Kenneth Dachman Gets 10 Years for Draining Sleep-Apnea Startups' Investors to Buy a Lake Forest Mansion

Case from 2013–2014 (U.S. Attorney's Office release: Jan. 17, 2013; later developments are from court records and other sources cited below). Published on Scammers.com Oct. 16, 2026; case status is current as of that date.

Kenneth A. Dachman, 52, of Glencoe, formerly of Lake Forest, was sentenced on Jan. 17, 2013, to 10 years in federal prison. He had fraudulently raised more than $4 million from 51 investors in sleep-disorder businesses he ran in Northbrook, the U.S. Attorney's Office for the Northern District of Illinois announced. (The release spells his first name "Kennth.") [1] The Seventh Circuit affirmed on Feb. 18, 2014 [2]. It described the victims as elderly investors.

"His business was not sleep apnea but putting money in his pocket," U.S. District Judge James Zagel said at sentencing [1].

How the scheme worked

According to prosecutors and the indictment [1]:

1. The companies: Central Sleep Diagnostics LLC said it ran at-home sleep studies, Advanced Sleep Devices LLC said it sold sleep-disorder equipment, and Key Partners LLC handled marketing.
2. The investments: From June 2008 to September 2010, Dachman and a director of investor relations sold units in the companies. They also sold "Convertible Debt Agreements" that Dachman personally guaranteed with monthly payments equal to 5% to 24% a year, and equipment purchase-and-leaseback deals.
3. The lies: He falsely claimed a PhD from Northwestern University and said he had put his own money in. He didn't disclose that he had almost no assets behind his guarantees and had filed personal bankruptcy seven times before. As late as March 2010 he called Central Sleep "on pace to be the most important and largest sleep diagnostic firm in the world."
4. First 15 investors: Of about $1.4 million they put in, Dachman used almost $1 million for himself, including more than $200,000 for stock trading, more than $180,000 for Windy City Ink, a Chicago tattoo parlor co-owned by his son-in-law, and more than $160,000 in checks to himself and his wife.
5. Other spending: He bought a two-acre Lake Forest mansion and a new SUV, and spent investor money on family vacations and cruises to Italy, Nevada, Florida and Alaska, Las Vegas gambling, and rare books and antiques.

The sentence

Kenneth A. Dachman, 52, Glencoe (formerly Lake Forest)

• Plea: guilty to 11 counts of wire fraud in October 2012, without a plea agreement.
• Sentence: 10 years in prison and three years of supervised release, plus restitution and forfeiture of just over $4 million each. Prosecutors established that he misappropriated at least $2 million. They also noted his history of bankruptcies and civil suits, including two contempt findings [1].
• Appeal: He challenged the loss amount, the denial of credit for acceptance of responsibility, and the length of the sentence given his health problems. The Seventh Circuit affirmed (No. 13-2353), 743 F.3d 254 [2].

The FBI investigated with help from the SEC.

Red flags

• A promoter's personal guarantee of principal and fixed monthly payments on a startup.
• Credentials you can't verify. Check degrees directly with the school.
• Prior bankruptcies and lawsuits you can find on PACER, CourtListener or county court sites.

Protect yourself

1. Search court records for the promoter's name before investing.
2. Ask for audited financials and bank statements showing how earlier money was spent.
3. Report it to the SEC at sec.gov/tcr and the FBI at tips.fbi.gov.

Case status (as of Oct. 16, 2026)

Defendant	Court	Status as of Oct. 16, 2026	Source
Kenneth A. Dachman	N.D. Ill. (Judge Zagel), 11 CR 504; 7th Cir. No. 13-2353	Pleaded guilty Oct. 2012 to 11 counts of wire fraud; sentenced Jan. 17, 2013, to 10 years; affirmed Feb. 18, 2014	[1], [2]

Sources

1. U.S. Attorney's Office, Northern District of Illinois, "North Suburban Man Sentenced To 10 Years In Prison For $4 Million Fraud Of 50 Investors In Sleep Disorder Businesses," Jan. 17, 2013. https://www.justice.gov/usao-ndil/pr/north-suburban-man-sentenced-10-years-prison-4-million-fraud-50-investors-sleep
2. U.S. Court of Appeals for the Seventh Circuit, United States v. Kenneth Dachman, No. 13-2353, Feb. 18, 2014. https://storage.courtlistener.com/pdf/2014/02/18/united_states_v._kenneth_dachman.pdf

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