Outfit lawyer turned federal informant Robert Cooley told the I-Team that Rod Blagojevich booked illegal bets in the 1980's and paid protection money to the mob.
Cooley claimed he told FBI officials that Blagojevich used to be a mobbed-up bookie.
On Thursday evening, the FBI agent who supervised Cooley's undercover work in the late 1980's confirms that federal officials were informed back then about Blagojevich's alleged bookmaking and mob payoffs.
In 1986, criminal defense lawyer Bob Cooley walked into the U.S. attorney's office in Chicago and offered to wear a wire in conversations with the hoodlums, corrupt city hall officials and crooked judges that he knew.
As part of Cooley's cooperation and to steer clear of criminal charges himself, he had to disclose all of the misconduct he knew about.
Some of what he reported to prosecutors and FBI involved Rod Blagojevich who was fresh from law school and working as an assistant cook county prosecutor.
"I reported, I observed Rod, the present governor who was running a gambling operation out in the western suburbs. He was paying street tax to the Mob out there," said Robert Cooley, federal Informant.
On Thursday, former FBI official Jim Wagner confirms that telling the I-Team that Cooley indeed informed the bureau about Blagojevich's alleged bookmaking business.
But Mr. Wagner says in the 1980's, FBI agents had never heard of Blagojevich.
Wagner was Cooley's 'handler' for the FBI at the time, supervising his undercover that resulted in two dozen successful prosecutions for public corruption.
That wasn't the end of it.
When Blagojevich ran for governor, Cooley says he returned to the FBI hoping agents would pursue the allegations of outfit bookmaking.
Wagner confirms that as well but says the statute of limitations had long passed for prosecuting Blagojevich on illegal gambling charges.
However, last week when federal prosecutors announced they had filed corruption charges against the governor, Al Patton, special agent in charge of the Internal Revenue Service, was on the podium.
As the feds examine Mr. Blagojevich's finances, one thing they will look for is unreported gambling income.
The governor's former chief of staff Chris Kelly will plead guilty next month to tax fraud for not declaring more than $1 million in winning sports wagers.
A few years ago when Robert Cooley reminded the FBI of his Blagojevich bookie information, Cooley also provided it to the ABC7 I-Team.
In attempting to verify the bookmaking allegations at the time i asked governor blagojevich whether he had ever been involved in taking betting action or paying a street tax to the mob.
The governor denied it and said he didn't know mr. Cooley.
This week, a spokesman for the governor declined to comment.