CHICAGO - Former Chicago-based Bear Stearns & Co. public finance banker P. Nicholas Hurtgen faces prison time after pleading guilty yesterday to aiding in the shakedown of a suburban hospital as it sought Illinois regulatory approval for its construction projects.
The plea agreement was entered yesterday before U.S. District Court for the Northern District of Illinois Eastern Division Judge John F. Grady. Hurtgen's trial was set to start March 9.
The plea brings to a close the pay-to-pay case that is part of U.S. Attorney for the Northern District of Illinois Patrick Fitzgerald's much wider probe of state corruption under former Gov. Rod Blagojevich known as Operation Board Games.
It also raises questions over what information Hurtgen might have for prosecutors in their probe of Blagojevich or others ahead of an expected spring indictment on alleged pay-to-play schemes undertaken to build his campaign coffers.
Federal authorities arrested Blagojevich in December on corruption charges including the allegation that he sought to benefit from his power to name President Obama's senate replacement. As part of the plea, Hurtgen agrees to cooperate with prosecutors and his sentencing was postponed until after his cooperation is completed.
In the hospital case that was the subject of the plea agreement, Hurtgen admitted to pressuring officials at Edward Hospital in Naperville, Ill., to use Kiferbaum Construction Co., in exchange for regulatory approval for a new hospital and an office building.
Illinois businessman Stuart Levine - who at the time in late 2003 and early 2004 was vice chairman of the Illinois Health Facilities Planning Board which oversees the state's certificate of need program - orchestrated the scheme. Levine and Jacob Kiferbaum previously pled guilty to various charges in the case.
Hurtgen "assisted the abuse of Levine's official position by telling representatives of Edward Hospital that the Planning Board would approve the CONs for its Plainfield hospital and medical office building if Edward Hospital retained Kiferbaum's business ... and that the planning board would deny Edward Hospital's CON applications if it did not hire Kiferbaum Construction," the plea reads.
The hospital did not hire Kiferbaum and its first application was denied in December 2003. In a conversation with Edward's chief executive officer soon after the vote, Hurtgen told her he could get the planning board to approve the projects if Kiferbaum was hired. For his assistance, Hurtgen asked "that Edward Hospital use Bear Stearns to handle financing for the projects."
The next day Hurtgen set up a meeting at a restaurant and introduced Kiferbaum to the hospital's CEO. Hurtgen and Kiferbaum did not know at the time, but the hospital official was cooperating with federal authorities who recorded that conversation. Pam Meyer Davis is the CEO of Edward, although she is not named in court documents.
Hurtgen told the CEO "that she did not want to know why Levine and Gov. Blagojevich wanted Kiferbaum to get the Edward Hospital construction projects, but advised her that the support for Kiferbaum by Gov. Blagojevich and those surrounding him was 'all about money' for political campaigns," the plea reads.
The hospital still refused and its applications were denied at an April board meeting during which members did approve an application for a new hospital in Crystal Lake from Mercy Hospital, which had hired Kiferbaum.
The federal government first brought the charges against Hurtgen in May 2005 but Grady dismissed the case in March 2007 because the government had failed to specifically allege in its indictments that Hurtgen was aware that Levine was to receive kickbacks.
Hurtgen was re-indicted in late 2007 on six counts of aiding and abetting mail and wire fraud and one count of extortion. He pled guilty to one of the aiding and abetting fraud counts.
Depending on his cooperation, the government would ask for a reduced sentence capped at 22.5 months, according to the plea agreement.