Main witness Stuart Levine talks about helping a Chicago firm get a big-money contract with Chicago Public Schools.
Given Levine's testimony today about working behind the scenes to help firms land lucrative contracts with the government, here's some background.
August 25, 2005 Thursday
City schools dragged into federal probe;
Fund-raiser close to gov already named in 2 indictments
BYLINE: Rosalind Rossi
SECTION: NEWS; Pg. 6
LENGTH: 756 words
The Chicago Public Schools and its dental insurer have been dragged into the widening federal corruption probe of Highland Park millionaire Stuart Levine, a top Republican fund-raiser who has held key posts under Gov. Blagojevich.
A federal grand jury has asked CPS to produce nine years of contracts and other records -- including the front and back of checks, all e-mail exchanges and all handwritten notes -- involving CPS dental insurer CompBenefits, the Chicago Sun-Times has learned.
Levine once did consulting work for CompBenefits and, as a state teachers pension board member, voted to invest $50 million in a firm that partly owns CompBenefits.
Asked about the wide-ranging CPS subpoena, Chicago School Board President Michael Scott said: "These guys are asking for everything everywhere, so it doesn't surprise me. . . . I am not alarmed because [Chicago Public Schools CEO Arne Duncan] is honest, I'm honest, and if somebody is doing something wrong, we ought to put them in jail."
Issued in June, the subpoena asks for CompBenefits records back to January 1996, the first year of Mayor Daley's Chicago schools takeover. It was obtained by Assistant U.S. Attorney Kaarina Salovaara, one of several prosecutors investigating Levine.
Levine, 59, has been named in two federal indictments alleging multimillion-dollar kickback and shakedown schemes involving his position as a board member of the Illinois Health Facilities Planning Board, the Chicago Medical School and the Teachers Retirement System.
But the latest subpoena indicates the probe is taking yet another twist, delving into the world of Chicago Public Schools, dental insurance and Levine's work for CompBenefits. CPS currently is paying CompBenefits up to $15 million for a 30-month DMO contract covering 22,000 CPS employees.
CompBenefits also provides dental insurance to 345,000 state employees, retirees and their families in a deal worth $2.6 million this fiscal year alone. State officials would not say Wednesday if their CompBenefits records have been subpoenaed.
Judith Herron, CompBenefits' senior vice president of marketing, confirmed Wednesday via e-mail that CompBenefits had a "contractual business relationship" with Levine, but refused to explain it or say when he was employed.
CompBenefits is "cooperating fully" with the FBI and the U.S. attorney's office and is not a target of the investigation, Herron said. And, she said, "CompBenefits has determined that it has not been a victim of Stuart Levine."
However, CompBenefits is owned in part by Golder, Thoma, Cressey, Rauner Inc., or GTCR, a multibillion-dollar private equity investment firm that won a $50 million commitment from the Teachers Retirement System while Levine was sitting on the TRS board of trustees. Levine has since resigned his post with TRS, which invests the pension money of all public school teachers outside Chicago.
'We'll defend it'
TRS had already given GTCR at least $70 million to invest when GTCR made a new $50 million pitch in February 2003, said TRS executive director Jon Bauman.
GTCR sent only one representative, "which is usually not a good idea [because] you don't have somebody to help you out if you get in trouble. He got in trouble," Bauman said.
Levine questioned the representative so aggressively that, rather than approving the deal, the board of trustees decided to table it, Bauman said.
Three months later, in May 2003, three GTCR representatives showed up, including partner Bruce Rauner. This time around, Levine was much more low-key. In fact, Bauman said, he couldn't recall Levine asking any questions, and Levine and other board members approved the $50 million deal with GTCR.
Herron wouldn't disclose the timing of Levine's work for CompBenefits, but Bauman said if that work overlapped with Levine's TRS service, TRS board members would have wanted to know about it at the time of Levine's GTCR vote.
Bauman said he had no idea that Levine had worked for CompBenefits, but he refused to say Wednesday whether records of the GTCR vote had been subpoenaed.
Levine's attorney, William Martin, noted that "there's no charge pending" involving CompBenefits or CPS, but if one arises, "we'll defend it."
Levine, an attorney and former HMO magnate, has given more than $1.6 million to mostly Republican state politicians since 1993. He was a Republican appointee to the Illinois Facilities Planning and TRS boards but was reappointed by Democrat Blagojevich.
Contributing: Dave McKinney, Natasha Korecki