The Chicago Office of the Federal Bureau of Investigation announced today that Kenneth A. Dachman, 52, of Glencoe, Illinois and formerly of Lake Forest, Illinois was indicted on federal charges for allegedly fraudulently obtaining approximately $4 million from more than 50 investors in now-defunct sleep disorder businesses that he operated in Northbrook.
Dachman operated Central Sleep Diagnostics, LLC, set up to treat sleep apnea and sleep-related illnesses by conducting diagnostic studies in a patient’s own home instead of a hospital or clinic and Advanced Sleep Devices, LLC, that was to sell equipment used to treat sleep disorders to patients. He also operated Key Partners, LLC, to handle marketing for both businesses.
From July 2008 through January 2009, the indictment alleges that Dachman falsely represented to the first 15 investors in Central Sleep that their combined funds of approximately $1.4 million would be used to open and operate Central Sleep.
In fact, he allegedly intended to and did use over $1 million of these funds for his own use and benefit, including the purchase a two-acre mansion in Lake Forest, Illinois, vacations and cruises for himself and his family to Italy, Nevada, Florida and Alaska, a new sport utility vehicle, to fund personal gambling in Las Vegas and stock trading, and to purchase rare books and antiques.
He also used more than $200,000 for personal stock trading, more than $180,000 to operate the tattoo parlor in Chicago that was co-owned by his son-in-law, Windy City Ink, and more than $160,000 to fund checks made payable to himself and his wife, even though at the time, Central Sleep had not received any income from the operation of its business.
Dachman personally guaranteed to repay certain investors’ principal without disclosing that he had almost no assets to fund the guarantees and that he had declared personal bankruptcy on seven prior occasions. He also allegedly falsely told victims that he had a PhD from Northwestern University, and had invested his own funds in Central Sleep, knowing that he had not done so. He told prospective investors and investors that the funds he raised would be used to purchase sleep-related equipment, to rent office space, to set up the companies’ offices, to hire and pay administrative personnel, and to retain and pay physicians to review sleep diagnostic studies.
Kenneth A. Dachman, was charged with 11 counts of wire fraud in an indictment returned by a federal grand jury yesterday, if found guilty, each count of wire fraud carries a maximum penalty of 20 years in prison and a $250,000 fine, and restitution is mandatory.