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Ettinger, who will represent Robert Blagojevich when the trial begins Thursday, turned over the information to prosecutors, promptly obliterating their case.

“[Prosecutors] called and said: ‘We’re going to dismiss the case. Don’t even bother showing up,” said Judge David Sterba, who then worked on the case as a defense lawyer with Ettinger. “I’ve never seen anything like it before or since. He absolutely decimated the government’s key witness before he took the stand.”

Experienced and tenacious, Ettinger is now challenged to walk Rob Blagojevich, brother of the ex-governor, who some wager also has a good chance of walking away from his charges.

Ettinger, who graduated valedictorian from his John Marshall Law School class, has a long history in federal court, having handled dozens of fraud and corruption cases. He beat counterfeiting charges against his client Terrence O’Keefe, and won an acquittal for accused government bid-rigger Michael Cahill. Ettinger also represented Roger Stanley, who cooperated in the Gov. George Ryan investigation.

“By far, Michael Ettinger is the best and brightest lawyer ever to appear before me,” said Sterba, now presiding judge of the Fifth Municipal District Circuit Court of Cook County. “He’s a street guy. He gets it. He understands what makes people think.”

Ettinger will be challenged to bring out the differences between the brothers without it looking as if big brother is taking a shot at the former governor.

Defense attorney Dennis Berkson, who has worked with Ettinger for 35 years, said he’s up to the task.

“He understands how to make Rob likable. He can humanize him,” Berkson said.

Former Assistant Cook County State’s Attorney Cheryl Schroeder will work alongside Ettinger to form the defense team. Schroeder, 45, tried more than 70 juries.

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New York Yankees third baseman Alex Rodriguez has $24.9 million in deferred pay at risk in the Texas Rangers’ bankruptcy case stemming from the record-breaking contract he signed with the Arlington, Texas, ball club after the 2000 season.

Rodriguez tops the list of the Rangers’ unsecured creditors – a lineup that also includes Baltimore Orioles pitcher Kevin Millwood, a former Ranger owed $12.9 million, and current Texas third baseman Michael Young, owed $3.9 million.

The Rangers filed for Chapter 11 protection Monday to complete the transfer of the club from owner Tom Hicks’ sports-investment company to a group led by former Rangers pitcher Nolan Ryan and attorney Chuck Greenberg.

Papers filed with the U.S. Bankruptcy Court in Fort Worth, Texas, revealed that the Rangers still owe Rodriguez pay from the $252 million, 10-year deal he signed with the team. At the time, the contract was the most lucrative deal in baseball history.

Rodriguez, a three-time American League Most Valuable Player, was traded to the Yankees after the 2003 season.

In a press release Monday, the team said its creditors would recover 100% on claims that are “guaranteed by the Rangers.” The release did not specify if those receiving full payment include unsecured creditors such as Rodriguez.

A spokesman for the Rangers did not immediately return calls seeking comment.

The Rangers top six unsecured creditors are all current or former Major League players owed “deferred compensation.”

Other former Rangers owed back pay include current Los Angeles Dodgers pitcher Vicente Padilla, owed $1.7 million, retired catcher Mickey Tettleton, owed $1.4 million, and retired utility man Mark McLemore, owed $970,000.

UPDATE: At a press conference Monday afternoon, Greenberg said the proposed $575 million sale would repay all the team’s creditors, including players owed back salary.

“Every creditor of Texas Rangers will be paid 100 cents on the dollar,” Greenberg said. The sale, however, won’t necessarily repay lenders to Hicks Sports Group who have fought the proposed sale since it was first announced in January.

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A former bank director built himself a financial fiefdom out of automotive-chemical companies, then plundered it through a series of stock frauds that let him live lavishly even though he’d declared bankruptcy, prosecutors said Tuesday.

As CEO of Industrial Enterprises of America Inc., John D. Mazzuto illegally gave stock to friends and relatives, pumped up the share price by making the company look more profitable than it was and lied to investors, according to the Manhattan district attorney’s office.

The proceeds got him multimillion-dollar houses in the Hamptons and Florida, $500,000 worth of private jet travel and the status of a major benefactor of Yale University’s baseball team, prosecutors said.

Mazzuto and James W. Margulies – a Cleveland lawyer who was the company’s finance chief and briefly succeeded Mazzuto as CEO – pleaded not guilty to grand larceny, scheming to defraud and other charges. Together, they’re accused of stealing more than $60 million from the now-bankrupt company.

“This was the wholesale looting of a public company for greed and self-enrichment,” District Attorney Cyrus R. Vance Jr. said.

Mazzuto’s attorney didn’t immediately return a call. Margulies’ lawyer declined to comment outside court.

Mazzuto, 61, was a managing director for the former Chemical Bank before he started acquiring a series of companies in 2002 to create Industrial Enterprises, prosecutors said. Subsidiaries made antifreeze, windshield-wiper fluid and other car chemicals at plants in Pennsylvania and elsewhere.

Mazzuto and Margulies began by issuing millions of shares of a type of stock that can legally be given only to employees – and funneling the shares to relatives, associates and shell companies, according to prosecutors. When the stock was sold, money was channeled back to Mazzuto and Margulies or was used to inflate the company’s cash flow and boost its stock price, prosecutors said.

The two doctored records to make the influx of cash look like legitimate earnings and used the company’s seeming success to draw in new investors, one of whom ultimately lost $20 million, prosecutors said. They wouldn’t identify the investor.

Briefly traded on the NASDAQ exchange, the stock now trades for pennies a share on the over-the-counter bulletin board, an electronic quotation service.

Mazzuto filed for personal bankruptcy in 2002 and didn’t emerge for seven years, prosecutors said. Meanwhile, he garnered more than $15 million from the stock scheme, money that bought him a $3 million house he’s since sold in Southampton, N.Y., and his $2.5 million home in Palm Beach Gardens, Fla., according to prosecutors.

He also endowed a baseball coaching post and underwrote a practice field for Yale, his alma mater, which praised his “incredible generosity” in a 2009 item on the team’s website. Prosecutors said he gave the university $1.5 million in Industrial Enterprises stock. The university didn’t immediately return a call.

Margulies, 45, gleaned more than $6 million from the scam and used the money for such luxuries as a $350,000 diamond ring for his wife from posh jeweler Harry Winston, prosecutors said.

Investors eventually began raising questions and filing lawsuits. Mazzuto and Margulies resigned within about a month of one another in 2008.

The company filed for bankruptcy last year, Securities and Exchange Commission and court records show. The new management has cooperated with prosecutors, company lawyer Allen L. Finkelstein said.

If convicted, Margulies and Mazzuto could face up to 25 years in prison.

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Regional supermarket chain Bi-Lo officially exited bankruptcy Wednesday, a little more than 13 months after seeking Chapter 11 protection.

The Mauldin, S.C.-based grocer said that it reduced indebtedness by about $60 million through the process. It remains under the ownership of Lone Star Funds, a Dallas-based private equity firm. A federal bankruptcy judge in Spartanburg approved Bi-Lo’s reorganization plan April 29.

“With our financial restructuring now behind us, we are emerging … with a strengthened balance sheet and enhanced financial flexibility that positions Bi-Lo for continued success,” president and CEO Michael Byars said in a statement. A more focused footprint and improved capital structure should help the company moving forward, he said.

The company now has 207 stores in the Carolinas, Georgia and Tennessee, about 15 fewer than when it entered bankruptcy, and employs about 15,000 people. Jen Aronoff

GM may return to auto lending

General Motors Co. may return to the auto-lending business more than three years after selling control of GMAC LLC, according to three people familiar with the company’s plan.

GM may buy back the GMAC business, start a new finance unit or form a partnership with banks and other lenders, said the people, who asked not to be identified because details are private. Chief Executive Officer Ed Whitacre wants to form an in-house lender before selling shares in GM as soon as the fourth quarter, one person said.

Whitacre has his management team exploring all options, the people said. Tom Wilkinson, a GM spokesman, declined to comment. GMAC is now known as Ally Financial Inc. and is 56 percent owned by the U.S. Treasury after an injection of $17.2 billion under the Troubled Asset Relief Program. Ally has a corporate center in Charlotte.

Bloomberg News and Staff writer Rick Rothacker

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