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A criminal case involving a business executive with ties to Gov. Rod Blagojevich has cast a legal spotlight on a common business practice: the finder's fee.

Throughout the business world people and companies earn finder's fees, placement fees and commissions for bringing together buyers, sellers and investors.

Often these fees reflect diligent work by licensed brokers and advisers in fields such as finance, real estate, law and marketing.

But such fees cross the line from legal to illegal when they are paid in secret for the personal gain of public officials and trustees. They are also improper when the fees are kickbacks resulting in public assets or privileges being steered to firms, which may be unworthy or may overcharge. Sometimes the money finds its way into coffers of political candidates.

That is what politically active businessman Antoin "Tony" Rezko and others were allegedly up to in investment and real estate transactions, according to charges in a federal indictment unsealed last week.

The indictment alleges that Rezko helped get an ally, Stuart Levine, appointed to two state boards. Levine then used those positions to solicit bribes from investment firms seeking to do business with the state. The bribes were to be paid in various forms, including "finder's fees," with money being steered to individuals and political campaigns, the indictment said.

In the indictment the term "finder's fee" is used as a synonym for commissions and placement fees, but in the business world it also can be used very broadly to describe payment to a middleman for helping to arrange a deal.

It may be difficult to separate legal finder's fees and deals from the illegal. "Sometimes it's black and white. Other times, it may be more of a gray area," said U.S. Atty. Patrick Fitzgerald when he announced the indictments against Rezko and others.

While Illinois has seen a hefty helping of scandals that involve an unsavory mix of money, politics, profit and influence, similar conflicts of interest occur across the U.S., specially when financial services are involved, said Jacob H. Zamansky, a New York-based lawyer who represents investors against brokers.

"This indictment crystallizes the problem of `pay-to-play,'" he said. "It's political corruption at its highest level and shows that trustees of public funds seek to perpetuate their boss in office rather than protect the public or investors."

In some instances parsing the legal from the illegal fees can be simple, said Howard Kirschbaum, managing partner at the Chicago law firm Barack Ferrazzano Kirschbaum Perlman & Nagelberg LLP.

A legal brokerage commission, placement or finder's fee is compensation for work actually performed, by a licensed agent when appropriate, and is disclosed to all interested parties, Kirschbaum explained.

"The payment of fees must be disclosed to the clients in writing so they'll know who is steering business to whom," said Zamansky.

When public assets are at stake the officials or trustees managing them are not supposed to use their public position to accept fees or property for their private enrichment. When they choose among bidders hoping to perform services there must be neutrality in the selection process, said Geoffrey Aronow, an attorney with the Washington, D.C., law firm Heller Ehrman LLP.

"Those who manage a public pension fund have a fiduciary responsibility to run it to favor the beneficiaries, not for their own personal advantage," he explained. "It's their job to provide honest services to the investors or to the public and not be swayed by secret payments."

In the business world there are other instances in which commissions or finder's fees have been questioned.

When placing investments at financial exchanges brokers collect a fee from the client, to whom they have a fiduciary responsibility, said John Coffee, director of the Center for Corporate Governance at Columbia University. But sometimes the broker also gets paid from another intermediary who processes the investment through the exchange. The intermediary is paying the broker to get the business.

The potential problem with this practice is that the second fee to the broker may not lead to the wisest investment decision for the client.

Paying for order flow, as it is called, "may be a conflict of interest but the [Securities and Exchange Commission] only requires disclosure if it is requested," Coffee explained. "I find that unsatisfactory."