Probe looks at consultant's pay

From the Chicago Sun-times

Probe looks at consultant's pay
July 26, 2004
BY CHRIS FUSCO AND LORI RACKL Staff Reporters
Republican businessman John E. Glennon has made a lot of money off DuPage
County, but taxpayers don't know the half of it.
His company, North American Capital Opportunities, has been paid $288,000
for county lobbying and financial consulting work since 2000, records show.
On top of that, Glennon has raked in at least $105,000 in previously unknown
payments -- cash that came out of pots of money he helped the county borrow
for road projects and new election equipment, among other things.The payments, made directly out of bond proceeds with virtually no
accounting to taxpayers, are now part of a larger inquiry by the county's
auditor. They raise questions not only about how much money consultants,
lawyers and others who work on bond deals have taken in, but also about
whether Glennon was being paid twice to do the same job.
In the county's most recent bond deal, for example, Glennon made $20,000 as
a financial adviser, or "F.A." -- a position that a former county official
said was unnecessary, especially given that Glennon already was being paid
under his county contract.
"Did we need an F.A.? Like I need a third leg," said the official, who spoke
on condition of anonymity. "But we paid an F.A."
An attorney for Glennon declined to comment, standing by DuPage County Board
Chairman Robert Schillerstrom's statement that Glennon deserved everything
he got because he put in extra work to close out borrowing deals.
At the same time, Schillerstrom acknowledges DuPage needs to bring Glennon's
payments under one umbrella.
"I'm not absolutely sure how he got paid, to be quite frank," Schillerstrom
said. "In the future, what we're going to be doing is having a straight-up
contract approved by the county board. I agree that's a better way of doing
it."
The $105,000 paid to Glennon has been a secret because county officials
didn't release records showing how much was made by him and other players
involved in borrowing deals. The county provided that information -- the
kind of detailed cost breakdowns routinely disclosed by the State of
Illinois and the City of Chicago -- only after repeated inquiries by the
Chicago Sun-Times. Records for two bond sales remain missing.
"It's taxpayer money. And it's buried, quite honestly," said county auditor
Jim Rasins, who has begun an examination of the payouts from all borrowing
deals authorized by the county board since 2001. "Because of the amount of
money involved with these bond issuances, we want to determine where the
proceeds went."
Glennon, 52, of Lake Forest, once chaired former Gov. George Ryan's campaign
fund and is a lobbyist for companies run by Chicago Blackhawks owner Bill
Wirtz. He headed a task force that oversaw Ryan's multibillion-dollar
Illinois FIRST program for road and other construction improvements. Before
creating North American Capital Opportunities, he worked for investment
banking companies including Lehman Brothers.
Link to hospital scandalIn one of the DuPage borrowing deals in which Glennon got cash that
previously was unknown, the lead underwriter was Bear Stearns & Co. The
investment banking firm is a player in an evolving state hospital
construction scandal under investigation by federal authorities.
Records of possible payments to Glennon for two other Bear Stearns bond
deals in DuPage remain missing, county officials said.
Glennon recently was fired as a real estate consultant by Rosalind Franklin
University of Medicine & Science, the former Finch University of Health
Sciences/Chicago Medical School, which was told by the feds it might be a
victim of fraud. He has not been accused of wrongdoing.
Glennon has ties to two people who recently resigned from the North Chicago
medical school's board: Stuart Levine and Jacob Kiferbaum. They're both
defendants in a whistleblower lawsuit filed in May by executives with Edward
Hospital in Naperville. The suit accuses them of being involved in a state
hospital construction "kickback" scheme.
Last year, Glennon arranged meetings between Levine, Kiferbaum and officials
with the DuPage Technology Park, for which Glennon also has been a
consultant.
While Schillerstrom said he's concerned about Glennon's dismissal from the
medical school, he has no plans to cancel Glennon's two contracts with the
county this year worth $145,000 for lobbying and financial consulting.
Services neededSchillerstrom said the county brought in Glennon as a consultant because its
infrastructure needed upgrading. Borrowing money, the chairman said, was the
best way to tackle big-ticket projects without raising property taxes.
"We hadn't done any bond deals in a while," he said. "We brought in John to
be our agent to make sure the underwriters, the lawyers and the people who
would do the work for us, that the costs stay in line."
In the first round of major borrowing deals, Glennon tapped Bear Stearns and
the head of its Chicago public finance team, Nicholas Hurtgen, after Merrill
Lynch dropped out. Hurtgen resigned from Bear Stearns this month in the wake
of the whistleblower lawsuit alleging the hospital construction "kickback"
scheme. Like Levine and Kiferbaum, Hurtgen has been named a defendant in
that case.
Glennon and Hurtgen were among the financial minds hammering out plans for a
$131 million bond sale for DuPage road construction projects in April 2001.
Glennon already had been paid $13,400 by the county as a consultant, but he
got $25,000 out of the bond proceeds "for professional advisory services."
That started a trend of Glennon drawing paychecks from both bond proceeds
and his county contracts.
"My understanding is that in all the payouts that were made on all of this
stuff, all kinds of lawyers were involved, and everything was appropriately
handled," Schillerstrom said.
Some of Schillerstrom's critics question that.
"I think the DuPage County Board members ought to start to ask some
questions and perhaps even be talking to the DuPage County state's
attorney," said Woodridge Mayor William Murphy, a member of the DuPage Water
Commission, which once rebuffed an effort by Schillerstrom to make Glennon
its borrowing adviser.
Other DuPage businessThe county board chairman has been more successful in helping Glennon land
other government consulting work in DuPage.
At the DuPage Airport, Glennon came on the scene in late 2002 as the airport
authority was in the midst of refinancing about $23 million in debt.
"Mr. Glennon just showed up and said he was going to be involved with us as
a broker [on the deal]," recalled Duane Gengler, who was chairman of the
airport board at the time. "I mentioned it to Mr. Schillerstrom during a
private meeting and told him it would cost us a lot more to use Mr. Glennon
as a broker. Mr. Schillerstrom said, 'Use him as a consultant because it's
not as expensive.' "
Schillerstrom denies forcing Glennon on any government authority.
"Especially my dealings with the airport authority," he said. "I want them
to run the very best airport they can, and I want them off the tax rolls in
two or three years."
This isn't the first time Glennon's contracts have been called into
question.
In 2001, Illinois gambling regulators fined Empress Casino Joliet Corp.
$95,000 for entering into a contract that would give Glennon a $1.5 million
success fee if the Empress was sold. The contract wasn't reported to
regulators and didn't specify Glennon needed to do anything to get the fee
-- a violation of Illinois Gaming Board rules.
Glennon never has been accused of any criminal wrongdoing stemming from that
contract.

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DUPAGE COUNTY'S $440,000 MAN

At the same time John Glennon had contracts with DuPage County for financial
consulting work, he also was getting paid out of pots of money he helped the
county borrow.
Above is a breakdown of the $282,415 that Glennon's company, North American
Capital Opportunities, has taken in for lobbying and financial consulting
work through July 16.
The county provided this information after a Freedom of Information Act
request by the Chicago Sun-Times, but it took repeated inquiries before
DuPage disclosed "separate payments" Glennon "may have" gotten for bond
work.
Records for two other deals where Glennon might have been paid still can't
be found. Below are the previously undisclosed payments that the county did
find:Borrowing deal: Payment to Glennon
$131 million for road construction (2001): $25,000
$55 million for courthouse construction (2001): $20,000
$26 million for drainage work (2001): $15,000
$29 million for refinancing (2001): $25,000
$18.5 million for county jail (2002): Records not found
$27 million for drainage work (2002): Records not found
$9 million for refinancing (2003): $20,000
Total: $105,000Besides his work for the county board, Glennon since 2001 also has done
consulting for other agencies affiliated with DuPage County government:
DuPage Technology Park: $27,559
DuPage Airport Authority: $25,000Known payments to Glennon since 2000: $439,974
SOURCE: DuPage County records