Chicago Loretto Hospital COVID-19 Fraud Case Dismissed as Judge Questions U.S. Attorney’s Office

CHICAGO (WLS) — Federal prosecutors have withdrawn all charges against two defendants in a COVID-19 fraud case tied to a hospital, after defense lawyers alleged prosecutorial misconduct and triggered pointed scrutiny from the judge handling the matter.

Before approving the government’s request to drop the case, U.S. District Judge Sharon Johnson Coleman pressed prosecutors for answers during a hearing at the Dirksen Federal Building, signaling clear frustration with the leadership of the U.S. Attorney’s Office.

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The case involves alleged fraud connected to COVID-19 testing at Loretto Hospital during the pandemic. Prosecutors had accused the defendants of filing false claims related to that testing, but lawyers for two of the accused challenged the indictments by raising concerns about misconduct during the grand jury proceedings.

In response, the government sought dismissal of 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 hearing drew additional notice because the assistant U.S. attorney involved in presenting the Loretto Hospital case to the grand jury also worked on the separate “Broadview Six” case, which was thrown out after similar allegations of prosecutorial misconduct. That earlier grand jury proceeding was also handled by Assistant U.S. Attorney Sheri Mecklenberg.

At the hearing, Judge Coleman also took issue with the absence of U.S. Attorney Andrew Boutros, who heads the office, arguing that responsibility should not rest solely with individual prosecutors.

“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.”

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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