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Firm indicted in scheme to get contract at Stroger

Sunday, January 22, 2006
Chicago Tribune
by Robert Becker and Mickey Ciokajlo

A major corporation and two of its employees were indicted in a fraud scheme to win a $49 million Cook County contract, a deal that also involved bribery of a county employee, federal prosecutors alleged Friday.

A grand jury late Thursday handed up indictments against Siemens Medical Solutions USA Inc., a subsidiary of Germany-based Siemens AG, one of its in-house lawyers and a locally based district manager.

The officials allegedly schemed with a minority contractor, Faust Villazan, in setting up a shell company to win the contract for radiology equipment at the then-new Stroger Hospital.

U.S. Atty. Patrick Fitzgerald said Villazan and his company, Faustech Industries Inc., received a flat fee of $500,000 without providing any real service and without sharing in the risks or profits of the deal.

"The joint venture was, in fact, a sham," Fitzgerald said.

The Siemens subsidiary, company lawyer Ellen Roth and Hoffman Estates-based administrator Daniel Desmond were each indicted on one count of wire fraud and mail fraud.

Desmond, 43, of Arlington Heights, was also charged with perjury for allegedly lying about the deal in federal court after a competitor filed a lawsuit to nullify the deal. Roth, 61, of Ridgewood, N.J., was also charged with allegedly lying to FBI agents in 2004.

In September, Villazan and Faustech had been indicted on a bribery charge. Villazan allegedly paid a $20,000 bribe to an employee in the county's contract compliance office to influence the deal. The employee has not been charged. Thursday's superseding indictment added fraud charges against Villazan and Faustech.

Siemens officials and attorneys for the defendants denied any wrongdoing. "We broke no law, and the worst one can say is we were in the wrong place at the wrong time," said Jack Bergen, Siemen's senior vice president for corporate affairs and marketing.

The allegations underlying the indictments were originally brought to light more than five years ago when General Electric, a losing bidder for the radiology contract, filed a successful lawsuit in federal court.

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