From the Tribune:

Insider wore wire while discussing alleged deal

By Jeff Coen and Matt O'Connor, Tribune staff reporters; Tribune staff reporter Jodi Cohen contributed to this report
Published May 11, 2007

As late as last summer, federal authorities allege, longtime friends Edward R. Vrdolyak and indicted political insider Stuart Levine were still talking about dividing a secret payment they had plotted to take from the sale of a Gold Coast building in the fall of 2004.

But by then Levine was cooperating with the government in his own corruption cases and wearing a wire, sources said, an effort that led to Vrdolyak's indictment on fraud and bribery charges Thursday.

Vrdolyak -- a legendary Chicago politician who has long skated while others around him were taken down by federal investigations -- is accused of setting up the crooked deal to generate a kickback with Levine, a figure at the center of what has become known as Operation Board Games.

In 2005, Levine was accused of using his influence on two state boards to enrich himself and friends, and it was a similar arrangement that allegedly snagged Vrdolyak. Levine was on the Chicago Medical School's board of trustees and chairman of its real estate committee in 2002 when the school was looking to sell the former Scholl School of Podiatric Medicine for a condo development.

In announcing the charges, U.S. Atty. Patrick Fitzgerald said Levine went to his friend Vrdolyak to find a buyer that could make them a personal profit.

"Mr. Vrdolyak found a buyer, and then an arrangement was entered into where Mr. Levine would seek to have that buyer approved and steer the board of the Chicago Medical School away from seeking other buyers," Fitzgerald said.

Smithfield Properties Development eventually agreed to buy the property for $15 million and agreed to pay Vrdolyak 10 percent, or $1.5 million, a cut of which would be quietly handed off to Levine, the indictment alleges. Attorneys for Smithfield Development could not be reached for comment Thursday.

Another former Chicago alderman, William Singer, was a consultant on the deal and related by marriage to a principal of the developer. He was not charged in the indictment.

Investigators have said the probe is ongoing. Fitzgerald on Thursday declined to elaborate.

Authorities said that what separates what Vrdolyak and Levine did from a typical finder's fee was the fraudulent way in which it was carried out.

Levine deprived the school of the honest services of one of its officers, engaging in cloaked self-dealing that the board was unaware of. He has pleaded guilty and admitted to the conduct alleged Thursday, prosecutors said.

If Vrdolyak knowingly helped him as alleged, Fitzgerald said, then he aided and abetted the scheme and eventually was to profit from it.

Vrdolyak didn't return telephone calls to his law offices. Vrdolyak's lawyer, Michael Monico, said he was saddened by the indictment of his client and vowed to fight the charges.

"I feel strongly that the allegations in the indictment will not withstand public scrutiny," Monico said. "Mr. Vrdolyak did not engage in a scheme with Levine to defraud the Chicago Medical School, did not pay him any money and did not offer to pay him money."

The school, part of the Rosalind Franklin University of Medicine and Science of North Chicago, has felt cheated by the deal and sued last year, claiming the property was sold for some $9 million below its value.

"From day one, Rosalind Franklin University has worked diligently to assist the authorities investigating this matter," the school said in a statement issued Thursday. "This is an unfortunate series of incidents that occurred under the direction of a former board chairman, in which the university was clearly the victim."

In the fall, Dr. K. Michael Welch, the president and CEO of the school, said Levine had the capability to control the school's direction on such issues. "This was a place that had a board run by a single individual who had control over the board," Welch said.

A federal investigation of Levine -- who had posts on the Illinois Teachers' Retirement System and the Illinois Health Facilities Planning Board -- came to a head in 2005. He was charged with extorting hundreds of thousands of dollars from investment firms trying to do business with the state teachers pension plan and using his role on the hospital oversight board to make money.

By last spring, Levine had agreed to cooperate in those cases and aid federal investigators in their work.

No payment was ever made to Levine in the alleged Vrdolyak deal, investigators said. His cooperation became public with a Tribune story in the fall.

The indictment states that the pair talked as late as June 2006 about their arrangement to profit off the Scholl deal.

"What we have seen previously in this investigation, and what we see with this indictment is more of the same," said FBI Special Agent Rob Grant, "a greedy lust for money by people with positions of influence and deceit by people entrusted with the responsibility of providing stewardship and oversight to important institutions that serve the greater good of our community."

----------