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.