The government told the court it intended to retry the case.
The jurors deliberated for 14 days before convicting Blagojevich of lying to investigators in March 2005 about keeping his political activities and government business separate.
He becomes the second straight Illinois governor, and the third of the last five, to be convicted of crimes. Both Blagojevich and his predecessor, George Ryan, were convicted on charges stemming from fundraising activities. Dan Walker, who served as governor in the early 1970s, was convicted of crimes that occurred after he left office.
The jury was deadlocked on the four counts against Blagojevich's brother, Robert, who worked for the former governor as a fundraiser.
Blagojevich, who faces a possible five years in jail, hailed the verdict as proof he "did not let (the people of Illinois) down."
Blagojevich accused the federal government of persecuting him.
"The jury just showed you ... on every count except one ... they could not prove i did anything wrong," Blagojevich said.
The former governor took issue with the one charge on which he was convicted, calling it nebulous, saying the FBI refused to allow him to have a court reporter present during the interview.
Blagojevich took federal prosecutors to task over violent crime in Chicago, saying that's where their resources should be targeted rather than wasting "tens of millions of dollars of taxpayer money to persecute my family."
Blagojevich said the verdict shows the government was unable to prove its case, even though the defense rested without calling a single witness.
Robert Blagojevich said after the court session he was an "innocent target of the federal government." He said if he is retried, he will put up a vigorous defense. It was unclear whether he was included when the prosecution said it planned to retry the former governor.
Robert Blagojevich, ruling out any type of plea bargain "because I'm not guilty of anything," called the experience "surreal" and said he felt bad about his brother's conviction.
U.S. Attorney Patrick Fitzgerald said he intends to retry the case and would not comment beyond thanking the jury for its service.
Earlier in the day, the jurors asked U.S. District Judge James Zagel for a copy of their oath and instructions on how to fill out the verdict forms if they could not agree.
Zagel agreed to provide the oath and told jurors to put a statement at the top of the verdict forms for those on which they were deadlocked and to sign the forms but not to indicate how they had voted.
The former governor was accused of trying to use his office for personal enrichment and campaign contributions. Among the accusations is that he tried to sell the U.S. Senate seat vacated by President Barack Obama to the highest bidder.
Following his indictment, Blagojevich was impeached and became the first sitting governor kicked out of office in the state.
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