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Sleep Disorder Clinic Owner Indicted For Alleged $4 Million Fraud

Glencoe man allegedly purchased Lake Forest mansion, Land Rover and more with investors’ funds rather than operating a Northbrook business as promised.

The owner of a sleep disorder business was indicted on federal charges Monday after he allegedly defrauded more than 50 investors of $4 million.

Kenneth A. Dachman, 52, of Glencoe and formerly Lake Forest, allegedly lied about the fact that he had seven previous bankruptcies and used investors’ funds to buy a mansion, a new SUV and cruises, among other purchases. He was indicted on 11 counts of wire fraud in connection with two Northbrook businesses and one Lake Forest company, according to a press release from the U.S. Department of Justice.

Dachman allegedly raised more than $4 million from investors between June 2008 and September 2010 by misrepresenting the use of the funds, his business background and the financial condition of his companies, He told investors the money would go to fund Central Sleep Diagnostics LLC and Advanced Sleep Devices LLC in Northbrook, and Key Partners LLC in Lake Forest, according to the indictment. Central Sleep Diagnostics billed itself as a treatment center for patients with sleep-related illnesses, while Advanced Sleep supposedly sold equipment to treat such conditions. According to Dachman, Key Partners was an international marketing firm for the other two businesses.

But rather than using investors’ money to operate his business, Dachman bought a 2-acre mansion in Lake Forest; helped fund Windy City Ink, a tattoo parlor owned by his son-in-law in Chicago; purchased a 2008 Land Rover, gambled in Las Vegas and bought vacations and cruises to Italy, Nevada, Florida and Alaska. 

Between July 2008 and January 2009, Dachman told investors that their combined funds of $1.4 million would be used to open and operate Central Sleep, according to the indictment. Instead, Dachman allegedly used nearly $1 million of the money for himself, including more than $200,000 spent in stock trading and more than $160,000 made out in checks payable to himself and his wife. At the time, Central Sleep had not yet received any income, according to the indictment. 

Despite promising investors that he would personally guarantee the repayment of their principal, Dachman did not disclose the fact that he had almost no assets and had declared personal bankruptcy seven times. He also allegedly lied to investors, claiming that he had invested his own money in Central Sleep, when in fact he had not, and claiming he had a PhD from Northwestern University, a school he never attended, according to the indictment. 

By March 2010, Central Sleep was having cash flow problems, because Dachman was allegedly taking the money himself. At that point, he asked for an additional $25,000 from his investors. He also promised monthly interest payments to his investors, despite not having the funds, but ultimately defaulted, causing a total loss of $4 million to more than 50 investors. 

If convicted, Dachman could face up to 20 years in prison and a $250,000 fine for each count of wire fraud. The government also seeks forfeiture of at least $4 million in assets and the 2008 Land Rover. 

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