A federal judge on Monday sentenced a Burr Ridge, Illinois, businessman to nearly five years in federal prison for swindling $2.6 million from hospitals seeking coveted protective gear in the traumatic early days of the COVID-19 pandemic and blowing much of it on credit cards and luxury cars.
The 57-month term handed to Dennis Haggerty marked the stiffest punishment so far in Chicago’s federal court in a fraud case arising from the pandemic.
U.S. District Judge John Kness said he found Haggerty’s behavior, which included the creation of phony billing records and repeated attempts to try to pin the fraud on his two unsuspecting business partners, “really nothing short of contemptible.”
“This was you taking advantage of a very bad time in this country for your own benefit,” Kness said at the conclusion of a two-hour, in-person hearing at the Dirksen U.S. Courthouse. “You just engaged in a cascade of lies. ... It’s certain to me you intended to rob the henhouse very early on.”
Haggerty, 46, pleaded guilty earlier this year to one count each of wire fraud and money laundering. Assistant U.S. Attorney Heidi Manschreck asked for a term within the federal sentencing guidelines of 46 to 57 months in prison. Haggerty’s attorney, Edmund Wanderling, asked for a sentence of less than 46 months.
In addition to the prison term, Kness ordered Haggerty to repay just short of $2 million he still owes to the two hospitals he victimized, Northwestern Memorial Hospital in Chicago and the University of Iowa Hospitals and Clinics in Iowa City.
Before he was sentenced, Haggerty, dressed in bluejeans and a polo shirt, briefly apologized for his actions, which he said were done “hastily.”
“Did I make mistakes? 100%,” he said. “Am I a decent man? Yes, I think I am.”
But Kness said he didn’t think Haggerty had gotten the message at all. Even when he got caught and indicted, the judge said, Haggerty treated his case as a business transaction, weighing risk and reward rather than showing true remorse.
“You have never expressed one bit of emotion,” Kness said. “You’ve said the words to some extent, but none of it feels genuine to me. ... The public needs to know that when fraudsters who take advantage of a natural disaster or a public health emergency get caught, they are going to be punished.”
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 more than $3 million.
According to the plea agreement, on March 31, 2020, the University of Iowa Hospitals and Clinics 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 2020, after At Diagnostics had failed to deliver a single mask, the hospital 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 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 Northwestern Memorial Hospital 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 the Iowa hospital and spent another portion on himself, according to the plea. No masks were ever shipped to Northwestern.
Meanwhile, both of Haggerty’s former partners testified in court Monday via video conference, telling Kness that they are still dealing with civil litigation in various courts as well as damage to their reputations and emotional well being.
“I have been called a fraud, a thief, a criminal and countless other things,” said James Pesoli, a Chicago-area attorney. “I’m really at a loss for words.”
Those thoughts were echoed by Haggerty’s other partner, Jelena Olmstead, who told the judge she feels like she’s in the middle of a “haunting nightmare.”
“(Haggerty) knew I didn’t do anything wrong,” she said. “I don’t know whether, as a human being, there is any excuse for that.”
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