Thursday, September 10, 2009

Pay-For-Play

The Wisconsin Supreme Court accepted the consent revocation of a lawyer convicted of wire fraud. The lawyer had been a senior managing director of Bear Stearns. The court recites the underlying facts:

The facts from the indictment are complicated and will be only briefly summarized by this court.  Attorney Hurtgen was a senior managing director in the Chicago office of Bear Stearns & Co. ("Bear Stearns"), an investment bank that did business with Edward Hospital.  In December 2007 Attorney Hurtgen was indicted in the U.S. District Court for the Northern District of Illinois on three counts of mail fraud, three counts of wire fraud and one count of extortion in connection with a "pay to play" scheme involving medical facility construction projects in Illinois.  Two other individuals, Stuart Levine, a member of the Illinois Planning Board, and Jacob Kiferbaum, owner and operator of Kiferbaum Construction, were also indicted in connection with the same scheme.  The indictment indicates that Attorney Hurtgen sought to arrange the financing of a proposed Plainfield hospital and medical center for Edward Hospital.

The indictment alleges that between early 2001 through at least June 2004, the three men conspired to defraud Chicago Medical School, the Planning Board, and the State of Illinois, among others, in connection with four construction projects.

According to the indictment, Levine, Kiferbaum, and Attorney Hurtgen agreed they would use Levine's position on the Planning Board to try to force Edward Hospital to hire Kiferbaum's company to build the proposed $90 million hospital and a $23 million medical office building in Plainfield.  The plan was to tell Edward Hospital representatives that the Planning Board would not approve the projects unless they hired Kiferbaum to build the projects.  Attorney Hurtgen assisted in the scheme because he wanted his employer, Bear Stearns, to receive the financing work for the new Edward Hospital.

According to the indictment, Attorney Hurtgen agreed to introduce Kiferbaum to the CEO of Edward Hospital.  Kiferbaum understood that Levine would direct the CEO to provide him with a kickback.  According to the indictment, in mid-December 2003, Attorney Hurtgen called Edward Hospital's CEO and said if the hospital wanted to have certain permits approved, it should postpone its application before the Planning Board on December 17, 2003, to allow time to hire Kiferbaum.  Otherwise, the permit would be denied.  On December 23, 2003, Attorney Hurtgen and Kiferbaum met with Edward Hospital's CEO to attempt to force the hiring of Kiferbaum's company.

On January 8, 2004, Attorney Hurtgen met again with the CEO as well as with Edward Hospital's project administrator.  When this meeting occurred, the defendants were unaware that the hospital officials were cooperating with the FBI.  The indictment alleged that in explaining his role in persuading Edward Hospital officials to hire Kiferbaum's company, Attorney Hurtgen said that Bear Stearns would finance the hospital if it was approved.  During the January meeting, the hospital's CEO requested proof that the threats and promises were real.  Attorney Hurtgen said he might be able to arrange a situation in which Levine would "inadvertently" bump into the CEO and Attorney Hurtgen.  After further discussions, Levine and Attorney Hurtgen went to a restaurant in Deerfield, Illinois, on April 18, 2004, to prove to the CEO that Levine, Attorney Hurtgen, and Kiferbaum were working together and that their threats and promises were real.  Levine and Attorney Hurtgen walked over to the table where Kiferbaum and the CEO were sitting and spoke with them about hiring Kiferbaum.  Attorney Hurtgen later said he told the CEO that it was "all about money" for campaign contributions.

As of the April 21, 2004, Planning Board meeting, Edward Hospital had not hired Kiferbaum.  Levine voted against the project and the Plainfield hospital application was denied. 

The court characterized the conduct as a felonious pay-for-play scheme. (Mike Frisch)

http://lawprofessors.typepad.com/legal_profession/2009/09/the-wisconsin-supreme-court-accepted-the-consent-revocation-of-a-lawyer-convicted-of-wire-fraud-the-lawyer-had-been-a-managi.html

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