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CHICAGO — An Illinois attorney has been indicted on federal criminal charges for allegedly waging a multi-year campaign to take control of a medical device company through fraud.
MARK ALAN SCHWARTZ, 61, of Dorado, Puerto Rico, is charged with six counts of wire fraud and two counts of aggravated identity theft, according to an indictment returned in U.S. District Court in Chicago. Each count of wire fraud is punishable by up to 20 years in federal prison, while each count of aggravated identity theft is punishable by a mandatory two-year sentence. Schwartz pleaded not guilty Tuesday at his arraignment before U.S. Magistrate Judge Young B. Kim.
The indictment was announced by John R. Lausch, Jr., United States Attorney for the Northern District of Illinois; and John S. Morales, Acting Special Agent-in-Charge of the Chicago Field Office of the FBI. Substantial assistance was provided by the U.S. Trustee Program and the U.S. Secret Service. The government is represented by Assistant U.S. Attorney Brian Havey.
According to the charges, Schwartz in 2012 partnered with a doctor to form a company to develop, market, and sell a surgical product the doctor had invented. The doctor served as chairman of the company’s board of directors, while Schwartz was its chief executive officer and secretary. Schwartz and the doctor later split the company into two entities, incorporating them in Puerto Rico, and embarked on a funding drive that raised more than $10 million from outside investors, including family members, friends, and colleagues in Illinois.
According to the indictment, a dispute arose between Schwartz and the doctor, resulting in Schwartz’s termination. Schwartz refused to accept his termination and relinquish control of assets, records, and bank accounts to which he had access, the indictment states. Schwartz sought to take over the companies through various fraudulent methods, including making misrepresentations to banks, using the doctor’s identity to open bank accounts without his knowledge, fabricating company records, arbitrarily issuing valuable shares of stock to himself, filing false civil lawsuits, and intimidating the doctor and his family through belligerent and threatening confrontations.
The indictment alleges that after Schwartz’s termination, he transferred more than $3.9 million from a corporate bank account to accounts he controlled in an effort to coerce the doctor to reinstate Schwartz as CEO and surrender control of the company to Schwartz.
The public is reminded that an indictment is not evidence of guilt. The defendant is presumed innocent and entitled to a fair trial at which the government has the burden of proving guilt beyond a reasonable doubt. If convicted, the Court must impose a reasonable sentence under federal statutes and the advisory United States Sentencing Guidelines.