So this is how a pharmaceutical company bribers doctors and hospitals to approve and pay for certain drugs. They make contributions to a doctor's private foundation. The doctor invests it with a crooked businessman in the hopes of a big payoff.
The Chicago Sun Times has the story. But they have no idea what is really going on. The pharmaceutical companies had no intention of investing in the doctor's research. This was a payoff. Pure and simple? Why are we paying 17% of GDP for healthcare? Because of these types of scams.
While on the county payroll, a top urologist at Cook County Hospital solicited nearly $1 million from drug companies over the last decade for his private foundation.
Dr. Paul S. Ray's pitch was that the money would go toward medical research and education.
Dr. Paul S. Ray has been granted immunity from prosecution to testify against Tony Rezko in a still-pending criminal case. (Courtesy)
But most of the money hasn't gone to health care at all. Instead, Ray invested it -- mostly in Tony Rezko.
Rezko is the convicted influence-peddler who had been a prodigious fund-raiser for politicians including Sen. Barack Obama, Gov. Blagojevich and the late Cook County Board President John Stroger, the ultimate boss of the county hospitals.
Ray had long worked with Stroger's godson, Orlando Jones, a top administrator at Cook County Hospital who became Stroger's chief of staff. Jones eventually left county government for a job with Rezko. Last September, after he had been questioned by the FBI, Jones committed suicide.
Ray set up the Paul S. Ray Urology Education and Research Foundation 16 years ago. It began investing with Rezko's companies in 2002, according to reports Ray filed with the Internal Revenue Service. The foundation invested $500,000 with Rezko Concessions, which operated Panda Express and Papa John's Pizza restaurants. It also put $100,000 into a proposed housing development Rezko unsuccessfully sought to build on a 62-acre site along the Chicago River in the South Loop.
Ray, 63, of Chicago, also invested his own money with Rezko, spending millions to buy real estate and Papa John's Pizza restaurants from Rezko.
Ray's Rezko deals didn't turn out well:
• • Ray's foundation appears to have lost the $500,000 it invested with Rezko Concessions -- nearly half of the foundation's assets. But the foundation apparently got back the $100,000 invested in Rezko's failed South Loop development.
• • Ray is battling lawsuits over two deals with Rezko. One was filed by Jabir Muhammad, a son of Nation of Islam founder Elijah Muhammad, claiming Rezko and Ray fraudulently took ownership of the South Side mansion where Muhammad lives. The other involves a $646,949 loan Ray allegedly got from a Rezko associate, Elie Maloof, to buy the Papa John's restaurants that Rezko owned in Wisconsin.
• • Ray's purchase of those restaurants is part of a second, still-pending criminal case against Rezko. Federal prosecutors say Rezko engaged in a conspiracy so Ray could buy the Papa John's stores in Wisconsin. Ray -- who has not been charged -- has been granted immunity from prosecution to testify against Rezko.
Sources say Ray has lost at least $3 million on his deals with Rezko. After 25 years, Ray resigned June 30 as chief urologist for the county's hospitals, including Stroger Hospital, which replaced Cook County Hospital. Ray's attorney, Thomas A. Durkin, declined to comment.
Cook County officials did not answer questions about Ray -- including whether he had permission to set up the foundation that he once ran from his county office, whether the foundation did studies or research on county patients and why the foundation paid Jones an $8,319 consulting fee in 2002 while Jones was John Stroger's chief of staff.
GlaxoSmithKline, the pharmaceutical giant, has been the biggest supporter of Ray's foundation, giving more than $420,000 since 1998. A GlaxoSmithKline spokesman said the company paid Ray's foundation and the county hospital to conduct clinical research.
Ray's foundation has taken in more than $1.2 million since 1998 and spent $583,000. The biggest expense: more than $160,000 for travel, conferences and meetings. The foundation also reported spending $26,000 on unspecified "contracted services" and $25,799 on "recruiting fees/medical study.'' Much of the other money went for computers and office supplies, Ray told the IRS.
Ray was one of the people Rezko tried to get Blagojevich to appoint to the Illinois Health Facilities Planning Board, the state agency that must approve major medical construction projects.
Last summer, Ray landed in the national spotlight when Obama, seeking to distance himself from Rezko, gave to charity $6,000 that Ray had contributed to Obama's U.S. Senate campaign.