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Builder in Crystal Lake hospital kickback scheme gets 27 months

Kiferbaum was last defendant from investigation that led to Blagojevich’s conviction

Published: Wednesday, July 31, 2013 2:47 p.m. CDT • Updated: Wednesday, July 31, 2013 11:48 p.m. CDT

A federal judge on Wednesday sentenced the contractor who offered a monetary kickback in exchange for the contract to build a new hospital in Crystal Lake to 27 months in prison.

Jacob Kiferbaum was the last defendant to be sentenced as a result of Operation Board Games, the investigation that led to the conviction of former Democratic Gov. Rod Blagojevich.

Kiferbaum, 61, was convicted of one count of attempted extortion for telling the administrator of a Naperville hospital the state would not approve its plans for a new hospital unless his firm was awarded the contract.

He originally faced 22 counts, which included charges stemming from the aborted Crystal Lake hospital, but reached a plea deal with federal prosecutors in 2005. His sentencing had been postponed for eight years in the event that prosecutors needed him to testify, but he was never called to do so.

Janesville, Wis.-based Mercy Health System announced plans in 2003 to build a 70-bed hospital at Route 31 and Three Oaks Road in Crystal Lake.

The Illinois Health Facilities Planning Board, the agency in charge at the time of granting permission to build hospitals in the state, voted 8-0 to issue an intent to deny permission, concluding the facility was too small and too close to other hospitals.

But the board abruptly reversed course in April 2004 and granted permission by one vote. The vote sparked suspicions of corruption – one member voted “present” before fellow board member Stuart Levine went up to him and whispered, “Tony wants this done today.”

“Tony” turned out to be former Blagojevich fundraiser Antoin Rezko, who planned to split a $1.5 million kickback from Kiferbaum with Levine.

Kiferbaum’s defense said in a pre-sentencing filing that it was his cooperation that set off the chain of events that led to Blagojevich’s arrest in 2008. Blagojevich is serving a 14-year prison term for multiple corruption conviction, including his attempt to trade or sell President Barack Obama’s vacated Senate seat.

Mercy officials were never charged with wrongdoing, but a McHenry County judge invalidated the planning board’s approval. Mercy has made subsequent attempts to build a hospital at the Crystal Lake location, which the successor authority, the Illinois Health Facilities and Services Review Board, has denied.

A tearful Kiferbaum apologized to his family and the court Wednesday before the sentence was announced. Kiferbaum, the son of Holocaust survivors, wrote in a six-page letter to U.S. District Judge John F. Grady that his decline began after he built Kiferbaum Construction into a profitable business.

“I didn’t know how to handle that success and the world of the rich, powerful and influential people I found myself in,” he said. “I lost my moral compass and couldn’t properly guide myself in that environment that was worlds away from where and what I had come from.”

Kiferbaum and his attorneys lay much of the blame on Levine, an admitted swindler and longtime drug addict who was indicted at the same time as Kiferbaum. Levine went on to serve as a key government witness and was sentenced last year to 5 1/2 years in prison for money laundering and fraud.

Rezko was sentenced in 2011 to 10 1/2 years for corruption, minus almost four years for time served. The final conviction to come from Operation Board Games was that of former Republican powerbroker William Cellini, who began serving his one-year prison sentence in January.

• The Associated Press contributed to this story.

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