CHICAGO (CN) – A man swindled 50 people out of $4 million, claiming he would invest their money in his sleep-disorder business, then spent it to buy a mansion, run a tattoo parlor and go on Italian cruises, federal prosecutors say.
Kenneth Dachman, 52, of suburban Glencoe, was charged with 11 federal counts of wire fraud.
His business, Central Sleep Diagnostics, purported to treat sleep-related illnesses though diagnostic studies conducted in the patient’s home. Dachman also operated Advanced Sleep Devices, which sold the equipment used to treat sleep disorders, and Key Partners, which marketed both businesses.
But Dachman’s business model relied on fraudulently-solicited funds, the government charged, which he obtained between 2008 and 2010 by misrepresenting expected returns and lying about the risks involved, his business background and the companies’ financial conditions, according to a federal indictment.
Dachman allegedly offered a personal guarantee of investors’ principal, as well as monthly payments up to 24 percent.
But he had almost no assets to fund the guarantees and had already declared personal bankruptcy seven times, the Justice Department claims.
Dachman allegedly lied to investors, claiming that he held a doctorate from Northwestern University and reporting that his business was “on pace to be the most important and largest sleep diagnostic firm in the world.”
Instead of putting the money into his businesses, Dachman spent at least $2 million to buy himself a two-acre mansion and Land Rover, travel the world, gamble in Las Vegas, and operate a tattoo parlor, according to a press release.
Each count of wire fraud carries a maximum penalty of 20 years in prison and a $250,000 fine. The indictment also seeks forfeiture of at least $4 million, as well as the Land Rover.