suntimes
MEDIOCRE 
Weather Updates

Man pleads guilty to wire fraud in investor scam

Updated: October 3, 2012 5:37PM



The owner of a now-defunct north suburban sleep clinic pleaded guilty to wire fraud for a plot in which he misappropriated as much as $2 million in investor funds, including money to open a tattoo parlor for his son-in-law, according to federal prosecutors.

Kenneth A. Dachman, of Glencoe, former CEO of Central Sleep Diagnostics in Northbrook, was indicted in August 2011 for fraudulently obtaining about $4 million from more than 50 investors.

Dachman pleaded guilty to each of the 11 counts of wire fraud, according to U.S. Attorney’s office spokesman Randall Samborn, who said Dachman faces up to 20 years in federal prison when he is sentenced on Dec. 13. He also faces fines up to $250,000 and must pay restitution.

In his plea declaration, filed Sept. 27, Dachman states: “I choose to admit my guilt to being accountable for soliciting money from investors on the premise and condition that the money would be directed to the startup and nurturing of the business (Central Sleep) when in fact the majority of the money went to my personal benefit. Over the period of June 2008 to July 2010, I am guilty of taking approximately $700,000 in bonuses and fees above reasonable salary.”

Dachman operated Central Sleep, purportedly to treat sleep apnea and sleep-related illnesses through diagnostic studies in a patient’s homes; Advanced Sleep Devices, which claimed to sell equipment to treat sleep disorders; and Key Partners, which handled marketing for both businesses, the indictment stated.

Dachman admits in the plea documents that he “obtained money from investors by means of materially fasle and fraudulent pretenses.” Those included lying about how investor funds would be used and about his own academic and business backgrounds.

The indictment alleged that he then misappropriated at least $2 million of co-mingled investor and company funds to benefit himself and his family.

Instead of using the funds to operate the sleep clinic, Dachman used a significant amount to buy a two-acre mansion in Lake Forest; to operate a tattoo parlor in Chicago co-owned by his son-in-law; and to buy a new Range Rover, rare books and antiques, vacations and cruises for himself and his family, among other expenses.

After being indicted in August 2011, Dachman was ordered held in contempt in December 2011 after authorities caught him trying to sell some of the rare books for cash, and lying about other funds in his accounts, according to prosecutors.

Dachman tried to sell the books after telling the court he no longer owned them, and when the judge asked about other funds, Dachman said he had none. However, just after the hearing, he tried to collect about $13,000 from his security funds, according to prosecutors.



© 2014 Sun-Times Media, LLC. All rights reserved. This material may not be copied or distributed without permission. For more information about reprints and permissions, visit www.suntimesreprints.com. To order a reprint of this article, click here.