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.
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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.
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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
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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 ommissioners. 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.
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