From the Chicago Tribune

Blagojevich adviser tied to appointee
Doctor, fundraiser co-owned condos
By Ray Gibson and Crystal Yednak, Tribune staff reporters. Tribune staff
reporters Ray Long and Jane Fritsch contributed to this report
Published July 18, 2004
A Winnetka podiatrist selected by Gov. Rod Blagojevich to a serve on a
powerful state health-care oversight panel is a partner in a real estate
venture with a top Blagojevich fundraiser and counselor who recommended her
appointment.
The podiatrist, Fortunee Massuda, was one of several members appointed by
Blagojevich last year to sit on the Illinois Health Facilities Planning
Board after the governor won legislative approval to overhaulits membership.
Aides to Blagojevich said the appointments were made solely on the basis of
professional credentials.
Massuda's connection to Antoin Rezko, the Blagojevich fundraiser and
adviser, was not publicly disclosed when the governor appointed her to the
board last Aug. 12. In a written statement to the Tribune, Rezko said he
recommended Massuda to the administration "on the basis of my respect for
Dr. Massuda as an outstanding health care professional and a person of great
integrity."
The hospital planning board, which has had the power to approve expansion
projects for medical facilities worth hundreds of millions of dollars a
year, is at the center of an inquiry into possible influence peddling and
extortion set off by a whistle-blower lawsuit filed in federal court by
Edward Hospital in Naperville.
The hospital board controversy has taken on serpentine dimensions in recent
weeks, involving a broad and seemingly disparate cast of institutions and
political insiders. One prominent board member linked to the investigation
resigned last month and Blagojevich has suspended the panel's activities.
Massuda, 51, is the founder and chief executive officer of Foot and Ankle
Clinics of America, a chain with 11 locations in Illinois and Indiana. She
and Rezko also own luxury condominiums worth more than $2 million in Lake
Geneva, Wis., according to government records in Wisconsin and Illinois.
Rezko, a real estate developer and the owner of the Panda Express fast-food
business, is a member of Blagojevich's so-called kitchen cabinet of close
advisers. He has been instrumental in raising hundreds of thousand of
dollars for the governor's campaign fund.
Massuda's clinic chain made a $25,000 contribution to Blagojevich in July
2003, and she was appointed to the board the following month, state campaign
records show.
Cheryle Jackson, a Blagojevich spokeswoman, said the governor's office was
unaware of any real estate venture linking Massuda and Rezko. Jackson said
Massuda had been recommended for the board by Rezko. Royal Martin, an
attorney for Massuda, also said he was unaware of any joint real estate
investment involving his client and Rezko.
Two units in a former Lake Geneva mansion that was converted to condominiums
are owned by a corporation that listed Rezko, Massuda, and a third owner as
partners, according to a 1998 filing with Illinois officials prepared by
Rezko.
Another unit in the complex is in Rezko's name, but in 2002 and 2003, the
property tax bill for the unit was mailed to Massuda's home. Last year,
Massuda paid a delinquent $23,294 tax bill on the property in Rezko's name.
Rezko said the corporation was formed "by us in response to the demands of
the condominium association as we sought to expand our individual homes.
"Neither of us considered this a business relationship, but instead a
solution to technical condominium requirements," he said in the written
statement.
Rezko has donated about $45,000 to Blagojevich's campaign fund. Earlier this
year, he helped underwrite a West Coast fundraising trip for the governor.
He picked up the $14,000 tab for lodging and meals and paid $28,000 to
charter aircraft.
Two of Rezko's former employees have won key spots in the Blagojevich
administration.
Jack Lavin, a former chief financial officer for a Rezko firm, was appointed
by Blagojevich to head the Illinois Department of Economic Opportunity.
Kelly King Dribble, a former vice president for Rezko, was named executive
director of the Illinois Housing Development Authority, which helps finance
affordable housing construction.
Blagojevich revamped the hospital panel last year as part of a broad
restructuring of state boards and commissions. It was one of the key
initiatives of his first year in office.
In addition to Rezko, the administration enlisted the help of a lobbying
firm then run by David Wilhelm, another close Blagojevich adviser, to
recommend members for the board.
A lobbyist with Wilhelm's firm, Wilhelm & Conlon Public Strategies, said he
passed along 15 to 20 names to the administration in June 2003.
Within a month, Wilhelm & Conlon was hired by Edward Hospital to help it win
the board's approval to build a $169 million hospital in Plainfield. Wilhelm
& Conlon continued to represent Edward even after one of its recommended
nominees, Annamarie Carey York, was appointed. When the Edward matter
eventually came up before the board, York was the only member to vote for
it.
Edward's plans to build a new hospital in Plainfield are at the heart of its
whistle-blower lawsuit. The suit, which is under seal, alleges that
Deerfield construction company owner Jacob Kiferbaum told an Edward Hospital
official that the board would reject the Plainfield project unless
Kiferbaum's firm was used to build it, sources said.
The lawsuit also alleges that Stuart Levine, who was then serving as vice
chairman of the hospital planning board, was present when Kiferbaum made the
alleged extortion threat, according to sources.
The Edward lawsuit also alleges that P. Nicholas Hurtgen, then a senior
managing director at the finance firm Bear Stearns & Co., pressured Edward
to use the firm to finance the project, sources said. Hurtgen, 41, resigned
his position at Bear Stearns last week.
Last month, Levine resigned from the hospital panel as well as from his
position as a board member at a North Chicago medical sciences university.
Kiferbaum, too, served on the medical school board until stepping down
recently. His firm built $57.5 million worth of buildings at the school,
whose officials have acknowledged receiving a federal grand jury subpoena
and being informed by federal agents that the institution may have been a
victim of fraud.
Meanwhile, another health-care related issue involving the state has drawn
the attention of federal investigators. A spokeswoman for Health Alliance, a
longtime health insurance provider for state employees, said Friday that
federal agents had questioned officials from the firm. The spokeswoman said
Health Alliance was not being investigated.
Health Alliance and state workers complained after the Blagojevich
administration earlier this year dropped the insurance provider after trying
to rebid the insurance contract. The resulting outcry forced the
administration to extend the state's existing insurance contracts, including
Health Alliance's.
State Sen. Rick Winkel (R-Champaign) said his contacts at Health Alliance
have told him the U.S. attorney's office had contacted the company regarding
irregularities in the bidding process.
Sharon Paul, a spokeswoman for federal prosecutors in the central district,
said she could not confirm or deny the existence of an investigation and a
spokeswoman for the state agency in charge of the insurance contracts said
state officials have not been contacted by authorities.
Copyright © 2004, Chicago Tribune