Post Political Career and Criminal Conviction
In the 1980s, Walker entered the private sector by forming Butler-Walker, Inc, a chain of self-named quick oil change franchises later bought by Jiffy Lube and acquiring two troubled savings and loan associations, one of which was First American Savings and Loan Association of Oak Brook.
In 1987, Walker was charged with Federal bank fraud based on two loans. A private contractor borrowed $279,000 from First American to build schools. Walker later personally borrowed $45,000 from that individual on a "handshake" basis. Those two loans ("borrowing from a borrower" while serving as a director) constituted bank fraud. Walker agreed to a plea bargain with Federal prosecutors; he pled guilty to bank fraud in the loan, perjury (based on dealings by the Association with his son), and filing false financial statements. He was sentenced to four years imprisonment for bank fraud, three years for perjury, and probation for false financial statements; the sentences to be served consecutively.
At his sentencing, U.S. District Judge Ann Williams stated, "It's clear to this court that a pattern was established and that you, Mr. Walker, thought this bank was your own personal piggy bank to bail you out whenever you got into trouble." The U.S. Attorney General ruled that "borrowing from a borrower," which was Walker's main offense, was a violation of the regulations but not a violation of law.
Media at the time inaccurately reported he received over a million dollars in fraudulent loans for his business and repairs on his yacht Governor's Lady.
However, no charges were laid against Walker for any other loans, and no other loans by First American were described as fraudulent.
After Walker had served eighteen months, Judge Williams ordered him released from prison based on "time served" and placed on probation until the two loans in question were repaid. This order eliminated the two other charges.
First American was declared insolvent and taken over by the Federal Savings and Loan Insurance Corporation. It continued in business as before, run by individuals brought in by FSLIC. There were no bondholders of First American and Walker and his wife were the only stockholders. When the two loans described above were repaid, Walker was released from probation and the case against him was closed. There was no cost to taxpayers for the loans.
In January 2001 Walker requested a pardon from outgoing President Bill Clinton, but his request was not granted.
Walker became the second of four Governors of Illinois in the 20th and 21st Century to be convicted on Federal criminal charges. The others were Otto Kerner, Jr., George Ryan, and Rod Blagojevich. However, unlike Kerner, Ryan, and Blagojevich, Walker's crimes were not related to his term as Governor.
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