Prison for 2 who embezzled hundreds of thousands of dollars from Park Nicollet clinic

Two Twin Cities men are going to prison for embezzling hundreds of thousands of dollars from a Park Nicollet clinic where they worked.

In U.S. District Court in Minneapolis on Tuesday, Gregory C. Koch, 59, of Minneapolis, was sentenced to a term of just shy of 3 ¹⁄₂ years and Jerome D. Kangas, 59, of Blaine, received a 2 ¹⁄_2-year term.

The men's sentence also includes two years' supervised release upon leaving prison and an order to jointly pay restitution of more than $367,000, well short of the amount that prosecutors alleged was stolen.

Jurors convicted Koch and Kangas in late September of mail fraud and conspiracy to commit mail fraud in a scheme that spanned several years while they worked for the Park Nicollet CPAP clinic in St. Louis Park. Kangas also was convicted of currency transaction fraud.

According to prosecutors:

Kangas was hired in June 2013 as a clinician in the CPAP clinic, where Koch was the supervisor and later the manager. CPAP machines treat sleep apnea.

Although Kangas worked only after-hours and weekends responding to patient calls, Koch entered more than 8,500 weekday hours on behalf of Kangas for work he did not perform. On most of the days while being paid, Kangas was either working for another employer or out of town.

Between June 2013 and June 2018, Koch and Kangas defrauded Park Nicollet of more than $505,000 in pay. The scheme was discovered when Koch was laid off in 2018 because of the acquisition of Park Nicollet by HealthPartners.

The currency transaction fraud Kangas committed occurred in 2017 when Kangas made six withdrawals between $5,000 and $5,500 from four Wells Fargo Bank branches within 12 days, for a total of $30,500.

Federal law requires banks to report currency transactions above $10,000, as a means of detecting financial crimes. Four days after the last $5,500 withdrawal by Kangas, Koch made a $29,300 cash deposit into his own US Bank account.