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A suburban Chicago biotechnology business owner, who swindled the University of Iowa Hospitals and Clinics out of $2.6 million for personal protective equipment it urgently needed during the early weeks of the coronavirus pandemic, pleaded guilty to a federal fraud charge.
Dennis W. Haggerty Jr., 45, of Burr Ridge, Ill., pleaded guilty to one count each of fraud and money laundering. He faces up to 20 years for the fraud charge and 10 years for the other charge.
The equipment UIHC ordered was never delivered to the hospital, according to court records. Haggerty instead used the money from UIHC and another hospital based in Illinois to buy two Maserati automobiles and a Land Rover sport utility vehicle.
Haggerty and two business partners in March 2020 formed At Diagnostics in Willowbrook, Ill., to sell personal protective equipment, according to the U.S. Attorney’s Office in the U.S. Northern District of Illinois. They made a deal with a “hospital vice president,” who isn't named in Illinois court documents. The deal called on the company to supply 500,000 N95 respirator masks for over $2.4 million.
According to court documents, Haggerty created an invoice to reflect the agreement and to instruct the hospital on where to wire the payment. Based on the invoice, the hospital on March 31, 2020, wired the money to a bank account that Haggerty falsely claimed was an At Diagnostics account. It was actually the account of a different business solely controlled by Haggerty.
In the plea, Haggerty admitted that he spent part of the money for his own personal use, including purchasing the three vehicles, paying nearly $189,000 to credit card companies, taking out over $147,000 in cash and paying $20,000 to a personal friend, according to the U.S. Attorney’s Office.
Haggerty also admitted in the plea that At Diagnostics never delivered the masks, and when questioned about it by the hospital he falsely claimed that the bank had no record of receiving the hospital’s payment. When his business partners also questioned Haggerty about the money, Haggerty altered a bank statement to make it appear as if the hospital’s funds hadn’t been received.
In the plea, Haggerty admitted that he engaged in similar conduct with a hospital based in Illinois. After reaching an agreement with that hospital to sell 1 million N95 masks for nearly $4.5 million, the hospital requested that an initial payment be sent to an escrow account instead of the account Haggerty provided. When At Diagnostics failed to fill the hospital’s order, the money in escrow was returned.
The Illinois hospital later inadvertently wired more than $933,000 to Haggerty’s account in connection with a second order for 500,000 N95 masks that were never delivered. Haggerty admitted in the plea agreement that he spent some of this money for his own personal use and didn’t return any of it.
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