Former executives at Cleveland Clinic Innovations set up a shell company and submitted inflated bills to the health system for software design and development.
A former executive at Cleveland Clinic was sentenced to 30 months in prison for his role in a conspiracy to defraud the renowned health system out of more than $2.7 million, the Department of Justice announced.
Gary Fingerhut, 58, had already pleaded guilty to one count of conspiracy to commit wire fraud and honest services wire fraud and one count of making false statements. He was also ordered to pay back the $2.7 million he stole, DOJ said.
Fingerhut worked at Cleveland Clinic Innovations from 2010 until he was fired in 2015. As general manager of information technologies, and later executive director, he helped doctors and other Clinic personnel with inventing and marketing medical products.
In 2012, Cleveland Clinic Innovations formed a subsidiary called Interactive Visual Health Records, to develop a visual medical charting concept of certain Clinic physicians into a functioning product. Fingerhut hired Wisam Rizk as a consultant and then chief technology officer at IVHR to develop the product, DOJ said.
Fingerhut and Rizk both knew they were prohibited from receiving financial benefit or having any personal or familial financial interests in companies the Clinic did business with, DOJ said.
Rizk created a shell company known as iStarFZE, set up a website, email addresses, and a mailing address in New York City. Once operational, ISTAR submitted 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, without disclosing his financial stake in ISTAR, DOJ said.
Rizk paid Fingerhut about $469,000 in "referral" fees from 2012 through late 2014. In return for Fingerhut not disclosing the fraud scheme. The fraudsters diverted more than $2.7 million from the Clinic.
Rizk has already pleaded guilty to his role in the conspiracy and is awaiting sentencing, DOJ said.
John Commins is a content specialist and online news editor for HealthLeaders, a Simplify Compliance brand.
KEY TAKEAWAYS
Gary Fingerhut received about $467,000 in "referral" fees from a shell company in return for not disclosing the fraud scheme.
His accomplice, Wisam Rizk, has already pleaded guilty to fraud charges for his role in the scheme, and he awaits sentencing.