The former executive director of Cleveland Clinic Innovations was charged in federal court this week for his role in a conspiracy to defraud the nonprofit academic medical center out of more than $2.7 million via a shell company.
Gary Fingerhut, 57, 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. Department of Justice.
The Cleveland Clinic initially hired Fingerhut in 2010 as the general manager of information technologies for the Innovations arm of the organization, which assists clinicians with inventing and marketing medical products usually via a spinoff company. He was promoted to executive director in 2013, a position he held for two years until the FBI informed the Clinic about an investigation into certain financial transactions involving one of the spin-off companies. Fingerhut was fired in June 2015 amid the criminal investigation.
The investigation revealed that Fingerhut was involved in a scheme with the chief technology officer of one of the spinoff companies, Interactive Visual Health Records (IVHR), which was created in 2012 to develop a visual medical chart product. The deal had IVHR contract with a shell company that never intended to perform or provide any goods and serves. Although Fingerhut underwent formal training on the Cleveland Clinic’s ethics and compliance policies and requirements, which prohibit employees from receiving any financial benefit from companies the Clinic did business with, he received “referral” or “commission” fees in return for not disclosing the fraud scheme.
Prosecutors say Fingerhut accepted nearly $130,000 in these payments from the chief technology officer of IVHR between August 2012 and November 2014. During that time, those involved in the scheme diverted nearly $3 million from the Clinic.
Fingerhut's attorney J. Timothy Bender, told Cleveland.com via a statement that his client is sorry for his role in the scheme. "I apologize for the bad decisions that I made; they were wrong and I am deeply remorseful," Fingerhut said in the statement. "I hurt my family, my former employer and my community and I take complete responsibility for my actions."