A Burr Ridge businessman pleaded guilty Tuesday to swindling as much as $2.6 million from hospitals seeking coveted protective gear in the traumatic early days of the COVID-19 pandemic, then blowing much of it on credit cards, two Maseratis and a Range Rover.
Dennis Haggerty, 46, pleaded guilty to one count each of wire fraud and money laundering during a hearing before U.S. District Judge John Kness. Preliminary sentencing guidelines call for up to about four years in prison, and prosecutors are also seeking forfeiture of about $2.57 million in allegedly ill-gotten gains.
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According to Haggerty’s plea agreement with prosecutors, the scheme began in March 2020, when Haggerty and two business partners formed At Diagnostics and contracted with two hospitals to provide as many as 1 million N95 face masks in exchange for $5 million.
One of the hospitals, identified only as Hospital A, was located in Chicago. The other, Hospital B, was previously identified by the Tribune as the University of Iowa Hospitals and Clinics in Iowa City.
According to the plea agreement, on March 31, 2020, the Chicago hospital deposited $2.5 million into a bank account that was supposedly the company’s but was controlled only by Haggerty.
Beginning the next day, Haggerty withdrew and spent the funds for his personal use, including nearly $150,000 in cash that he took out in increments under $10,000 to avoid federal currency reporting requirements, according to the plea.
Haggerty also used more than $132,000 in hospital funds to buy a 2013 Maserati GranTurismo, a 2015 Range Rover, and a 2017 Maserati Ghibli, paid $20,000 to a friend, and made about $190,000 in credit card payments, according to the plea.
In April, after At Diagnostics had failed to deliver a single mask, Hospital A demanded a refund. In response, Haggerty falsely stated that his bank had no record of the hospital’s wire transfer and that the bank was in the process of trying to get to the bottom of the issue, according to the plea.
Confronted by his two business partners about the missing funds, Haggerty altered a bank statement to make it appear the money was never received, the plea stated.
Meanwhile, in June 2020, after the University of Iowa Hospitals and Clinics entered into a contract with At Diagnostics for 500,000 N95 masks, the hospital’s payment system “inadvertently released” $933,825 to Haggerty before any masks had been received, the plea stated.
Instead of returning the money, Haggerty used some of it to repay what he’d taken from Hospital A and spent another portion on himself, according to the plea. No masks were ever shipped to Hospital B, and as of this month, Haggerty had not paid back any of that money.
The charges against Haggerty represented the single biggest case of fraud to arise in the Chicago area out of the pandemic.
Among the others: An Elgin restaurant owner accused of obtaining a PPP loan even though she’d closed the restaurant and terminated all of her employees; the owner of an Evanston-based technology company accused of falsifying paperwork seeking a $441,000 PPP loan; a south suburban businessman who allegedly was given more than $420,000 even though his company had no employees or ongoing operations; and a North Shore businessman accused of illegally price gouging customers seeking to buy protective masks.