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The rise and fall of a golden boy
Nick Hurtgen soared as a young Tommy Thompson stalwart, then scored with lucrative bond deals
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Hurtgen shortly after he was indicted on federal corruption charges in Chicago; in happier times, Gov. Thompson ushered at his wedding.
Credit:AP Photo/Brian Kersey

Peter Nicholas Hurtgen entered Wisconsin government fresh out of college in 1987, getting in on the ground floor of Tommy Thompson's extraordinary 14-year tenure in the governor's mansion. Over the course of nearly a decade on Thompson's staff, he rose to become the No. 2 man in the Department of Administration, arguably the most important cabinet office. He left for a plum job in investment banking, specializing in, no surprise here, government bond issues.

A year ago it all came crashing down. Today Hurtgen, 43, stands indicted in Illinois in a complex pay-to-play scheme involving construction and financing for hospital and healthcare facilities. He also stands largely alone, abandoned by the Dairyland politicians and lobbyists whose company he kept.

It was a stunning fall for someone who had once been a financial wunderkind in the Tommy Thompson administration. Hurtgen was "a rainmaker," says Mike McCabe, executive director of the Wisconsin Democracy Campaign. "He played a very critical role in arranging campaign contributions and setting up fund-raisers and making campaign money appear. He's the classic influence peddler."

As the Doyle administration faces its own crisis over alleged fund-raising improprieties, it's worth remembering how powerful the Thompson machine was. Over four elections, Thompson's campaign raised $18 million. Indeed, some people wonder if Hurtgen, facing a gulp-inducing 80 years in prison and $1 million in fines, may yet roll over on his old Wisconsin friends, exposing pay-to-play deals in exchange for a plea bargain from a tough federal prosecutor.

For Democrats and other Thompson critics, the speculation is delicious. They know how tightly Hurtgen was wired into the Thompson machine - from his close relationship to so-called deputy governor James Klauser, to his marriage to Thompson chief fund-raiser Phil Prange's sister (Thompson himself ushered at the wedding). And they know that when Hurtgen jumped to join Bear Stearns, a global investment bank and securities firm, he had extraordinary success securing government contracts in Wisconsin.

Hurtgen generated millions of dollars in fees for Bear Stearns through the Miller Stadium bond issue championed by Thompson; the $100 million Milwaukee County debt refinancing carried out by its county executive and former GOP gubernatorial hopeful Scott Walker; and through the $1.7 billion collateralization of the state's share of the tobacco settlement.

Might Hurtgen's case blow up on Wisconsin Republicans this year, as some Democrats fervently hope, and assure Jim Doyle's re-election? Maybe not. For one thing, Doyle took Hurtgen's money, as did his GOP challenger Mark Green. Then, too, it's possible Nick Hurtgen may yet walk away an innocent man.

A rapid ascent

Nick Hurtgen grew up in La Crosse, grandson of a trucking company magnate and a shirttail relative of lobbying legend William "Uncle Billy" Gerrard. Hurtgen attended the UW-Madison and its law school. Madison lawyer Fred Mohs, a Badger alumnus and former member of the Chi Psi fraternity, got to know Hurtgen, another Chi Psi member, as he made his rapid ascent in Republican politics.

"He was given tasks and he enjoyed accomplishing them well, and then was rewarded with more important tasks," recalls Mohs, a longtime GOP partisan.

While still a law student, Hurtgen went to work for Thompson, then an Elroy state representative and the Assembly minority leader. Next, Donald Stitt, a Republican state senator from Port Washington, hired Hurtgen, whom he describes as "a bright, capable guy who knew what he was doing."

Hurtgen "seemed particularly adept" at helping him develop legislation deregulating Wisconsin securities markets, Stitt recalls. "He worked well with the business community in Milwaukee, particularly with the brokerage community."

Hurtgen's work on Thompson's successful 1986 gubernatorial campaign led to a job in the new administration with Klauser, Thompson's choice for Department of Administration secretary. Hurtgen rose to become deputy secretary.

"Nick was the one you'd go to to do deals," says a GOP source.

Hurtgen was one of a handful of 20-something whiz kids, including the likes of Bill McCoshen and Scott Jensen, who zoomed up the ranks. "He was given a great deal of authority at an unusually young age," says Mohs.

In 1995, Hurtgen joined Bear Stearns, the leading seller of state bonds during Thompson's first two terms. Hurtgen's old connections paid off. At Bear Stearns, Hurtgen helped win a contract to finance the construction of Miller Park - a $147 million package that yielded $2 million in commissions for the investment bank.

Hurtgen rose to senior managing director of Bear Stearns' Chicago office. In the fall of 2002, he was smart enough to realize that Gov. Scott McCallum, who assumed power when Thompson decamped for Washington, was a loser.

In the closing weeks of the campaign, Hurtgen organized a big Chicago fund-raiser for McCallum's Democratic rival, Jim Doyle, which drew other former Thompsonites like McCoshen, who wanted to tie his fortunes to Doyle.

As Democratic strategist Bill Christofferson told the Milwaukee Journal Sentinel: Statehouse players want to tell winning candidates that "I was with you early, or late, or at least before the election."

Straight shooter

Political insiders on both sides of the aisle defend Hurtgen as a straight shooter in his years in Wisconsin. Yes, Bear Stearns got the bulk of state business under Hurtgen, says Stitt, who's now a lobbyist. But Stitt credits Hurtgen's success to his competence rather than to corrupt ties - even when his own securities clients lost out to Bear Stearns. "They gave the state exceptional services at a very competitive price," says Stitt. "It was hard working against him."

Marc Marotta, Gov. Jim Doyle's former Administration secretary and now the head of his reelection campaign, agrees. "In my dealings with Nick, he was always aboveboard. He operated with the utmost integrity, and he and his colleagues at Bear Stearns provided effective service. There was never any suggestion that anything untoward was taking place."

Yet questions dogged Hurtgen, going back to his days in the Thompson administration. In the late 1980s, Marshall Burkes was fired as executive director of the State of Wisconsin Investment Board. Burkes sued, alleging that lobbyist Bill Gerrard obtained SWIB financial backing for clients through pressure brought by Thompson, Klauser and his shirttail relative Hurtgen. Burkes won $450,000 in a pretrial settlement.

Three years after his move to Bear Stearns, a 1997 Milwaukee Journal Sentinel article named Hurtgen among eight members of Thompson's "inner circle." A companion article raised questions about continuing contacts between Hurtgen and the Thompson administration: "When big deals are cut involving state government, they often bear the imprint of the phantom-like Hurtgen, who shuns public attention."

Then, last year, it all fell apart for Nick Hurtgen -not in Wisconsin, but south of the border.

Fraud and extortion alleged

In May 2004, a Chicago Sun-Times story alleged (based on information gleaned from a whistleblower lawsuit) that Hurtgen was involved in a scheme to shake down a hospital that wanted to expand. The story set in motion a federal investigation. Two months later, Bear Stearns fired Hurtgen, and in May 2005, a federal grand jury indicted him, along with two others.

The indictment - brought by U.S. Attorney Patrick Fitzgerald, the same Boy Scout-like prosecutor who investigated the White House-Valerie Plame leak case - outlines a complicated "pay to play" scheme involving hospital construction in Illinois, which is governed by the Illinois Health Facilities Planning Board.

Besides Hurtgen, the indictment named Stuart Levine, a lawyer and businessman who at the time served on the health facilities board, and Jacob Kiferbaum, an architect and construction firm executive who was accused of kicking back money to Levine for his help in landing the Edward Hospital contract.

Compared with Levine, with 28 charges against him, and Kiferbaum, with 22, Hurtgen looks like a small fish in the deal, with seven counts - three counts each of mail fraud and wire fraud and one of extortion.

Kiferbaum pleaded guilty in June 2005 in an agreement that portrays Hurtgen as intimately involved in the shakedown. Yet the indictment stops short of implicating Hurtgen as personally benefiting. Instead, a U.S. attorney's office press release says that "Hurtgen assisted in the scheme because he wanted his employer, Bear Stearns, to receive the financing work from the new Edward Hospital."

Hurtgen's Madison lawyer, Stephen Hurley, has seized on the distinction. A defense motion to throw out Hurtgen's charges, filed in September, contends most of the indictment relates to allegations of public corruption and bribery, "all of which do not involve Hurtgen."

Hurtgen, Hurley insists in his filing, "was unaware of any bribe or improper conduct" and thus shouldn't face any charges. Not so, says Fitzgerald. In a rebuttal to Hurley's motion, the prosecutor argues that Hurtgen was directly involved in warning the hospital's CEO that "Edward Hospital should give the contract to Kiferbaum Construction" if it wanted its project approved.

No deals

When his indictment came down last spring, political observers speculated that Hurtgen might turn around and point fingers at his old Wisconsin pals in a bid to win a favorable deal with Fitzgerald.

Two days after his arrest, Milwaukee Journal Sentinal columnists Cary Spivak and Dan Bice wrote how GOP pols were distancing themselves from Hurtgen. Republican political consultant Brian Christianson piled on. "The Hurtgen caper will spawn new [disclosures] like spring dandelions," Christianson wrote in his WisOpinion.com blog, Free Will. "The question is not whether this becomes a Wisconsin story, it already is. The real question is, which politician's lawn becomes riddled with dandelions once the deals to stay out of jail are proffered?" (The italics are Christianson's.)

So far, those deals haven't emerged. Republican and Democratic sources say they don't see any signs of Wisconsin indictments. "No one seems to be worried about anything," says Stitt.

Some, though, won't talk. "I really don't give interviews anymore," says Klauser, before hanging up. "I think I'll pass," says John Matthews, Thompson's former chief of staff and now an executive at JohnsonDiversey in Racine.

Among those who will talk, Bill McCoshen, now a prominent Madison lobbyist, acknowledges that Hurtgen "might have gotten caught up with the wrong crowd, but Nick's a very smart guy" - too smart, he says, to have knowingly broken the law.

For reformers, though, Hurtgen's story carries symbolic weight as a morality play about Wisconsin's descent from a paragon of clean government to a case study in corruption - an image thrown into sharp relief by Scott Jensen's recent conviction in the legislative caucus scandal.

Shortly after Hurtgen's arrest, Mike McCabe was contacted by FBI agents, "who were generally interested in any thoughts I might have" about possible political corruption in Wisconsin. But the investigators made no mention of Hurtgen, and McCabe says the timing more likely reflects the caucus scandal and state Sen. Brian Burke's fund-raising violations.

"Their interest is very broad," says McCabe of the federal investigators. "They're just generally interested in political corruption in state government in Wisconsin. They talked to me a lot about the scandals that have already broken and what the root causes of those scandals were and what additional problems might still plague the state government."

At one point, federal investigators were reportedly checking out how Bear Stearns won Milwaukee County's bond refinancing - it was not the low bidder - after Hurtgen helped raise money for County Executive Scott Walker. But that probe now appears dormant.

To be sure, incumbent Doyle has also come under fire from critics who link campaign donations to his actions as governor, from the Adelman Travel contract with the state to the moves expanding Indian gaming in Wisconsin.

In an interview well before the indictment of a state official in connection with the Adelman Travel controversy, the governor's campaign chair, Marc Marotta, rejected such reasoning, defending both Doyle and Hurtgen.

"The fact that somebody gives money to the state or to the governor or a legislative candidate has nothing to do with who gets a state contract or how legislation moves," Marotta says. "I know that because I was at the center of that for three years.... The fact that somebody gave money and at some point got a state contract - the cynical people will read into that, and you can write a story about it, but there's no basis for saying anything is wrong in that case."

But Jay Heck, director of Common Cause/Wisconsin, says it's simplistic to view the issue as simply a raw quid pro quo. It's more a matter of access, he explains. Elite groups are granted political access in a way that non-giving groups are not.

"The legislators know what they've spent [on contributions]. So you don't even have to mention that stuff," Heck says. "When [big contributors] call to make an appointment, you will shuffle the calendar around so you can talk to them. It's much more insidious. It's systemic."

Legal or not, the linkage between state government and Thompson's fund-raising through people like Nick Hurtgen "was shocking," Heck says. "It was really unprecedented. Now it's almost routine. That's the price of doing business in Wisconsin."

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