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FBI investigates county fraud

Thursday, January 06, 2005
Chicago Sun-Times
by ABDON M. PALLASCH ,STEVE PATTERSON

A federal grand jury is probing a contract the Cook County Board awarded to a politically connected company four years ago.

Former Cook County Hospital Director Ruth Rothstein met with the FBI and the U.S. attorney's office, and County Commissioner Joseph Mario Moreno has been subpoenaed to answer questions from them next month. At least one other Cook County employee has been interviewed, as have other people connected with the contract.

Commissioners voted in 2000 to award a $49 million contract for radiology services at the new Stroger Hospital -- then still under construction -- to DD Industries, a joint venture of Siemens Medical Systems and Faustech Industries.

Faustech President Faust Villazan had contributed to the campaigns of Moreno, commissioners Roberto Maldonado and Deborah Sims, and County Board President John Stroger. Villazan had taken Maldonado to dinner and golfed with Moreno.

General Electric, which lost the bid to DD, filed a federal suit against the county, saying it violated its own bidding procedures and let DD cheat to get the winning bid.

Arranging access

A federal magistrate agreed, ruling Faustech -- which had no experience in radiology -- appeared not to be a legitimate minority partner in the deal, but rather just a facilitator to arrange "access to county officials." Magistrate Gerladine Soat Brown found there had been fraud in the awarding of the contract.

County commissioners canceled the contract with DD and awarded it to GE.

Maldonado said Wednesday he had not been contacted by federal authorities and knew nothing about the investigation.

He and Moreno have both said they did nothing to advance the contract and merely voted for it as one of many that day.

The revelation of a federal investigation came from Stroger, who let it slip during Wednesday's County Board meeting as he admonished Commissioner Tony Peraica not to criticize Digby's Security Service for a contract the Sun-Times has raised questions about.

Digby -- run by a family that has given thousands to Stroger's campaign -- got the contract even though it was not the lowest bidder for the work.

Stroger said federal agents began digging in response to "accusations" made by some commissioners about "some things we did a certain time ago." County employees or officials "may or may not have" done something improper or illegal, Stroger said, but he cautioned his colleagues to watch what they say.

Stroger said no one can "say they bought me a lunch and got a million-dollar contract," urging other commissioners to "be careful what you say because these guys [FBI agents] are out to make a living and don't care who they burn."

Don't talk too much

Those who say too much could cause agents to "think you're involved deeper than you are."

Stroger said Rothstein -- who retired last year after years as the county health director -- was recently interviewed by federal agents, though "she probably didn't know any more than what they were telling her."

"She met informally and voluntarily with representatives of the U.S. attorney's office," said her attorney, Jim Montana. "She was not subpoenaed. She is not under investigation. We sat down with them for a couple of hours in my office. They asked her questions about the Siemens contract. She answered them. That's the end of it."

Moreno did receive a federal grand jury subpoena "like many other commissioners, I'm sure," he said. They apparently want to talk to him about his relationship with Villazan, which he said is not all that close. Villazan served on his campaign committee when Moreno ran for mayor of Cicero and donated money to his campaign.

It is unclear why the investigation is coming to a head now, four years later, and whether the grand jury is looking at other allegations of shady contracts, kickbacks or influence-peddling that circulate routinely in Cook County government, especially at the hospital.

Two of the three people the Sun-Times spoke with who had been interviewed by federal investigators said all the questions had been about the Siemens-Faustech contract. The third said the conversation branched into fresher allegations of contract bid-rigging.

Two years ago, agents in trademark trench coats crashed a County Board meeting, whistling board members and their staff out one-by-one to question them in a separate ghost payrolling investigation.

 

 



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