By Bob Secter and Jeff Coen, Tribune reporters
7:48 AM CST, January 31, 2014
Back in 1996, Atlanta-based dental insurer CompDent Corp. bought an Illinois competitor called Dental Care Plus Management Corp., a seemingly run-of-the mill business deal that would be long forgotten if it weren't now reverberating through the Republican race for governor.
To mind its new Illinois subsidiary, CompDent retained the services of the departing president of Dental Care Plus, Stuart Levine, a budding political power broker who years later would be a key witness in a federal corruption case that eventually brought down former Gov. Rod Blagojevich.
In the all too bountiful annals of Illinois corruption, few people have proved more thoroughly crooked than Levine, who confessed to using his positions on state hospital and pension boards to extort money for himself and political contributions for Blagojevich. Levine also disclosed he paid bribes to secure lucrative government contracts for CompDent.
Now some in the current field of GOP candidates for governor are trying to draw a dotted line between the notorious political fixer and their rival for the Republican nomination, Bruce Rauner, whose venture capital firm came to be a part owner of CompDent.
But a closer look at the available details suggests any such connection is tenuous at best, starting with this fact: Records show Rauner's firm, GTCR Golder Rauner, took its ownership stake in CompDent in 1999 — three years after CompDent's arrangement with Levine was inked.
At the center of the controversy is Rauner's appearance in May 2003 at a board meeting of the Teachers Retirement System, the overseer of billions of dollars of pension funds for most Illinois teachers. One of the members of the pension panel was Levine, having been appointed to the post by a succession of governors.
GTCR was already managing $39 million in TRS investments, board records show, and Rauner's mission that day was to secure a commitment for an additional $50 million, which he did. Levine and the rest of the board voted to approve the investment.
Now, in the heat of the 2014 governor campaign, two of Rauner's opponents for the nomination are raising questions about the propriety of Rauner seeking money from the pension panel without disclosing the financial relationship Levine had with a GTCR-owned company.
Rauner had a "convicted Blagojevich con man on his payroll … for $25,000 a month while he was hawking business from the Illinois Teachers Retirement System," state Sen. Kirk Dillard, R-Hinsdale, said recently.
Another GOP contender, state Sen. Bill Brady of Bloomington, has called on Rauner to "come clean" about the situation.
But Rauner said he had no idea at the time that Levine had any connection to CompDent, which by then had changed its name to CompBenefits.
"The emphatic answer is absolutely not — I did not," Rauner told the Tribune, adding that he knew nothing about Levine until two years later when criminal allegations against him surfaced in news reports.
Rauner said he made no attempt to understand who the TRS board members were because they served largely as rubber stamps for recommendations made by staffers at the pension agency. "They're sitting behind these big desks half asleep," Rauner said,
The appearance by Rauner at that TRS meeting in May came after the pension panel delayed action on the GTCR money request at a meeting months earlier. Rauner didn't go to that first meeting, but he said the GTCR representative who did blamed the delay on "some guy" on the board who gave him a hard time. However, Rauner said he didn't realize until much later that Levine was the board member.
Between the two meetings, neither he nor anyone else from GTCR reached out to Levine to smooth things over, Rauner said.
Levine acknowledged during his testimony at the 2008 trial of convicted Blagojevich influence peddler Antoin "Tony" Rezko that he had never disclosed any relationship he had with any company getting money from the state, even though it was required. That included his connection to CompDent, from which Levine testified he was making hundreds of thousands of dollars a year.
CompDent signed a purchase agreement for Levine's firm on Feb. 29, 1996, according to a CompDent news release.
Three years later, on June 18, 1999, the company issued another release announcing its merger with TAGTCR Acquisition Inc., a company formed by GTCR and another venture capital firm, TA Associates Inc. At the time, records at the federal Securities and Exchange Commission pegged GTCR's ownership stake in CompDent at just under 45 percent while TA Associates owned a similarly sized share of the company.
Rauner said he has been asked how he could not know about Levine given the lucrative contract he held with a GTCR subsidiary. He said GTCR at the time financed about 400 companies and had an ownership interest in 60 or 70 of them. He sat on the board of eight or nine, and he was not on the CompBenefits board. He said among all the companies there were probably 350 executives at Levine's pay level.
"I would probably know 10 percent of those, maybe," he said.
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