Solon man charged with defrauding the Cleveland Clinic out of $2.7 million
A Solon man was charged in federal court for his role in a conspiracy to defraud the Cleveland Clinic out of more than $2.7 million, said U.S. Attorney Justin E. Herdman and FBI Special Agent in Charge Stephen D. Anthony.
Gary Fingerhut, 57, was charged via criminal information with one count of conspiracy to commit wire fraud and honest services wire fraud and one count of making false statements.
Fingerhut worked at Cleveland Clinic Innovations, which assisted doctors and other Clinic personnel with inventing medical products and marketing those products, typically through the formation of a spin-off company. Fingerhut was hired as general manager of information technologies in 2010 and became executive director in 2013. The Clinic terminated his employment in June 2015, according to the information.
In 2012, the Cleveland Clinic Innovations formed a subsidiary company known as Interactive Visual Health Records (IVHR), to develop a visual medical charting concept of certain Clinic physicians into a functioning, marketable product. Fingerhut hired an individual identified in court documents as W.R. to work as a consultant and then chief technology officer at IVHR to develop the product, according to the information.
Fingerhut and W.R., as a condition of their employment, were prohibited from receiving any financial benefit or having any personal or familial financial interests in companies the Clinic did business with, unless they were expressly disclosed to, and approved by, the Clinic. Fingerhut underwent formal training on the Clinic’s ethics and compliance polices and requirements, according to the information.
W.R. and others caused to be incorporated a shell company known as iStarFZE LLC (ISTAR) that did not actually perform or provide any goods or services. It was established in the name of a nominee owner. W.R. caused ISTAR to establish a web site and email addresses and a mailing address in New York City, according to the information.
W.R. caused ISTAR to submit a bid to the Clinic to develop and design IVHR’s software and to increase the price the Clinic paid for the software design and development, all without disclosing W.R.’s financial interest in ISTAR, according to the information.
W.R. periodically paid Fingerhut a “referral” or “commission” fee in return for Fingerhut not disclosing the fraud scheme, according to the information.
Fingerhut accepted nearly $469,000 in these payments from W.R. between August 2012 and November 2014. During that time, Fingerhut, W.R. and others diverted more than $2.7 million from the Clinic, according to the information.
The investigation is ongoing.
This case is being prosecuted by Assistant U.S. Attorneys Paul Flannery and Rebecca Lutzko following an investigation by the Federal Bureau of Investigation.
If convicted, the defendants’ sentences will be determined by the court after review of factors unique to this case, including the defendant’s prior criminal record, if any, the defendant’s role in the offense and the characteristics of the violations. In all cases, the sentence will not exceed the statutory maximum and, in most cases, it will be less than the maximum.
An indictment is only a charge and is not evidence of guilt. A defendant is entitled to a fair trial in which it will be the government’s burden to prove guilt beyond a reasonable doubt.