Former Bear Stearns Banker Pleads Guilty to Fraud Charges

A former Bear, Stearns & Co. municipal banker has admitted taking part in a plot to defraud a hospital financing plan that was uncovered as part of a large investigation into government corruption in Illinois.

P. Nicholas Hurtgen pleaded guilty to a single charge of aiding and abetting a scheme to defraud the state’s health facilities planning board, which was considering whether to pay for expansion of a hospital in Chicago.

Hurtgen admitted that he and others pressured officials at Edward Hospital into hiring a particular construction firm for the expansion work or else state officials would decline funding for the project. Hurtgen also pressured the hospital into using Bear Stearns, which has since been acquired by JPMorgan Chase & Co., to fund the planned hospital expansion.

The investigation into the fraud, dubbed “Operation Board Games,” involved former Illinois Gov. Rod Blagojevich, who was arrested in December for his role in the scheme and also allegations that Blagojevich attempted to extort money in exchange for an appointment to replace President Barack Obama, who was leaving behind a seat in the state’s senate.

As part of a plea agreement reached with federal prosecutors, Hurtgen agreed to cooperate with prosecutors in exchange for a recommended prison sentence of less than two years.

Hurtgen resigned from Bear Stearns in July 2004 and was indicted in 2005. He was previously a top aide to former Wisconsin Governor Tommy Thompson.

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