CHICAGO | Former Merrillville attorney Frederick Cuppy faces sentencing next month on a federal charge of perjury in a scheme to help hide the wealth of a corrupt former hospital executive in an offshore trust.
By pleading guilty to the perjury charge in November, Cuppy avoided trial on three counts of obstruction of justice and three additional perjury charges. The hearing is set for March 14.
A single count of perjury carries a maximum five-year prison term and a maximum fine of $250,000.
The charges against Cuppy, 72, stem from an alleged plot to help his client Peter Rogan thwart government and bank efforts to collect civil judgments totaling $188 million involving the fraud that led to the financial collapse of Edgewater Hospital in Chicago.
Rogan, formerly of Valparaiso, was the hospital's owner and CEO.
The U.S. Attorney’s Office alleges Cuppy, now of Fort Lauderdale, Fla., and an unnamed Florida lawyer helped Rogan create the trust, withhold information from authorities, and choose offshore locations to stash the money.
Rogan purportedly created a trust in the Bahamas in 1996 to protect his assets from future judgments. By 2002, the trust held $28 million.
Cuppy and Rogan allegedly engineered the trust so it would be funded with Rogan’s assets held by corporate entities. Cuppy transferred money from those entities to the trust, according to court documents. Rogan, a beneficiary of the trust, was eligible for distribution of income from the trust.
Rogan sold Edgewater 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 several of its officials pleaded guilty to federal criminal health care fraud. The charges involved kickbacks for patient referrals and medically unnecessary hospital admissions, tests and services.
Although Rogan was not charged criminally at that time, he was indicted in 2002 when the federal government filed a civil suit against him alleging Medicare and Medicaid fraud. He was ordered to pay more than $64 million, and was accused of providing false testimony, obstructing justice and destroying documents.
Also in 2002, Dexia Credit Local sued Rogan and was awarded $124 million.
Cuppy’s guilty plea involves false testimony during a U.S. District Court proceeding in connection with Dexia Credit Local’s post-judgment efforts to collect the $124 million. In 2004, the court ordered Rogan to produce all documents relative to the trust.