Rich Miller's Capitol Fax gave a heads up to its readers today with the cryptic posting statement that didn't give a clue to its contents:
What followed is a stunning repudiation of Bruce Rauner and his GTCR private equity firm, as a former general counsel of the Illinois Republican Party posted an article titled "Rauner's GTCR linked to nursing home deaths and abuse."
The author of the piece, Chicago attorney Doug Ibendahl, opened with, "Republican gubernatorial candidate Bruce Rauner pledges to run Illinois government 'like a business.' In light of some disturbing facts which have come to light through multiple lawsuits involving Rauner’s former private equity firm, voters had better do their homework into what exactly the catchphrase 'like a business' means to Mr. Rauner.
The well-researched and documented piece by Ibendahl, notes that the Balanced Budget Act of 1997 "significantly changed Medicare’s reimbursement system.
Rauner and GTCR co-founded a company, Trans Healthcare Inc. (THI) in 1998 with Anthony Misitano, THI's CEO to take advantage of the change in the Medicare reimbursement. The purpose of THI was, as Ned Jannotta Jr., a GTCR principal, said at the time, "We thought it would create a lot of distress, and there would be a decline in multiples for assets and a decline in buyers for those assets."
The investments turned out well for Rauner and GTCR, but not so well for Ms. Arlene Townsend who died from neglect and abuse in one of the Rauner-controlled nursing homes, as reported by the Jere Beasley Report. The Townsend family was awarded a $1.1 billion dollar settlement, with $100 million in compensatory damages and $1 billion in punitive damages.
The jury in Polk County, Florida returned the stunning verdict against THI and said the "misconduct" was described as "corporate corruption." The jury also charged that the Rauner-controlled nursing home was short-staffed and under-supplied.
An expert forensic accountant testified during the trail that GTCR Boards of Directors were composed solely of investors and bankers, and did not include a single health care official. From 1999 to 2003, GTCR and THI began acquiring nursing homes with funding from GECC, Ventas and other lenders. THI became one of the nation’s largest health care operators with more than 220 facilities and more than a billion in revenues at that time.
With the number of lawsuits piling up and to protect itself from financial loss, GTCR/THI agreed to sell THMI for a mere $100,000 to Fundamental Long Term Care, Inc. (FLTCI), a shell company that had no employees.
One of the more disturbing findings in the testimony by a forensic accountant, is that THI’s former company leaders engaged in illegal political contributions and then got reimbursed with tax dollars by charging the contributions to the government through Medicare reports.
In effect, THI used Medicare dollars for campaign contributions.
The problems for Rauner are mounting by the day, and the piece by Ibendahl says there is more.
Trans Helathcare Management Inc (THMI) was the management company of the $1 billion GTCR/THI empire and according to the testimony, when Medicare money for residents’ rent flowed into the THI account, GECC and Ventas took their share before monies were available to cover payroll, supplies, utilities, etc. for the hundreds of nursing homes, according to evidence presented at trial.
One of the most damning statement was that, "The case went beyond the nursing home’s extreme negligence that resulted in Townsend’s death and revealed its investors had conspired to run the nursing home chain into insolvency without any regard to residents’ care."
Insider operators and former employees began suing GTCR/THI over poor management, as did nursing home residents and their families because of what was described as abysmal care.
Then there was this: "One of GTCR’s attorneys at Kirkland & Ellis LLP also has this interesting tidbit posted on the firm’s website: “Aegis v. TransHealtcare, Inc., et al. Represented TransHealthcare and GTCR private equity fund in litigation initiated by nursing home landlords in state and federal courts, alleging RICO violations, fraudulent transfer, and other torts. Resolved through settlement."
There was also a case of "Joseph Webb who was a resident at University Place from 1995 to 2005. While there, he suffered multiple injuries including pressure sores or lesions on his right foot, right calf, right heel, coccyx (which required debridement and surgery), buttocks, sacrum, and even his scrotum." Webb was awarded $900 million.
Ibendahl warns, "We’ve detailed only two cases involving GTCR/THI. But there is more."
There will be answers expected from Rauner and he must now abandon the tactic of bullying reporters with his answers, a tactic that didn't work so well for Governor Chris Christie in New Jersey.
Rauner will also be called upon to answer about an investment in Lason Inc., a Detroit-area imaging company. The Chicago Tribune reported GTCR netted a $32 million profit, while investors lost $285 million as a result of systematic accounting fraud, and three top executives went to prison. The newspaper made clear that "neither Rauner nor his partners at the venture firm GTCR were accused of any wrongdoing."
Then there is the unaswered question about Stuart Levine and his relationship with Rauner. Rauner claims he didn't know Levine.
But Greg Hinz of Crain's Chicago Business asks the question: "How can Mr. Rauner be trusted to clean up corrupt Springfield when he won't fully explain how and why Mr. Levine made $25,000 a month trying to get government business for a company owned in part by Mr. Rauner?"
Levine was the ultimate Springfield insider and political fixer who is now a federal felon. He is the corrupt Springfield insider who testified against Springfield power broker William Cellini and Antonin "Tony" Rezko. Levine also wore a wire against former Chicago alderman and ultimate political insider "Fast Eddie" Vrdolyak. It was Levine's undercover work in the case that resulted in Vrdolyak's guilty plea that sent this elusive target to jail.
Rauner can no longer not answer.
Other Allvoices related pieces about Bruce Rauner by John Presta:
Rich Miller's Capitol Fax - This one's gonna sting
Republican News Watch - Rauner’s GTCR linked to nursing home deaths and abuse
Send John Presta an email and your story ideas or suggestions,firstname.lastname@example.org.