Guilty Plea in Elaborate Fraud Scheme

By Christopher Brown

Dec. 15 — An Indiana resident has pleaded guilty in an elaborate fraud scheme in which con artists impersonated representatives of Kansas City-based Cerner Corp. and other companies to entice dozens of physicians to invest more than $6 million, sold an MRI to a Dallas hospital for more than $1 million and manipulated and influenced several court proceedings, U.S. Attorney for the Western District of Missouri Tammy Dickinson said Dec. 14.

The defendant, David Hernon, pleaded guilty Dec. 14 to a federal information charging him with conspiracy to commit wire fraud between August 2008 and February 2015. Three of Hernon's co-conspirators, David Tayce, Richard Bryant and Christina Bryant, previously pleaded guilty to their roles in the scheme.

According to a statement from Dickinson's office, the con artists carried out the scheme by creating dozens of fake companies that were designed to “impersonate” leading industry companies, and created an infrastructure for each company that enabled the fraud to be accomplished. The conspirators registered Internet domains similar to existing company domains in order to make e-mail accounts appear legitimate. They also leased virtual office space in the cities of the existing companies, established telephone numbers in the area codes of existing companies and impersonated actual employees of the real companies.

The conspirators then used the identities of actual as well as fictional employees to communicate with investors, conduct business transactions and manipulate court proceedings, the statement said. They also provided fabricated documents, agreements, quotes and invoices that purported to be from the fake and fictional employees, it said.

One of the companies that the con artists impersonated was Cerner, a global supplier of health-care information-technology services, devices and hardware. To help win $6 million in investments from more than 50 physicians, the conspirators used false representations of commitments from other customers and investors, including Cerner, along with false financial statements and projections, the statement said.

A spokesman for Cerner declined to comment on the plea.

As part of their scheme to sell MRI machines, conspirators showed MRI images that were altered to falsely make them appear to have been created by an “iHeart” machine, the statement said. Conspirators also showed physicians demonstrations of an MRI machine that they claimed was manufactured by Lux Imaging Systems using new technology, but which in reality had been put together with used components from which the labels had been removed, the statement said.

They also hid the fact that Lux Imaging Systems was an entity created and controlled by the conspirators, it said.


Conspirators used the fraudulent infrastructure they created to manipulate the filing and settlement of the involuntary bankruptcy of CMI Holding Co. Inc. in the Northern District of Texas, the statement said. Conspirators impersonated bondholders in filing the bankruptcy, and then continued to impersonate them throughout the negotiation of the settlement of the bankruptcy.

The conspirators also managed to impersonate an investor, which enabled them to participate in settlement discussions from the other side of the litigation as well, it said. As part of this scheme, they used fabricated documents and communications purporting to be from Cerner to obtain a larger settlement. Conspirators also created an entity to receive the funds of the settlement in place of the bondholders, and later conspired to cover it up by providing false testimony in yet another case, the statement said.

Conspirators also manipulated the trial in the case of LBDS Holding Co., LLC v. ISOL Technology, Inc. (E.D. Tex., No. 6:11-cv-428) by providing false testimony during the trial about Cerner, and by causing the admission of fabricated documents and agreements with Cerner, it said. The court in that case, in May, granted ISOL Technologies' motion for sanctions, vacated a $25 million jury award handed down in favor of LBDS in March 2014 and awarded ISOL over $700,000 in attorneys' fees.

Conspirators used the elaborate infrastructure of business entities, website domains, phone numbers, addresses, bank accounts and identities as a shield to prevent others from detecting their fraud, all while the conspirators continued to use this scheme repeatedly over several years to mislead new investors, new business partners and new courts, it said.

Under federal statutes, Hernon, Tayce and the Bryants are each subject to a sentence of up to 20 years in federal prison without parole, plus a fine up to $250,000 and an order of restitution. Sentencing hearings will be scheduled after the completion of presentence investigations by the U.S. Probation Office.

This case is being prosecuted by Assistant U.S. Attorney Matthew P. Wolesky.

An attorney for Hernon could not be reached for comment Dec. 15.

To contact the reporter on this story: Christopher Brown in St. Louis at

To contact the editor responsible for this story: Janey Cohen at