Health IT, Hospitals

Ex-Cleveland Clinic Innovations director Gary Fingerhut charged in $2.7M fraud against health system

Gary Fingerhut was charged with one count of conspiracy to commit wire fraud and honest services wire fraud and one count of making false statements, according to the U.S. Attorney's Office. Through his attorney, Fingerhut said he took "complete responsibility" for his actions.

The former executive director of Cleveland Clinic’s technology transfer office, Cleveland Clinic Innovations, was charged with bilking the health system out of more than $2.7 million following an investigation by the FBI, according to a news release from the U.S. Attorney’s office for the Northern District of Ohio.

Cleveland Clinic dismissed Gary Fingerhut in June 2015 after the institution was notified “by a government agency” about financial transactions involving one of its spin-off companies and Fingerhut was found to have violated Cleveland Clinic policy. Fingerhut had worked for Cleveland Clinic Innovations since 2010 as general manager of information technologies before becoming executive director in 2013.

The attorney’s office charged Fingerhut with one count of conspiracy to commit wire fraud and honest services wire fraud and one count of making false statements. An investigation is ongoing, according to the release.

A Cleveland Clinic spokeswoman emailed a statement in response to a request for a comment on the charges against Fingerhut:

“Cleveland Clinic first learned about this issue through the Federal Bureau of Investigations (FBI). We fully cooperated with their efforts and with the U.S. Attorney’s Office in pursuing this matter. We commend both offices on their great work.”

The U.S. Attorneys Office highlighted information from court documents that led to the charges against Fingerhut in the news release:

  • Over a two-year period, Fingerhut, a person referred to in court filings as W.R., and others allegedly diverted more than $2.7 million from the Clinic.
  • Fingerhut set up a subsidiary business called Interactive Visual Health Records to produce a visual medical charting concept from certain Clinic physicians, according to information cited by the attorney’s office. He allegedly hired an individual, referred to in court documents as “W.R.”, to work as a consultant and then chief technology officer at IVHR to develop the product.
  • W.R. and others allegedly set up a shell company known as iStarFZE LLC (ISTAR) with a website and email addresses and a mailing address in New York City. W.R. had ISTAR submit a bid to design and produce software for IVHR and increased the price the Clinic paid for those services, but did not reveal W.R.’s financial interest in ISTAR, the attorney’s office alleged. Fingerhut’s and W.R.’s employment agreement prevented them from receiving any financial benefit or having any personal or familial financial interests in companies the Clinic did business with.
  • Fingerhut allegedly accepted $469,000 from W.R. between November 2012 and August 2014 in “commission” or “referral” fees for keeping quiet about the scheme.

Fingerhut’s attorney J. Timothy Bender released a statement Thursday on his client’s behalf, cited by Cleveland.com.

“I apologize for the bad decisions that I made; they were wrong and I am deeply remorseful,” Fingerhut said through his attorney “I hurt my family, my former employer and my community and I take complete responsibility for my actions.”

Founded in 2000, Cleveland Clinic Innovations has launched more than 40 spin-off companies, which have attracted nearly $1 billion in equity investment.

In May, Cleveland Clinic President and CEO Toby Cosgrove announced he would retire  this year after 13 years at the helm. Tomislav Mihaljevic, Cleveland Clinic Abu Dhabi CEO, is expected to take over Cosgrove’s role in 2018.

Photo: zimmytws, Getty Images

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