CHI allegedly defrauded of millions by IT employee, 2 others

A federal grand jury indicted three men on Oct. 11 on multiple counts of fraud and money laundering for defraud Englewood, Colo.-based Catholic Health Initiatives, according to the U.S. Department of Justice.

Here are seven things to know:

1. Two of the individuals, David Rietz and Richard Cartwright, were indicted on Oct. 11 and charged with mail fraud, wire fraud, conspiracy to commit mail and wire fraud, aiding and abetting, money laundering, and conspiracy to commit money laundering. The third defendant, Lyle Perry, was charged Oct. 12 with conspiracy to commit money laundering. All three men entered not guilty pleas at their respective court hearings.

2. According to the indictment, Mr. Rietz was an employee of CHI, and Mr. Cartwright was a principal at Cross IT Group. The Justice Department alleges that between roughly September 2013 and January 2014, Mr. Rietz and Mr. Cartwright conspired to defraud CHI and split the payment.

3. Mr. Rietz was responsible for a software integration project at CHI involving the use of proprietary software sold by a third-party company. The Justice Department alleges Mr. Rietz used his authority to hire Cross IT to implement the third party's software at the health system.

4. In implementing the software at CHI, Mr. Cartwright submitted 25 "quotes" to the health system for software and services, totaling more than $72 million. Mr. Rietz then signed and processed those quotes through the health system. In total, Mr. Rietz processed $19.89 million in four payments from CHI to Cross IT as part of the scheme.

5. After receiving the payments from CHI, the men transferred the payments to bank accounts controlled by their third co-conspirator.

6. For each count of fraud, each man faces up to 20 years in prison and a fine of $250,000 or not more than the greater of twice the gross pecuniary gain or loss from each offense, and restitution.

7. A CHI spokesperson shared the following statement with Becker's Hospital Review:

"CHI discovered the transactions shortly after they occurred and has worked collaboratively with law enforcement. The organization took immediate legal action and recovered the majority of the funds. The individual's employment with CHI was terminated in December 2013."

To access the full report, click here.

Editor's note: This article was updated Oct. 26 at 1:45 p.m. to include additional information.

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