Former executive of Cleveland Clinic spinoff charged in $2.8M fraud scheme

The former chief technology officer of a Cleveland Clinic spinoff company was arrested Thursday and charged for his role in a conspiracy to defraud the hospital system out of at least $2.8 million, according to the Department of Justice

In 2012, Cleveland Clinic Innovations, the development and commercialization arm of Cleveland Clinic, 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 Wisam Rizk to serve as chief technology officer of IVHR. The two 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, Mr. Rizk 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. He 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 Mr. Rizk, according to the DOJ.

Through the scheme, Mr. Rizk and others defrauded Cleveland Clinic out of at least $2.8 million, according to the DOJ.

Federal prosecutors brought charges in September against Mr. Fingerhut, and he pleaded guilty in October to his role in the conspiracy.

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