“As Gov. Rod Blagojevich was trying to pick Illinois’ next U.S. senator, businessmen with ties to both the governor and U.S. Rep. Jesse Jackson Jr. discussed raising at least $1 million for Blagojevich’s campaign as a way to encourage him to pick Jackson for the job, the Tribune has learned.

Blagojevich made an appearance at an Oct. 31 luncheon meeting at the India House restaurant in Schaumburg sponsored by Oak Brook businessman Raghuveer Nayak, a major Blagojevich supporter who also has fundraising and business ties to the Jackson family, according to several attendees and public records.

Two businessmen who attended the meeting and spoke to the Tribune on the condition of anonymity said that Nayak and Blagojevich aide Rajinder Bedi privately told many of the more than two dozen attendees the fundraising effort was aimed at supporting Jackson’s bid for the Senate.

Among the attendees was a Blagojevich fundraiser already under scrutiny by federal investigators, Joliet pharmacist Harish Bhatt.That meeting led to a Blagojevich fundraiser Saturday in Elmhurst, co-sponsored by Nayak and attended by Jesse Jackson Jr.’s brother, Jonathan, as well as Blagojevich, according to several people who were there. Nayak and Jonathan Jackson go back years and the two even went into business together years ago as part of a land purchase on the South Side.

Blagojevich and the congressman met to discuss the Senate seat on Monday, one day before federal prosecutors arrested Blagojevich and charged him with trying to sell the U.S. Senate seat vacated by President-elect Barack Obama. As part of the charges, prosecutors alleged that Blagojevich was considering awarding the seat to a politician identified as “Senate Candidate 5″ because emissaries for that candidate were promising to raise as much as $1.5 million for Blagojevich’s campaign fund.

The Tribune has identified Jesse Jackson Jr. as “Senate Candidate 5.” Jackson has denied knowing anything about efforts by emissaries or anybody close to him promising to raise money for Blagojevich in exchange for being appointed to the Senate. He has been contacted by federal prosecutors as part of the probe and has agreed to meet with them.”

At this point this about seals the fate of Jessie Jackson Jr. as a key player in the scandal that has engulfed Illinois, and the Obama camp. There’s no doubt that the focus was to get Jr. the vacant senate seat, the only question at this point – again – is how deep is the involvement to Obama or his people.

“President-elect Barack Obama said Thursday morning that he is “confident” no one representing him took part in any pay-to-play dealings with Illinois Gov. Rod Blagojevich over filling Obama’s U.S. Senate seat, and pledged to release details of contacts between his team and the governor’s office in the next few days.

“I have never spoken to the governor on this subject. I am confident that no representatives of mine would have any part of any deals related to this seat. I think the materials released by the U.S. attorney reflect that fact,” Obama said at a Chicago news conference. “I’ve asked my team to gather the facts of any contacts with the governor’s office about this vacancy so that we can share them with you over the next few days.”

Obama said he personally wasn’t interviewed by the federal prosecutors and suggested no one on his transition team was either — but did not answer a specific question about what role, if any, his transition team played in the investigation.

“I have not been contacted by any federal officials, and we have not been interviewed by them,” Obama said. “As is reflected by them, we were not perceived by the governor’s office as amenable to any deal-making.”

Perhaps. But just an investigative note, investigators don’t always contact those they are investigating until they have the information they need.

But then again, so far Obama is two for two on statements that turned out not to be true. Seems like every day we learn that the contacts between Obama and Blago were deeper than he first disclosed.

You know, it’s always the coverup that gets you in the end.

“Gov. Rod Blagojevich and his chief of staff John Harris were arrested today by FBI agents on federal corruption charges.

Blagojevich and Harris were accused of a wide-ranging criminal conspiracy that included Blagojevich conspiring to sell or trade the Senate seat left vacant by President-elect Barack Obama in exchange for financial benefits for the governor and his wife. The governor was also accused of obtaining campaign contributions in exchange for other official actions.

Blagojevich was taken into federal custody at his North Side home this morning.

A Blagojevich spokesman said he was unaware of the development. “Haven’t heard anything — you are first to call,” Lucio Guerrero said in an e-mail.

The stunning, early morning visit by authorities to the governor’s North Side home came amid revelations that federal investigators had recorded the governor with the cooperation of a longtime confidant and had begun to focus on the possibility that the process of choosing a Senate successor to President-elect Barack Obama could be tainted by pay-to-play politics.

Blagojevich was taken into custody hours after the Tribune reported that the investigation into allegations of pay-to-play politics within his administration had been expanded to include his pending choice of a Senate replacement for Obama. The Democratic governor has said he expects to make a decision on the state’s next senator in weeks.

Stay tuned on this one, because as you might know, Blagojevich is tied to the hip with Tony Rezko who has been swawking it up with the feds.

Question, who’s next?

Can we dream?

UPDATE: Holy Cow, this thing is exploding. Drudge Report has blaring headline: GRAND JURY SUBPOENAS ISSUED ON REZKO/OBAMA LAND DEAL.

Doug Ross covered the Obama/Rezko FBI probe earlier this month.

Via this news release from November 4th from the GOP:

“A former Illinois real estate specialist says FBI agents have questioned him about a Chicago property that had been bought by convicted felon Tony Rezko’s wife and later sold to the couple’s next-door neighbor, Sen. Barack Obama.

The real estate specialist, Kenneth J. Conner, said bank officials replaced an appraisal review he prepared on the property and FBI agents were investigating in late 2007 whether the Rezko-Obama deal was proper.

“Agents and I talked about payoff, bribe, kickback for a long time, though it took them only a short number of minutes of talking with me while looking at the appraisal to acknowledge what they already seemed to know: The Rezko lot was grossly overvalued,” Mr. Conner told The Washington Times Monday.

“Rezko paid the asking price on the same day Obama paid $300,000 less than the asking price to the same seller for his adjacent mansion,” he said. “This begs the question of payoff, bribe, kickback.”
In a wrongful-termination complaint filed last month in the Circuit Court of Cook County, Mr. Conner said his appraisal of the Rezko property, held in Rita Malki Rezko’s name, was replaced with a higher one and he was fired when he questioned the document.

Mr. Conner, a former real estate and commercial credit analyst at Mutual Bank Corp. in Chicago, noted in the complaint that the bank received a grand jury subpoena in October 2006 requiring it to produce information concerning Mrs. Rezko’s purchase, including the bank’s files on the property. …”

Since good ole Patrick Fitzgerald is the proescutor on this the Blagojevich case, and now it’s coming home to roost on Rezko and Obama dealings could this really be Fitzmus after all?

Stay tuned.

UPDATE: Fitzgerald presser:

Additionally Hot Air has the scoop of who gave Blago up.

UPDATE: Gee trying to sell a Senate seat get’s you a $4500 bail?