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Justice News

Department of Justice
U.S. Attorney’s Office
District of Minnesota

FOR IMMEDIATE RELEASE
Friday, September 30, 2022

CPAP Clinic Employees Found Guilty of Embezzling from Employer

MINNEAPOLIS – A federal jury convicted two men of mail fraud and conspiracy for embezzling several hundred thousand dollars from Park Nicollet Health Services, announced U.S. Attorney Andrew M. Luger.

Following a seven-day trial before Senior U.S. District Judge David S. Doty, Gregory Carl Koch, 59, of Minneapolis, and Jerome David Kangas, 58, of Blaine, were convicted September 28, 2022, of mail fraud and conspiracy to commit mail fraud. Kangas was also convicted of currency transaction structuring.

According to the evidence presented at trial, in June 2013 Kangas was hired as a clinician in the Park Nicollet CPAP clinic, where Koch was the supervisor and later manager. CPAP machines are devices commonly used to treat sleep apnea. Between June 2013 and June 2018, Koch and Kangas defrauded Park Nicollet out of hundreds of thousands of dollars in compensation. Although Kangas worked only afterhours and weekends responding to CPAP patient calls, Koch entered more than 8,500 weekday hours in the Park Nicollet records to cause Kangas to be paid for work he did not perform. On most of the days for which Kangas was paid, the evidence showed that he was either working for another employer or out of town. The evidence at trial also showed that Koch logged into the company network for Kangas and helped Kangas reset his computer password to conceal that Kangas was not working as his job description required. The scheme was discovered when Koch was laid off in 2018 as a result of the acquisition of Park Nicollet by HealthPartners.  

The currency transaction structuring related to a 12-day period in July and August 2017 when Kangas made six withdrawals between $5,000 and $5,500 from four different Wells Fargo Bank branches, for a total of $30,500. Federal law requires banks to report currency transactions over $10,000, as a means of detecting financial crimes. Four days after the last $5,500 withdrawal by Kangas, Koch made a $29,300 cash deposit into his own US Bank account.

Koch and Kangas face potential five-year sentences for each count. A sentencing date is not yet scheduled. 

This case was the result of an investigation conducted by the FBI.

This case was tried by Assistant U.S. Attorneys Michelle E. Jones and Robert M. Lewis.

Topic(s): 
Financial Fraud
Component(s): 
Updated September 30, 2022