http://www.suntimes.com/output/healt...nws-med30.html
Chicago Medical School investigated by feds, two trustees step down
June 30, 2004
BY LORI RACKL Health Reporter Advertisement
Federal authorities are investigating alleged financial wrongdoing at a North Chicago medical school, according to a source familiar with the probe.
Rosalind Franklin University of Medicine and Science, which includes the Chicago Medical School, acknowledged Tuesday it has received a grand jury subpoena and that two of its trustees, Jacob Kiferbaum and Stuart Levine, have resigned.
Details of the investigation were not known. But the probe started around the same time that a federal whistleblower suit accused Kiferbaum and Levine of schemes involving shakedowns and kickbacks to get hospital projects approved.
That suit, filed last month by Edward Hospital executives, claims approval from the state Health Facilities Planning Board hinged on whether hospitals were willing to do business with Kiferbaum's construction firm and arrange financing through Bear Stearns & Co. Inc. Levine was the planning board's vice chairman until he resigned earlier this month.
In the case of the medical school, Kiferbaum sat on the university's board of trustees while his Deerfield construction company snared contracts to build a massive health sciences building and student housing on campus.
Faculty members, speaking on the condition of anonymity, said Kiferbaum's role as both the university's trustee and contractor smacked of conflict of interest. The organization that accredits medical schools states that the "governing board responsible for oversight of the medical school must be composed of persons who have no personal or pecuniary interest or other conflict of interest in the operation of the school, its associated hospitals, or any related enterprises."
The Kiferbaum construction projects at the university were paid with $57.5 million in bonds issued by the state in 2001 and 2003. Records show that Bear Stearns was tapped to be the underwriter for both deals. Nicholas Hurtgen, who runs Bear Stearns' Chicago office, is also named in the whistlebowler suit.
The lawsuit alleges that in January, a Bear Stearns executive claimed Kiferbaum had arranged to have Bear Stearns finance the medical school's construction projects.
A spokesman for the medical school declined to elaborate on the nature of the feds' investigation. The university released a statement saying "the school may have been victimized" and that it "is cooperating fully with this federal inquiry."
Earlier this month, the Chicago Medical School was put on probation by the organization that accredits medical schools in North America. A school spokesman said the probationary status has nothing to do with the recently launched criminal investigation.
Contributing: Chris Fusco, Steve Warmbir, Tim Novak