A former Cleveland Clinic executive is charged with accepting an estimated $130,000 in payment from a shell company that allegedly defrauded the health system out of more than $2.7 million, according to the U.S. Department of Justice in Northern Ohio.
Gary Fingerhut, 57, of Solon, Ohio, is charged with one count of conspiracy to commit wire fraud and honest services wire fraud and one count of making false statements. The Cleveland Clinic terminated his employment in 2015.
Fingerhut began working there in 2010 as general manager of information technologies for Cleveland Clinic Innovations. This arm of the health system assisted doctors and other clinic personnel with inventing and marketing medical products, typically through the formation of a spin-off company. Fingerhut became executive director in 2013.
In 2012, Cleveland Clinic Innovations formed a subsidiary company known as Interactive Visual Health Records, to develop a visual medical charting concept 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 to develop the product, according to the DOJ.
W.R. and others incorporated a shell company known as ISTAR that did not actually perform or provide any goods or services, prosecutors said. ISTAR submitted a bid to the Cleveland Clinic to develop and design Interactive Visual Health Records' software without disclosing W.R.'s financial interest in ISTAR.
W.R. periodically paid Fingerhut a "referral" or "commission" fee in return for Fingerhut not disclosing the fraud scheme, according to the DOJ. Fingerhut accepted nearly $130,000 in these payments 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 prosecutors.
The investigation is ongoing.
Fingerhut and W.R. knew as a condition of their employment, that they were prohibited from receiving any financial benefit or having any financial interests in companies the clinic did business with. Fingerhut also underwent formal training on ethics and compliance policies and requirements.