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Stolen funds used to buy Lake Forest mansion

Updated: February 20, 2013 6:08AM

CHICAGO — A Glencoe man was sentenced to 10 years in federal prison Thursday for stealing more than $4 million from investors in his sleep disorder business.

U.S. District Judge James Zagel also sentenced Kenneth Dachman, 52, to three years supervised release after he completes his sentence, and ordered him to pay about $4 million in restitution, according to the U.S. Attorney’s Office.

Dachman pleaded guilty in October 2012 to 11 counts of wire fraud for allegedly stealing more than $4 million from 51 investors in a Northbrook sleep disorder business, the statement said.

Dachman operated Central Sleep, advertised to treat sleep apnea and sleep-related illnesses through diagnostic studies in a patient’s homes; Advanced Sleep Devices, which claimed to sell equipment to treat sleep disorders; and Key Partners, which handled marketing for both businesses, the indictment stated.

Dachman admitted in plea documents that he “obtained money from investors by means of materially false and fraudulent pretenses.” Those included lying about how investor funds would be used and about his own academic and business backgrounds.

“His business was not sleep apnea but putting money in his pocket,” the judge said.

Instead of using the funds to operate the sleep clinic, Dachman used a significant amount to buy a two-acre mansion in Lake Forest; to operate a tattoo parlor in Chicago co-owned by his son-in-law; and to buy a Range Rover, rare books and antiques, and vacations and cruises for himself and his family, among other expenses.

In his plea declaration, filed Sept. 27, 2011, Dachman stated: “I choose to admit my guilt to being accountable for soliciting money from investors on the premise and condition that the money would be directed to the startup and nurturing of the business (Central Sleep), when in fact the majority of the money went to my personal benefit. Over the period of June 2008 to July 2010, I am guilty of taking approximately $700,000 in bonuses and fees above reasonable salary.”

After being indicted in August 2011, Dachman was ordered held in contempt in December 2011 after authorities caught him trying to sell some of the rare books for cash, and lying about other funds in his accounts, according to prosecutors.

Dachman will be back in court Jan. 30, when Zagel will decide when he is to begin serving his sentence.

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