Knox defends hiring of felon at his Md. HMO

Philadelphia mayoral candidate Tom Knox yesterday defended his decision to hire a convicted embezzler at his Maryland health-insurance firm, denying he practiced the type of cronyism he preaches about ridding from City Hall.

Knox, a multimillionaire businessman, said he still keeps David S. Fishbone on his personal payroll three years after Maryland insurance regulators fined his company $125,000 for employing the disbarred lawyer as a compliance officer for Fidelity Insurance, a company he bought in 1999 and sold in 2004.

Knox says he believes in giving people a second chance.

"David Fishbone goes to work every day," Knox said yesterday in a telephone interview. "He works hard. He's smart."

Knox's employment of Fishbone - who pleaded guilty in 1995 to looting six estates of more than $1 million when he was a bankruptcy lawyer in Philadelphia - has surfaced as an issue in the May 15 Democratic primary. Knox, who has financed his campaign from his personal fortune, has led in recent polls.

U.S. Rep. Bob Brady's campaign said yesterday that while the congressman favors rehabilitation of ex-cons, Knox's hiring of Fishbone is ironic, considering he has spent millions on TV ads railing against the cronyism of the Democratic machine.

"He's a hypocrite, a complete hypocrite," said Brady spokeswoman Kate Philips. "He talks about redemption, but really he just has cronies with really bad records. Cronyism got him into that mess. He took one of his old goombahs and gave him that job."

State Rep. Dwight Evans, a rival candidate who has stepped up attacks on Knox in recent days, quipped: "I guess that's Tom's idea of a prisoner reentry program."

Knox said his own definition of crony was a person who did no work - and therefore "he's not a crony," Knox said of Fishbone. "He actually works. I'm not spending Fidelity's money to employ him. I'm spending my own personal wealth."

Maryland officials said Fidelity's hiring of Fishbone violated a federal law that prohibits such a felon from working in the health-insurance field unless the state insurance commissioner grants a waiver. Fishbone applied for a waiver but was turned down.

State regulators also said that Fidelity promised to remove Fishbone in 2003 but continued to employ him.

Knox said yesterday that he had moved Fishbone onto his own payroll as a personal assistant, but that he continued working at the Fidelity premises for about a month until he could relocate his family to Philadelphia.

Knox also said yesterday that the federal no-felons rule was not in place when he first put Fishbone on Fidelity's payroll. This could not be confirmed last night.

The candidate said he chose not to contest the Maryland regulators' assertions. He was in the process of selling Fidelity to a larger company, UnitedHealthcare, in 2004.

"You can't argue with regulators and win," said Knox.

Knox said that Fishbone works two days a week for him as a "personal assistant," writing letters and reviewing documents, but he performs no legal work.

"I've hired thousands of people," said Knox. "In the entire time, I've hired maybe three people with criminal records. They were good people . . .. I think he learned his lesson."

Knox said he would "absolutely not" hire Fishbone for a city job, should Knox be elected mayor. "Quite frankly, he has another job - he flies up to Boston three days a week," said Knox.

The fine against Fidelity for hiring Fishbone was the largest infraction among several violations cited by Maryland regulators.

Among other violations, the report said that Fidelity was routinely late in paying for medical care and hadn't fully informed customers about which procedures were excluded from coverage.

Fishbone admitted in 1995 to stealing money over four years from the estates of six bankrupt clients, among them the now-defunct St. Mary Hospital in Fishtown - money that would have been shared by the clients' creditors.

He was sentenced to four years and five months in prison and was released after serving most of his sentence. He voluntarily surrendered his license to practice law.

At the time of his sentencing, Fishbone told the judge he had stolen the money to pay for a big house, expensive cars, and other luxury items, as well as big family therapy bills. In denying leniency, the judge noted that Fishbone had failed to keep up on his child-support payments, despite the ill-gotten gains.

Political analysts said that the association was unlikely to seriously damage Knox unless one of his opponents capitalized on it with an attack ad. Besides, in Philadelphia, few politicians can claim to be completely free of shaky personal ties.

"I thought associating with felons is a prerequisite for elected officials in Philadelphia," joked consultant Larry Ceisler.