From the Chicago Sun-Times

Gov appointee faces $9.5 mil. fraud case
May 10, 2005
BY CHRIS FUSCO, DAVE MCKINNEY, LORI RACKL AND NATASHA KORECKI Staff Reporters

A top fund-raiser for failed Republican gubernatorial nominee Jim Ryan who later was reappointed to key state posts by Gov. Blagojevich, was rousted out of bed early Monday by FBI agents and hauled into court on fraud charges alleging kickbacks, influence-peddling and insider dealing.
All told, Stuart P. Levine, 59, abused his positions on the Illinois Health Facilities Planning Board and the Rosalind Franklin University of Medicine and Science/Chicago Medical School board of trustees to the tune of $9.5 million, federal prosecutors stated in a 64-page indictment.
Charged along with Levine, of Highland Park, were P. Nicholas Hurtgen, 42, and Jacob Kiferbaum, 52, both of Glencoe. Hurtgen, a former executive with Bear Stearns & Co., and Kiferbaum, a construction magnate, took part in the schemes so their companies could obtain multimillion-dollar contracts, the government is alleging. Kiferbaum is cooperating in the investigation, which authorities said is only just beginning.
"It's truly stunning what people will do when motivated by greed and backed by clout," U.S. Attorney Patrick Fitzgerald said. "When you serve on the board of a state . . . it's your job to look out for the citizens of Illinois . . . not to shake down bribes and extort people to steer contracts to your friends."
On two occasions, Levine allegedly leveraged his position on the health facilities board, which oversees hospital and medical office construction in Illinois, to try to route lucrative construction and bond deals to Kiferbaum and Hurtgen in exchange for kickbacks. He used another board position at the Chicago Medical School in North Chicago to skim millions from construction deals given to Kiferbaum.
Thousands donated to governor
The scandal marks the first major criminal charges linked to the Blagojevich administration, which noted it overhauled the health board shortly after it learned of potential wrongdoing last year.
Levine, who has given more than $1.6 million to mostly Republican state politicians since 1993, was re-appointed to the planning board -- as well as the state Teachers' Retirement System board -- at the urging of Blagojevich adviser and fund-raiser Tony Rezko.
"We needed Republicans on the [health] board and wanted to show no repercussions against Jim Ryan's people," Blagojevich spokeswoman Abby Ottenhoff said. "The public should look at how we responded when we became aware of what was going on."
Blagojevich canceled a public appearance in Bolingbrook soon after the indictments became known.
Levine has donated the governor $4,267 worth of free transportation to political fund-raisers -- which is less than what some Republicans vying to replace Blagojevich in 2006 have accepted. They include state Treasurer Judy Baar Topinka ($12,000 from Levine) and DuPage County State's Attorney Joe Birkett ($11,000).
But Hurtgen also has ties to Blagojevich. Bear Stearns was paid more than $8 million to be one of two senior underwriters on a $10 billion state pension bond deal. Knight Infrastructure, an engineering company that once included Hurtgen's wife Catherine as a 3.5 percent owner, has given Blagojevich more than $42,000 in cash and free plane flights.
Fitzgerald would not say whether anyone in the governor's office has been questioned and wouldn't talk about who else is tied to the scheme.
"Stay tuned; there will be more charges in the future," FBI Special Agent in Charge Robert Grant said.
Levine and Hurtgen appeared before U.S. Magistrate Judge Sidney Schenkier. Each was released on $5 million bond.
Levine was placed on home detention with electronic monitoring until he strikes a formal bond deal. Hurtgen was released into the custody of his wife. Neither Hurtgen's attorney, Ronald Safer, nor Levine's attorneys, Marc and William Martin, would comment.
Kiferbaum will appear in court at a later date. Said his attorney, Theodore Poulos: "Jacob Kiferbaum is accepting full responsibility for his conduct."
Besides the three men charged Monday, the indictment identified three others who were part of the schemes, but it did not name them. Several sources identified them as Dr. Robert J. Weinstein, a longtime business associate of Levine's and former president of HMO America, which Levine founded; Republican businessman John Glennon; and Sven Philip-Sorensen, a European businessman who once served on HMO America's board. None was charged with crimes.
The biggest recipient of political cash from Levine was surprised by the government's charges. Former Attorney General Jim Ryan was a classmate of Levine's at the Kent College of Law and still considers him a friend. Levine has given him nearly $900,000 since 1993.
"I'm saddened very much," Ryan said. "If the allegations are true, they don't square with what I know about Stu Levine, but that's what the courts are for.
"He's entitled to the presumption of innocence."
Contributing: Steve Warmbir

THE CASE AGAINST STUART LEVINE, JACOB KIFERBAUM AND P. NICHOLAS HURTGEN
The following allegations come from a 28-count federal indictment against these three men. Three additional unidentified men were mentioned in the indictment but were not charged with crimes. Sources identified them as Dr. Robert J. Weinstein, John Glennon and Sven Philip-Sorensen. None could be reached for comment.
STUART P. LEVINE, 59, OF HIGHLAND PARK
Attorney, former HMO magnate, campaign finance chief for Jim Ryan's failed 2002 gubernatorial campaign, Gov. Blagojevich re-appointee to several state boards and commissions
Positions referenced in the indictment:
Board member, Illinois Health Facilities Planning Board
Board member, Chicago Medical School
Trustee, Northshore Supporting Organization, a charitable trust to fund Chicago Medical School scholarships
Charged with: 19 counts, mail fraud; 4 counts, wire fraud; 2 counts, misapplication of funds; 2 counts, money laundering; 1 count, extortion
P. NICHOLAS HURTGEN, 42, OF GLENCOE
Lawyer, investment banker, top aide to former Wisconsin Gov. Tommy Thompson
Positions referenced in the indictment:
Senior Managing Director, Bear Stearns & Co.'s Chicago office
Charged with: 3 counts, mail fraud; 3 counts, wire fraud; 1 count, extortion
JACOB KIFERBAUM, 52, OF GLENCOE
Architect, construction magnate
Positions referenced in the indictment:
Owner, KCC Group Design + Build (formerly Kiferbaum Construction Corp.)
Board member, Chicago Medical School
Charged with: 16 counts, mail fraud; 3 counts, wire fraud; 2 counts, misapplication of funds; 1 count, extortion

TURNING A MILLION-DOLLAR KICKBACK INTO $6 MILLION
1 Levine had the Northshore Supporting Organization loan $3 million to his company and another $3 million to a firm owned by Dr. Robert J. Weinstein, a medical school board member and business associate of Levine's.
2 Levine had the loans converted into his and Weinstein's names. He donated the loans to the medical school on one condition: the school had to sell them for $1 million to European businessman Sven Philip-Sorensen.
3 Philip-Sorensen bought the loans using $1 million Levine previously got from a Kiferbaum kickback (see Dorm Dollars).
4 The loans were ''gifted'' back to Levine and Weinstein, meaning they were off the hook for the debt.
MED SCHOOL'S COSTLY ADDITION
1 Levine and Kiferbaum in 2001 set the table for Kiferbaum's company to win an $18 million contract to build an addition at Chicago Medical School.
2 Levine told Kiferbaum to pad the cost by $1 million, which would be kicked back to Levine.
3 Levine had Kiferbaum funnel the money through a sham marketing contract with John Glennon, an attorney and CEO of a consulting company.
4 Glennon sent Kiferbaum invoices for $28,000 a month, even though Glennon did no substantial work.
5 Kiferbaum paid Glennon's company $700,000. The rest was lumped in with another kickback paid to Levine.
DORM DOLLARS
1 Levine and Kiferbaum in 2002 made sure Kiferbaum's construction company would get a $22 million contract to build student dorms at Chicago Medical School.
2 Levine told Kiferbaum to jack up the price an extra $1 million, which would be kicked back to Levine.
3 To make the kickback look legitimate, Levine set up a bogus marketing contract between Kiferbaum and European businessman Sven Philip-Sorensen.
4 Philip-Sorensen was paid in two installments -- a check for $628,000 in 2002 and another in $372,000 in 2003 -- even though he did no work.
THE MERCY KILLING
1 Mercy Health System's proposed Crystal Lake hospital looked like it wouldn't be approved by the state Health Facilities Planning Board in late 2003.
2 Levine and Kiferbaum agreed Levine would use his board influence to grease the skids for Mercy, if Kiferbaum got the $49 million construction job.
3 In return, Kiferbaum would give Levine a $1.5 million kickback, which would be paid through a bogus consulting contract to Levine's business associate, Dr. Robert J. Weinstein.
4 Mercy hired Kiferbaum in early 2004. That April, the planning board narrowly approved the project after Levine whispered in the ear of one board member who then changed his vote to yes.
THE EDWARD SHAKEDOWN
1 Edward Hospital in Naperville wanted planning board approval to build a $113 million hospital and medical offices in Plainfield. Levine, Kiferbaum and Hurtgen agreed they would leverage Levine's position to profit.
2 Levine would get a kickback, Kiferbaum would get the construction contract and Hurtgen's company, Bear Stearns, would do the financing.
3 Hurtgen and Kiferbaum met with two Edward executives. Edward's CEO -- who was cooperating with the feds -- wanted proof that hiring Kiferbaum would secure board approval.
4 The CEO was told to go to a Deerfield restaurant in April 2004, where she would bump into Levine by mistake to avoid breaking state ethics laws.
5 At that restaurant, Levine and Hurtgen came over to her table. Levine told her "Kiferbaum is a person upon whom one can rely, and he is a person whose word can be depended on," the indictment states.
6 Edward did not hire Kiferbaum, and the board rejected its hospital plans