BOSTON -- Mark S. Ferber, who last year saw his public finance career wrecked by scandal, has a new job as a financial consultant to a subsidiary of Massachusetts General Hospital -- a former client from his days as an investment banker.

Several sources in Boston said that Ferber, once one of the most prominent players in the municipal finance industry, has worked for the past five months trying to raise capital for a company called R-Star Inc., a medical imaging corporation.

R-Star is a for-profit subsidiary of Massachusetts General, one of Ferber's clients during his career in public finance. The company is designing new technology that will allow physicians to transmit high-definition pictures to other doctors around the world for diagnosis.

Ferber's meteoric rise in the public finance industry ended last summer when he was fired by his employer, First Albany Corp. Before that, he enjoyed a career in which he represented some of the largest issuers in New England.

He also maintained a close relationship with some of the major officials at Massachusetts General, including the hospital's former general director, Dr. J. Robert Buchanan and vice president for program and facilities development Vincent D. Cucchiara.

Ferber's political mentor, Massachusetts Senate President William M. Bulger, sits on the board of trustees for Massachusetts General.

Although not an employee of R-Star Ferber is under contract to provide financial services to the company, according to Peggy Slasman, a hospital spokesperson.

The contract began in November 1993 and runs through the end of June 1994, and was approved by the R-Star board of directors, she said.

Ferber's attorney, Thomas Dwyer, a partner at the law firm of Dwyer, Collurra & Gertner, decline to comment on Ferber's consulting work.

Over the past 10 years, Massachusetts General has sold six bond issues, five through the Massachusetts Health and Educational Facilities Authority and one through the Massachusetts Industrial Finance Agency.

Ferber played an instrumental role in most of the financings, several sources familiar with the transactions said.

A report issued last December by the Massachusetts inspector general said that Ferber, while a partner at Lazard Freres & Co., claimed he was responsible for earning the firm $1.3 million in fees from a $257 million sale for the hospital in 1989 sold through MIFA.

Although Goldman Sachs & Co. served as senior manager, the report stated that Goldman and Lazard split the fees earned from the deal.

One source at MHEFA said that Ferber was instrumental in getting firms added to the bond syndicate for Massachusetts General and also played a role in deciding allocations.

Last summer, one of Ferber's largest clients, the Massachusetts Water Resources Authority fired him after a 10-year relationship, and disbanded its underwriting team after learning that Ferber had an undisclosed agreement with Merrill Lynch & Co.

Merrill Lynch served as one of the authority's senior managers.

In a 1990 contract between Lazard Freres and Merrill Lynch, Ferber was paid $2.8 million over three years to give Merrill Lynch advice on interest rate swaps.

But a report from the Massachusetts inspector general, Robert A. Cerasoli, maintained that for that fee, Ferber also helped Merrill Lynch gain underwriting slots and business in other parts of the country and provided the firm with inside information that breached the fiduciary responsibility he owed his clients.

Additionally, the inspector general said that Ferber received and promised favorable bond allocations from Merrill Lynch.

Both Merrill Lynch and Lazard Freres have denied that the contract between the two firms was ever meant for any of Ferber's advisory clients, and both said that no inappropriate disclosure took place as part of the contract.

Ferber's activities are currently under investigation by the U.S. Attorney's office, the Securities and Exchange Commission, the U.S. Postal Service, and several state agencies.

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