Former Cleveland Clinic executive pleads guilty in $2.7M fraud scheme

The former executive director of Cleveland Clinic Innovations, the development and commercialization arm of Cleveland Clinic, has pleaded guilty to his role in a conspiracy to defraud the hospital system out of more than $2.7 million, according to

Federal prosecutors brought charges in September against the former executive director of Cleveland Clinic Innovations, Gary Fingerhut.

Prosecutors alleged Mr. Fingerhut hired a person identified in court documents as "W.R." to serve as a consultant and then chief technology officer at Interactive Visual Health Records, which Cleveland Clinic Innovations formed in 2012 to develop a visual medical charting concept into a marketplace product. 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 Department of Justice, 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.

Prosecutors charged 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, with one count of conspiracy to commit wire fraud and honest services wire fraud, and one count of making false statements.

Mr. Fingerhut formalized his plea agreement Tuesday. Under the deal, he pleaded guilty to the charges, and prosecutors will seek a prison sentence of between 41 and 51 months. Prosecutors will also seek a court order requiring Mr. Fingerhut to pay the total amount Cleveland Clinic lost in the scheme, according to

Mr. Fingerhut is scheduled to be sentenced Jan. 30.

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