A defiant Illinois Treasurer Dan Rutherford has vowed to remain in the competitive Republican race for governor despite allegations of misconduct by a former employee that political experts say could derail his campaign just weeks before the primary election.

Hours after a lawsuit alleging sexual harassment and political coercion was filed in federal court Monday, Rutherford called a news conference to refute the claims one-by-one. He said the "false" and "absolutely, totally political" accusations could even energize his campaign.

"I’m going to keep my head up high. I’m going to continue on. We have had a stronger response, in fact, candidly because of this," Rutherford said. "I’m carrying on with my campaign."

But with the clock ticking ahead of the March 18 primary, experts say it’ll be a tough recovery for Rutherford, particularly with primary voters. He’s locked in a four-way GOP race with businessman Bruce Rauner and state Sens. Kirk Dillard and Bill Brady.

The allegations could hurt Rutherford by possibly impeding his fundraising efforts and damaging his image before a Republican primary electorate that includes many social conservatives, said David Yepsen, director of Southern Illinois University’s Paul Simon Public Policy Institute.

"This kind of accusation from another man is just going to be devastating to Rutherford with a lot of those voters," Yepsen said. "There’s just no other way to portray this."

One rival was quick to take aim at Rutherford about the allegations. At a debate Monday night, Dillard asked Rutherford if anyone else would be making similar sexual harassment claims, the Chicago Sun-Times reported. Rutherford called Dillard’s question "inappropriate" and received a round of applause from the crowd gathered in the northwest Chicago suburb of Hoffman Estates.

In the lawsuit, Ed Michalowski, a former lawyer and director in Rutherford’s office, alleged that Rutherford’s unwanted advances began in April 2011, shortly after Michalowski began working in the office, and continued for more than two years. The lawsuit also claims Rutherford asked Michalowski to set up meetings with potential donors for campaign contributions and organize parades and petition drives while he was working for the state.

Michalowski alleges that he attended an April 2011 overnight retreat at Rutherford’s home in Chenoa. He says Rutherford told him other staff members would be there, but no one else arrived. The lawsuit alleges that after Michalowski went to the guest bedroom that night, Rutherford entered the bedroom and grabbed his genital area. Michalowski says he pushed Rutherford away and later told Rutherford’s chief of staff about the incident. Michalowski alleges the aide told him, "At least we have job security."

Rutherford’s chief of staff denied Michalowski ever spoke to him about misconduct.

The lawsuit alleges other advances, including Rutherford asking Michalowski back to his hotel room during the 2012 Republican National Convention in Tampa.

The suit also claims Rutherford made Michalowski do work for his own campaign as well as for 2012 Republican presidential candidate Mitt Romney. Rutherford was the Illinois chairman for the Romney campaign.

Rutherford said the allegations are completely false. He said an independent investigation by his office would clear his name, and he accused Rauner of being behind the accusations in an attempt to undermine Rutherford’s campaign. Rauner has denied the allegation.

Michalowski submitted a letter of resignation to Rutherford’s office last week.

In rejecting the accusations, Rutherford pointed to Michalowski’s history of financial troubles. Public records show Michalowski and his wife - who are in the process of divorcing - filed for bankruptcy in November 2011, claiming assets of $295,000 and liabilities of $642,000. A judgment of foreclosure and sale was entered in October against Michalowski’s Chicago condo.

Rutherford said Michalowski’s attorney was linked to Rauner’s campaign and had solicited a $300,000 payout from Rutherford to "walk away and keep it under wraps." Rutherford, a former state lawmaker, was elected to the treasurer’s office in 2010.

Michalowski said his motivation is neither financial nor political. His attorney Christine Svenson said the alleged issues had been ongoing.
"He can say whatever he wants," Svenson said of Rutherford. "It doesn’t change anything from my perspective. My client came to me with issues concerning his employment at the treasurer’s office. Those issues had been going for a long time."