Former Cleveland Clinic executive charged in $2.7M fraud scheme

The former executive director of Cleveland Clinic Innovations, the development and commercialization arm of Cleveland Clinic, has been charged for his role in a conspiracy to defraud the hospital system out of more than $2.7 million, according to the Department of Justice.

In 2012, Cleveland Clinic Innovations formed Interactive Visual Health Records to develop a visual medical charting concept into a marketable product. The former executive director of CCI, Gary Fingerhut, hired a person identified in court documents as "W.R." to serve as a consultant and then chief technology officer at IVHR.

Mr. Fingerhut and W.R. were prohibited from receiving financial benefit or having financial interests in the companies Cleveland Clinic did business with, unless expressly approved by the Clinic. 

According to the DOJ, W.R. worked with others to incorporate a shell company, known as iStarFZE, and used the shell company to submit a bid to Cleveland Clinic to design and develop IVHR's software. W.R. did not disclose his financial interest in iStarFZE to Cleveland Clinic, and he rewarded Mr. Fingerhut financially for not disclosing the fraud scheme. Between August 2012 and November 2014, Mr. Fingerhut accepted about $130,000 in payments from W.R, according to the DOJ.

Through the scheme, W.R. and others defrauded Cleveland Clinic of more than $2.7 million.

Mr. Fingerhut, who was fired by CCI in June 2015 following a report from the FBI stating he made financial transactions that violated the health system's policies, is charged with one count of conspiracy to commit wire fraud and honest services wire fraud and one count of making false statements. The charges against Mr. Fingerhut were brought by way of a criminal information, according to the DOJ.

On Thursday, Mr. Fingerhut's attorney released the following statement on his client's behalf, according to

"I apologize for the bad decisions that I made; they were wrong and I am deeply remorseful. I hurt my family, my former employer and my community and I take complete responsibility for my actions."

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