said: ‘I do not envy your position,’ ” a Tribune reporter noted. “Again, apologetically, Judge Taylor told Kerner he didn’t have to worry about going through the normal routine of reporting to the United States marshal’s office for processing or posting a new appeal bond.

“I don’t intend to run away,” Kerner said. ‘I know you don’t,’ the judge said.”

His appeal was rejected, but Kerner only served 7 months because he was suffering from cancer. He died in 1976, still proclaiming his innocence.

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