116 3rd St SE
Cedar Rapids, Iowa 52401
The head of a suburban Chicago biotechnology company swindled the University of Iowa Hospitals and Clinics out of more than $1.6 million for personal protective equipment it urgently needed last March as the coronavirus was beginning to unfold here, federal authorities say.
The equipment, they said, was never delivered to the hospital. Instead, they allege, the man used money he had defrauded from the Iowa City hospital and another university hospital to buy two Maserati automobiles and a Land Rover sport-utility vehicle.
Dennis W. Haggerty Jr., 44, who formed At Diagnostics with two partners in Willowbrook, Ill., at the start of the pandemic, made a deal with a 'hospital vice president,” who isn't named in Illinois federal court documents, on March 29. The deal called on the company to supply 500,000 N95 masks made by 3M at $4.99 each for a total of $2,495,000.
UIHC isn't specifically named in the complaint, but is described as a teaching hospital on the University of Iowa campus in Iowa City.
The UIHC had not responded a request Wednesday afternoon from The Gazette for more information.
According to court papers, the deal initially was made with one of Haggerty's partners. His other partner had been diagnosed with COVID-19 and was in a hospital in Florida at the time, court documents show. Neither partner was named in court documents filed in U.S. District Court of Northern Illinois in Chicago.
The partner who was part of the purchase the hospital official his company could get the supplies to the UIHC by the end of that week.
According to the hospital and email records, a fulfillment request letter was sent to At Diagnostics shortly after the phone call, a federal complaint affidavit shows.
The $2,495,000 would be delivered upon receipt of the order and confirmation of acceptance.
Later the same day, a purchase agreement was sent to the hospital, which stated the masks would be delivered April 6 and the funds would be deposited in an escrow account and released upon delivery of the products, according to the complaint. The agreement listed Haggerty as the contact person.
Haggerty sent the invoice and wire information for the hospital to his partner. The invoice stated the balance was due that same day.
The invoice instructed the hospital to wire the balance to At Diagnostics. But according to subpoenaed records, the wire information given by Haggerty was for an account called 'At Media Inc.,” which authorized Haggerty as the signer on the account.
Haggerty told the partner that while their other partner was sick in Florida, he had opened another account for At Diagnostics, court records show, and the partner believed him.
A short while later, the hospital official contacted the partner and said there was problem wiring funds to that account. The partner then got a different routing number from Haggerty and sent it to UIHC.
The hospital official, at the time, was unaware that account was for At Media and not for At Diagnostic, according to the complaint.
On March 31, Haggerty's account was overdrawn by $4,858 before the hospital's funds were deposited. According to bank records, Haggerty about the same time opened a separate account at the same bank under 'At Diagnostic Holdings,” listing him as the authorized signer.
The complaint shows Haggerty made various withdrawals and transfers from his accounts. Haggerty's wife also was authorized on one of the accounts.
The hospital official sent a text message to the partner April 11, saying none of the PPE had arrived. Officials said they would be asking the company to return the more than $2.4 million in the escrow account.
According to authorities, Haggerty engaged in a ruse that included altering bank documents to hide that the UIHC's money had been funneled into bank accounts he controlled.
One partner told Haggerty to refund the hospital, but Haggerty claimed he never received the funds. Haggerty then sent the partner records of an account that had a balance of only $1,000 to try to prove he didn't have the money. The partner believed him because it was shown on a bank document.
But that same day, according to bank records cited in the complaint, $1,644,838 was transferred from one of Haggerty's accounts to another.
The hospital vice president continued to contact the partner, asking about the missing funds.
Haggerty told his partner he was trying to track down what had happened and said he asked the bank to perform trace on the wire.
According to phone records, however, there had been no contact between Haggerty and the bank during this time.
The complaint shows after a civil complaint was filed in June, about $600,000 of the hospital's funds were left in one of Haggerty's accounts.
According to the hospital and its bank records, Haggerty wired $500,000 to the hospital on June 3, $100,000 on June 5 and $250,000 on June 18. But, court papers say, the hospital still has not received about $1,645,000 of the $2,495,000 it sent.
Haggerty also is accused of swindling a university hospital in Chicago, which isn't named in the complaint, out of more than $1.2 million.
Haggerty was arrested Tuesday and charged with wire fraud. He faces up to 20 years in prison of convicted.