Judge questions US Attorney's Office as charges are dropped in Loretto Hospital fraud case

CHICAGO (WLS) -- Federal prosecutors have dropped all charges against two defendants in a hospital COVID-19 fraud case after their attorneys raised allegations of prosecutorial misconduct, prompting sharp questions from the judge overseeing the case.

Before granting the government's motion to dismiss, U.S. District Judge Sharon Johnson Coleman sought explanations from prosecutors during a hearing Friday at the Dirksen Federal Building, expressing frustration with leadership at the U.S. Attorney's Office.

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The case centers on alleged fraud tied to COVID-19 testing at Loretto Hospital during the pandemic. Defendants were indicted for submitting fraudulent claims related to that testing, but attorneys for two of them raised concerns about misconduct before the grand jury that returned the indictments.

As a result, prosecutors moved to dismiss the charges against Mahmood Khan and Suhaib Chaudhry. Assistant U.S. Attorney Diane MacArthur told the court, "We decided that providing the defendants with their relief... is not an unjust result given the culpability in the case pending before you."

The proceedings drew added attention because the assistant U.S. attorney who handled the grand jury in the Loretto Hospital case also worked on the so-called "Broadview Six" case, which was dismissed following allegations of prosecutorial misconduct. Assistant U.S. Attorney Sheri Mecklenberg handled the grand jury in that earlier case as well.

During the hearing, Judge Coleman criticized the absence of U.S. Attorney Andrew Boutros, who leads the office, saying accountability should extend beyond individual prosecutors.

SEE ALSO | Former Loretto Hospital CFO Anosh Ahmed among 3 charged in $15M embezzlement scheme

"You keep pointing the finger at Sheri Mecklenberg, this is not a one-man show. It should be the U.S. Attorney, and he's not here," Coleman said. "It's his decision who he puts in that position... that's why he got the big job, but he's not here."

Following Friday's court hearing, Boutros shared a statement with ABC7, saying "Two veteran federal prosecutors who are also Senior Litigation Counsels, meaning they have some of the most in-court experience in the Office, are currently handling both Loretto I and II, which are pending before different United States District Court Judges. Both prosecutors ably discharged their duties on behalf of the United States today in court, including in their handling of the motion to dismiss."

Former federal prosecutor Ron Safer said the dismissals reflect broader concerns within the office.

"It takes a lifetime to build a trust, but it can be destroyed in a second, and that's what's happening to the generations of goodwill that this office has had, because it's always done the right thing until now," Safer said. "It says that there's a fundamental failure of leadership. Things are happening in the office that have never happened before. This is a scandal."

For Khan and Chaudhry, the case is now closed. Two other defendants indicted in the Loretto Hospital fraud case could still face superseding indictments through a different grand jury.

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