Cleveland Clinic Scammed: Former Exec Charged In $2.7 Million Fraud

SOLON, OH — The man who was responsible for commercializing some of the Cleveland Clinic’s prized technologies has been charged for his part in a scheme to defraud the health care giant of $2.7 million, according to law enforcement. Gary Fingerhut, 57, was investigated by the FBI and has been charged with one count of conspiracy to commit wire fraud and honest services wire fraud and one count of making false statements.

The alleged conspiracy involves an inside-job, nepotism and shell companies. Fingerhut was an employee of Cleveland Clinic Innovations until he was terminated in 2015 after the FBI alerted Cleveland Clinic to the possible fraud, according to U.S. Attorney Justin E. Herdman's office. Fingerhut was originally hired as the general manager of information technologies in 2010 and became executive director in 2013 before being terminated.

Fingerhut released a statement through his attorney J. Timothy Bender. "I apologize for the bad decisions that I made; they were wrong and I am deeply remorseful," Fingerhut said. "I hurt my family, my former employer and my community and I take complete responsibility for my actions."

Before being let go, the Innovations group formed a subsidiary company, Interactive Visual Health Records (IVHR), to develop visual medical charting into a marketable product. Fingerhut hired a consultant, known as W.R. in court documents, to serve as chief technology officer of IVHR. Both W.R. and Fingerhut were stricly prohibited from benefiting financially, in any way, from IVHR. (To stay up to date on these stories, subscribe to the Patch Solon newsletter. As news breaks and the story develops, you will be the first to receive updates from Patch.)

That's where things reportedly got fishy. W.R. and others created a shell company called iStarFZE LLC (ISTAR) that didn't actually do anything. The company was created to submit a bid to the Clinic to develop and design IVHR's software. ISTAR had a web site, email addresses and a mailing address in New York City.

According to Herdman's office, W.R. paid Fingerhut periodic "referral" or "comission" fees to keep him from disclosing the fraud. Between Aug. 2012 and Nov. 2014, Fingerhut allegedly accepted $469,000. Over that time, Fingerhut, W.R., and others diverted some $2.7 million from the Cleveland Clinic, according to information provided by Herdman.

“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," a Cleveland Clinic spokesperson told Patch via email.

The investigation into the scheme is ongoing and is being led by the FBI.

Cleveland Clinic Innovations commercializes the hospital's innovations, taking different technologies and creating purchasable products and implementable systems. Since its inception in 2000, the CCI group has produced more than 3,400 inventions, been issued more than 800 patents and has 80 active spin-off companies.

Photo from Cleveland Clinic