All the Governor's Men

Gov. Jeb Bush will likely be pulled into a federal grand jury investigation of the North Broward Hospital District, the $800 million-a-year, tax-subsidized public health powerhouse that serves as one of his chief political fiefdoms.

The grand jury is looking into a project by the nation's sixth-largest public hospital system, which runs four hospitals and numerous clinics, to build a $30 million medical office building in Fort Lauderdale. The deal is marked by apparent insider dealing and an estimated $100 million of inflated profits for a few well-connected businessmen, including Bush supporter Austin Forman, a scion of the county's most prominent family.

Though Bush appointed all seven NBHD commissioners who voted for the building plan and has strong political ties to some district officials and lobbyists, he's managed so far to keep clear of the scandal, which last year led to the embezzlement conviction of former district CFO Patricia Mahaney. Sources close to the probe say that is about to change: A little-noticed veto by the governor played a crucial role in the medical office building saga, paving the way for Forman's deal.

To understand the connection, one must follow not only the money but the legislation. And all roads in this imbroglio lead to William Scherer, who, as the district's general counsel, oversees $5.5 million in NBHD legal work, $3 million of which goes to his law firm, Conrad and Scherer.

Scherer is not only the chief power at the district, where he controls several contracts and counsels board members on their votes, but he's also a close friend and business partner of Forman and his wealthy and influential father, Hamilton Forman, who lorded over the district for three decades as NBHD chairman. It was the man called "Ham" who took Scherer under his wing when the lawyer first moved to South Florida in 1972 from his native Indiana. The senior Forman gave Scherer entrée into the heavy-hitting world of Broward County development and landed him his position at the district in 1988.

Scherer is also one of Bush's chief political supporters. He's personally raised hundreds of thousands of dollars for both the governor and his brother, the president, and worked on campaigns for both Bushes. Scherer even serves as a Jeb Bush appointee on the state Judicial Nominating Commission.

A gregarious man prone to audacious statement, Scherer is a triple threat -- a lawyer, lobbyist, and developer, who controls more than $10 million in land held in trusts. But when questioned about the veto after last week's board meeting, he was silent, refusing to make any comment on the matter.

Like the district, he's part public, part private, all political. The NBHD prides itself on running like a corporation, downplaying its reliance on the $174 million in property taxes and more than $200 million in Medicaid and Medicare dollars it will collect this year. But it's more a classic political machine. New Times investigated three district deals -- the Forman agreement and two lucrative doctors' contracts -- that provide a close view of district business, which is rife with inflated compensation, possible violation of federal laws, and rampant cronyism.

First, the deal that involved the governor's veto pen:

Back in 1999, the district decided to put a new medical office building on SE Third Avenue, just east of Broward General Medical Center, its flagship Fort Lauderdale hospital. The only problem: The location was occupied by 14 homes and businesses. So the district set out to acquire them and by early 2000 had bought seven. The remaining landowners, however, held out for exorbitant prices -- at least $2 million more than NBHD was willing to pay. Facing a stalemate, administrators turned to Tallahassee.

Enter Scherer, who began a legislative effort to win "quick-take" rights for the district, wherein it could gain ownership of the properties and let a jury decide a fair price later. NBHD lobbyist Ron Book also played a key role in the legislation but says he obtained his orders from Scherer's office.

"Bill spoke to the governor about the quick-take," explains Nico Winningham, who was then the real estate manager for the district. "All along, he was the tie to Jeb."

The ensuing bill sailed unanimously through the House and overwhelmingly passed the Senate. Then came Bush's surprise veto on June 7, 2000. "The governor told Bill before the veto that it was going to happen," says Winningham, who was laid off with 42 other district employees in November 2002 and now works for a real estate company owned by the son of U.S. Rep. Clay Shaw (R-Fort Lauderdale). "I heard that Bill said afterward that he wasn't going to expend any more of his political capital on the matter."

Bush explained in a 2000 letter to then-Secretary of State Katherine Harris that his veto came in defense of private property rights and argued that the district could use regular eminent domain to obtain the properties. He said expanding the district's power to take the properties wasn't in the "spirit of fair play."

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Bob Norman
Contact: Bob Norman