Bill Conway’s billionaire father is bankrolling his state’s attorney bid. His fortune came from a firm that invested in weapons manufacturers and nursing homes accused of neglecting patients.

Chicago Tribune (IL)

Democrat Bill Conway’s biggest advantage in the Cook County state’s attorney race is also proving to be his largest political liability.

The 41-year-old Chicago lawyer has been able to raise his profile and attack incumbent Kim Foxx on the strength of $10.5 million in campaign cash supplied by his billionaire father, who amassed one of the biggest fortunes ever made in private equity.

But Conway’s opponents have seized on the source of that money, attempting to portray him as a fake progressive whose father is trying to buy him a powerful office. They note that the Carlyle Group, co-founded by Bill Conway Jr., has stakes in the military-industrial complex.

While the defense contracts have gotten attention in the race, another investment with broad implications has gone unnoticed. For a decade, Carlyle owned the for-profit nursing home chain HCR ManorCare as it racked up allegations that it neglected elderly patients, committed Medicare fraud and ultimately drove the company into bankruptcy.

Asked about Carlyle’s control of ManorCare, the candidate said, “this isn’t something that I’m particularly familiar with.”

“We all have relatives that we don’t agree with, but I’m certainly not going to sit here and disown my own father," he added.

Conway, who said he has never worked for the Carlyle Group, said he manages some of his father’s fortune, but he declined to say how much. Conway spent a few years working in investment banking at J.P. Morgan, according to his resume.

The candidate, whose full is name is William E. Conway III, has deep Chicago roots. A graduate of the tony Latin School of Chicago in the Gold Coast, he went on to serve as an assistant state’s attorney.

Conway was raised in the city by his mother, Joanne. Meanwhile, his father climbed to the top of the finance industry. The elder Conway rose through the ranks at First National Bank in Chicago, then became chief financial officer at Washington-based telecommunications giant MCI. In 1987, Conway’s father left to form the Carlyle Group.

The Carlyle investors sought to differentiate themselves from the rest of the so-called leveraged-buyout industry by basing the firm in Washington rather than New York, according to a Washington Post story on the company’s founding.

Carlyle hired former government officials to leverage their ties, especially in the defense industry, published reports show.

Frank Carlucci, who was defense secretary in the Reagan administration, became Carlyle’s chairman. Under his leadership, Carlyle bought large stakes in military contractors such as United Defense.

The company’s multibillion-dollar Crusader artillery system symbolized both the scale of Carlyle’s defense contracting business and the firm’s political clout.

Criticized by military planners and analysts as slow, heavy and outdated, the Crusader cannon was billed as a field weapon that could shoot “farther, faster and more accurately” than other artillery. While lobbying Congress for the system, United Defense took in about $2 billion from the government to develop the weapon, according to The Washington Post. But it never saw battle, as the Department of Defense killed the project in 2002.

Carlyle also ran into trouble in the nursing home business. In 2007, the firm bought HCR ManorCare, a national nursing home chain that currently has about 15 facilities in the Chicago area.

Carlyle followed the typical private-equity playbook in its ManorCare dealings. The firm sold the chain’s real estate to a new landlord in 2011 for $6.1 billion -- the same price it had paid for the whole company four years before, according to published reports. The chain then struggled to pay rent, which amounted to about $472 million a year, The Washington Post reported.

The debt-laden business became unprofitable even as Carlyle extracted more than $80 million in fees from the nursing home chain, according to the Post. With $7.1 billion in debt, ManorCare declared bankruptcy in 2018. Carlyle walked away from the chain’s hundreds of facilities in the bankruptcy settlement.

Along with the financial wreckage, Carlyle’s ownership of the nursing homes had substantial consequences for residents, the Post reported. Carlyle imposed cost-cutting measures including layoffs, and health code violations rose 26% from 2013 to 2017. Alleged neglect led to bedsores, medication mishaps and falls in some of the homes, the Post wrote.

It is difficult to assess whether ManorCare’s Illinois homes mirrored that trend, but numerous lawsuits here have made similar allegations and sometimes resulted in six-figure payouts.

For example, the chain agreed to pay $400,000 to settle a lawsuit over allegations that staff at its home in South Holland failed to prevent a woman from getting bedsores and an infection that resulted in her death in 2010, records show. Another suit contended that staff at the Arlington Heights location allowed a woman to fall and suffer a brain hemorrhage. ManorCare agreed to pay $230,000 in that case, records show.

Steven Levin, a Chicago lawyer who has frequently sued nursing homes, said ownership by private equity generally leads to cost-cutting and understaffing. That, he said, is “the single biggest problem” in nursing home care.

“The private equity model is not designed for any health care industry and especially nursing homes,” he said. “Desire to show a profit is inconsistent, in some respects, with the need to provide sufficient staff to provide appropriate care.”

A major player inside the Beltway, the Carlyle Group had little role in Cook County politics before Conway funded his race with his father’s fortune. With a week to go until the March 17 primary election, Conway had collected $11.4 million in campaign contributions, with $10.5 million coming from his father.

The Foxx campaign is banking on the theory that local voters will care about the source of the money a wealthy candidate spends as he seeks office. As such, her campaign has sought to use Carlyle’s record to brand her opponent as beholden to war profiteers.

“Mr. Conway has spent (millions) in this campaign trying to fashion himself as both a progressive and also one who wants to militarize this office,” Foxx said in a candidate forum late last month. “Mr. Conway has spent the last several months introducing himself to the public in a duplicitous way.”

A Foxx campaign web ad went further, contending “the Conway family made billions off global conflict. Made a killing off weapons’ makers.”

When asked about Carlyle’s investments, Conway told the Tribune he has not closely studied the firm’s holdings. He sought to reframe the issue, arguing that his father’s money grants him political independence.

“I knew early on that I would need some family support to do this, just because it’s a giant county, (I’m) not a famous person, I’m obviously doing it without any kind of backing of the Cook County machine," he said in a Friday interview at his downtown campaign headquarters.

That complements one of the main messages of his campaign -- that Foxx’s handling of the Jussie Smollett case shows she’s played politics with the office. The actor was charged with making false allegations of a hate crime last year. Foxx dropped the charges, spurring allegations that she was influenced by Smollett’s politically powerful allies.

Conway also has accused Foxx of hypocrisy, noting that her campaign has been bolstered by a political action committee that took in $2 million from a group tied to liberal hedge fund billionaire George Soros. The PAC has sent mailers saying “Conway is not the progressive reformer he claims to be.”

The other state’s attorney challengers are Donna More, an attorney who represents gambling interests and lost a 2016 primary bid for the office; and former Ald. Bob Fioretti.

Neither of them can afford broad television exposure. Conway has leapt to prominence with frequent commercials that highlight his military experience -- he’s a Navy veteran who was deployed in Afghanistan in 2017 -- and call for locking up alleged gun offenders. Conway’s ads also remind voters of the Smollett scandal and Foxx’s ties to indicted 14th Ward Ald. Edward Burke.

“What I’m focused on is making sure that we keep that appearance of impropriety out of the state’s attorney’s office,” he added.

Chicago Tribune’s Lolly Bowean contributed.

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