CHICAGO | A former Merrillville attorney was arrested Monday in Florida on federal charges alleging he lied to the government and banks in a multimillion-dollar fraud that led to the collapse of Chicago's Edgewater Hospital and Medical Center.
Frederick Cuppy, 70, of Fort Lauderdale, Fla., was charged in a 10-count indictment following a criminal complaint unsealed in May 2008 against his former client, Peter Rogan, the onetime owner of Edgewater.
Cuppy and Rogan were charged with one count each of conspiracy to obstruct justice in connection with an alleged scheme to thwart government and bank efforts to collect civil judgments totaling $188 million involving the fraud that led to Edgewater's collapse.
Cuppy was also charged with three counts of perjury and three counts of obstruction of justice. He appeared before a magistrate judge in federal court in Fort Lauderdale and remains in custody pending further court proceedings.
Rogan, formerly of Valparaiso, also was charged with two counts of perjury and one count of obstruction of justice. Rogan is living in Vancouver, Canada, and remains free on bond.
Rogan sold Edgewater, 5700 N. Ashland Ave., but continued to control the hospital and medical center through various businesses and investments. The hospital closed in December 2001 and entered bankruptcy in 2002 when four doctors, a vice president and the management company pleaded guilty to federal criminal health care fraud charges involving kickbacks for patient referrals and medically unnecessary hospital admissions, tests and services.
Rogan was not charged criminally at that time. But in 2002, the federal government filed a civil suit against him alleging Medicare and Medicaid fraud. He was ordered to pay more than $64 million and accused of providing false testimony, obstructing justice and destroying documents.
Also in 2002, Dexia Credit Local sued Rogan and was awarded $124 million.
According to the U.S. attorneys office, Rogan created a trust in the Bahamas in 1996 in an effort to protect his assets from future judgments. By 2002, the trust held $28 million.
The U.S. attorneys office alleges Cuppy and an unnamed Florida lawyer helped Rogan create the trust and choose an offshore location.
The indictment alleges Rogan and Cuppy conspired to obstruct justice in the government's and Dexia's federal cases between 2002 and October 2010 by withholding accurate information about the trust. Between 2002 and 2006, the feds allege, more than $11 million was distributed from the trust for Rogan and his wife.
Rogan and Cuppy face up to 20 years in prison on each obstruction count. Each perjury count carries a five-year maximum and all of the charges carry a maximum fine of $250,000.