From the Chicago Tribune

Blagojevich gives donors hospital posts
House member's lobbying also raises questions

By Ray Long and Christi Parsons, Tribune staff reporters. Tribune staff
reporter Ray Gibson contributed to this report
Published July 11, 2004
SPRINGFIELD -- Just days after Gov. Rod Blagojevich received $50,000 in
contributions from two medical specialists last July, he appointed both to
an obscure state health-care construction panel that is now linked to
extortion allegations and is under the scrutiny of federal investigators.
With controversy growing over the activities of the Illinois Health
Facilities Planning Board, several members of Blagojevich's cabinet said
they had been pressured last fall by state Rep. Jack Franks (D-Woodstock)
into urging the panel to back a controversial hospital project in Crystal
Lake that was represented by Franks' law firm.
The Illinois Governmental Ethics Act bars lawmakers from attempting to
influence state agencies in cases where they have an economic interest.
Franks said he did nothing wrong.
The revelations about Franks and the campaign gifts to Blagojevich raised
new questions about the operations of the panel and its close-knit
membership of health-care insiders empowered to decide the fate of medical
expansion projects, worth hundreds of millions of dollars, across the state.
Blagojevich overhauled the nine-member panel last year, appointing several
new members and reappointing a handful of holdovers to new terms. Among the
newcomers were Kankakee neurosurgeon Michel Malek and Winnetka podiatrist
Fortunee Massuda, both named by the governor on Aug. 12.
On the same day, Blagojevich also appointed to the board Danalynn Rice, an
arbitrator for the Service Employees International Union. The union, with
donations totaling more than $822,000, represented his biggest contributor
during his gubernatorial campaign.
Only 18 days earlier--on July 25--Malek had given Blagojevich $25,000, as
did the Chicago-based Foot & Ankle Clinics of America, which Massuda runs,
state records show.
At the time, Massuda also managed the clinic at the William M. Scholl
College of Podiatric Medicine, which is owned by a North Chicago medical
school also entwined in the investigation of alleged extortion linked to the
hospital panel.
Blagojevich's aides said there was no connection between the contributions
and appointments.
"There's no connection whatsoever, and that's by design," said Cheryle
Jackson, the governor's press secretary. "Campaign activities are separate
from government activities."
Malek said the timing was a coincidence, and he was unaware that
appointments were being considered when the donation was made. He said he
regularly donates to religious and political causes.
While records show Malek has made contributions to candidates for federal
office, the electronic database of the Illinois State Board of Elections,
which lists all contributions over $250 to state and many local candidates
over the last decade, reflects only one donation by Malek. That is the
$25,000 check to Blagojevich last year.
"I do not look at any contribution as an investment," Malek said. "I never
ask anything in return, nor should anybody. I will not do anything on the
board that is a conflict of interest."
Massuda did not respond to several requests for comment.
The hospital planning board has come under intense scrutiny since an
executive of Edward Hospital in Naperville secretly tape-recorded a meeting
with Deerfield contractor Jacob Kiferbaum early this year as part of a
federal investigation, according to sources familiar with the probe.
Edward Hospital executives later filed a sealed whistle-blower lawsuit in
federal court alleging extortion attempts by Kiferbaum and a Chicago
financier, Nicholas Hurtgen, a senior managing director of Bear Stearns &
Co., sources said.
The hospital was seeking board approval to build a hospital in Plainfield,
and the suit alleges that hospital officials were told the board would
reject their application unless Bear Stearns was used to finance the project
and Kiferbaum's business was used to build it, sources said.
Kiferbaum recently resigned from the board of Rosalind Franklin University
of Medicine and Science in North Chicago, where officials have acknowledged
receiving a federal grand jury subpoena and a warning from federal agents
that they may have been a victim of fraud.
Another Rosalind Franklin board member who resigned last month was Stuart
Levine, who also recently stepped down as vice chairman of the hospital
planning board.
Hurtgen's wife, Catherine, has a trust with a minority interest in a Chicago
engineering and architectural firm that also has been a generous contributor
to Blagojevich's campaign fund, recent state and city records showed. The
company, Knight Infrastructure, also has received a variety of state
contracts during Blagojevich's tenure, including one involving the proposed
$30 million showcase trapshooting facility in Downstate Sparta.
One recent hospital planning board decision that has come under scrutiny
involves an attempt by Mercy Health Care Systems of Janesville, Wis., to
build a 70-bed hospital in Crystal Lake. In April, the planning board
approved the $81 million project despite strong opposition from an existing
hospital in Crystal Lake and a recommendation from its staff to reject the
proposal.
Mercy hired Franks' Marengo-based law firm to represent it in the
application process, and Franks had previously acknowledged linking up the
health-care concern with a lobbying firm that employs his former campaign
manager.
At least five state agency directors wrote letters to the planning board
last fall at Franks' request urging favorable consideration for the Crystal
Lake project.
Carol Adams, secretary of the Illinois Department of Human Services, said
Franks pestered her with numerous letters and phone calls to write the
board, even sending her copies of letters that other agency directors had
already written to drive home the message.
"I felt there was a great deal of pressure on me to respond," Adams said.
When Franks discussed the matter with her, Adams said she believed he was
acting in his role as a state representative seeking to push a development
project for his district. Still, she said, when he sent her information
about the project it bore the letterhead of his law firm.
Brian Hamer, director of the Department of Revenue, said Franks "pressed me
hard to send a letter to the planning board supporting the Mercy hospital
project."
"I truly believe that he was calling entirely in his official capacity as a
state legislator," Hamer said.
However, like Adams, Hamer said he received follow-up information from
Franks' law firm.
Letters to the planning board from two other agency directors indicated that
they believed Franks had approached them in his capacity as a lawyer for
Mercy Health Care Systems.
Franks said he was engaged in "absolutely legitimate activity" and never
meant to make the directors feel pressured to support his project. He also
said that when he contacted agency heads, he made it clear that he was
acting as a representative of Mercy.
He said the Blagojevich administration criticism of his actions was an
orchestrated payback for his refusal to side with the governor in his
ongoing state budget battle with House Speaker Michael Madigan (D-Chicago).
"I think this is a politically motivated attack," Franks said. "If you do
not agree with [Blagojevich], he will slam you. He will attack you."
Still, one government watchdog raised concerns about Franks' actions.
"Personally, I think it's in the conflict-of-interest arena," said Cindi
Canary, director of the Illinois Campaign for Political Reform. "As a
lawyer, you need to do everything for your client. But when you're in the
General Assembly and you're also a lawyer, you sometimes may have to refer
cases."
The fact that the directors were confused about "which hat was being worn"
is of special concern, Canary said.
- - -
Illinois Health Facilities Planning Board
The Illinois Health Facilities Planning Board was created in 1974 to
stabilize rising health-care costs by issuing permits thatrequire
health-care companies to justify their projects beforebeginning any major
construction.
VOTING BOARD MEMBERS
Thomas P. Beck (chairman) Appointed 1997
A retired Cook County comptroller who runs a consulting company.
Stuart Levine (vice chairman) Appointed 1996
- Resigned (amid investigations June 9, 2004)
A private investor and major political donor, Levine was an original
shareholder HMO America, which merged with United Health Care.
Annamarie Carey York Appointed Aug. 12, 2003
A consultant to the Kendall Pointe Surgery Center in Aurora.
Dr. Fortunee Massuda Appointed Aug. 12, 2003
Medical director and chief executive officer of Foot & Ankle
Clinics of America, which has 12 locations. She managed the
clinic at the William M. Scholl College of Podiatric Medicine of
the Rosalind Franklin University of Medicine and Science and
serves on the Committee on Economic Development of the
Cook County Board of Commissioners. She is also on staff at
Advocate Illinois Masonic Medical Center.
Pamela Orr Appointed April 8, 2004
Administrator of the William Dawson Nursing Center in Chicago.
Danalynn Rice Appointed Aug. 12, 2003
Arbitrator for Service Employees International Union.
Bernard Weiner Appointed April 19, 2004
Founded Weiner Insurance in 1959 and represents many of the
leading insurance companies in the country.
Dr. Michel Malek Appointed Aug. 12, 2003
A neurosurgeon on staff at Provena St. Joseph Medical
Center in Joliet.
Dr. Imad Almanaseer Appointed August 2003
- Left board (term expired July 1)
Chairman, department of pathology at Advocate Lutheran General Hospital in
Park Ridge.
Chicago Tribune
Copyright © 2004, Chicago Tribune