Former American Senior Communities executives indicted

[nitpicker]

https://www.justice.gov/usao-sdin/pr/former-american-senior-communities-executives-indicted

Department of Justice
U.S. Attorney’s Office
Southern District of Indiana

FOR IMMEDIATE RELEASE
Wednesday, October 12, 2016

Former American Senior Communities executives indicted

Former CEO and COO of major nursing home chain charged in over $16 million fraud and kickback scheme

INDIANAPOLIS - United States Attorney Josh J. Minkler announced the indictment of four individuals for their roles in a vast fraud, kickback, and money laundering scheme involving Indiana nursing home chain American Senior Communities (ASC). Those charged include James Burkhart, 51, of Carmel, who formerly served as ASC’s Chief Executive Officer, and Daniel Benson, 51, of Fishers, who served as Chief Operating Officer. The four men charged are alleged to have personally pocketed millions in kickbacks and fraudulent overcharges, which they spent on vacation homes, private plane flights, golf trips, expensive jewelry, gold bullion, and casino chips.

The thirty-two count indictment charges Burkhart and Benson, along with Burkhart friend and associate Steven Ganote, 42, of North Salem, and Burkhart’s brother Joshua Burkhart, 42, of Fishers, with one count of conspiracy to commit mail, wire, and health care fraud, along with multiple other counts of mail fraud, wire fraud, and money laundering. Additionally, the indictment charges James Burkhart, Benson, and Ganote with one count of conspiracy to violate the federal Anti-Kickback Statute.
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ASC is one of Indiana’s largest nursing home chains. It manages the daily operations of approximately 70 senior care facilities throughout Indiana on behalf of the Health & Hospital Corporation of Marion County (Health & Hospital), a public health organization that administers hospitals, like Eskenazi Health, as well as nursing homes. To manage the facilities, ASC purchases and refers patients to a wide variety of products and services provided by outside companies. Nearly all of these products and services are paid for with money from Medicare and Medicaid.

According to the indictment, between 2009 and 2015, James Burkhart and his co-conspirators engaged in side deals with many of these outside vendors for their own personal benefit – unbeknownst to, and at the expense of Health & Hospital and ASC’s owners. These side deals often involved intentionally overcharging ASC and Health & Hospital for the products and services the vendors provided and then funneling the overcharged amounts back to themselves through a web of shell companies. For example, the indictment alleges that James Burkhart directed a landscaping vendor to artificially inflate its invoices to ASC by 45%. After James Burkhart had ASC pay the invoices, the landscaping vendor paid the 45% overcharge back to one of James Burkhart’s shell companies, which he then split with the landscaping vendor’s shell company. False and inflated invoices through the landscaping vendor allegedly defrauded ASC and Health & Hospital out of over $2.3 million.

In other instances, the vendors simply paid kickbacks to James Burkhart, Benson, and Ganote in exchange for doing business with ASC. For example, the indictment alleges that the vendor who provided pharmacy services at ASC-managed facilities paid three of Ganote’s shell companies over $5.5 million in two years for purported “marketing” services. Ganote regularly split this money among James Burkhart, Benson, and himself.

Furthermore, according to the indictment, vendors that questioned the overcharges and kickbacks were turned down. For example, James Burkhart, Benson, and Ganote approached a company about installing new nurse call systems in all ASC facilities. They told the company to mark up their prices by 30% and pay the overcharged amount back to a shell company. The company declined to inflate its prices. James Burkhart immediately terminated negotiations and moved on to a second company, which agreed to the inflated-invoice deal. After the nurse call systems were installed, this second company was used again and again for big-ticket electrical contracting, such as generators at ASC facilities. In total, these overcharges allegedly came to over $3.7 million.

The defendants’ scheme allegedly capitalized on much more than ASC’s need for landscaping, pharmacy, and nurse call systems. The indictment contains allegations concerning food supplies, medical supplies, patient lifts, patient therapies, interior decorations furniture, office supplies, scent products, American flags, patient discharge packages, uniforms, and Alzheimer’s Memory Walk t-shirts.

The indictment alleges that the fraudulent proceeds and kickbacks were laundered through over 20 shell companies and bank accounts, and then divided among the four men for their personal use and benefit. Some of the illegal proceeds, for example, were allegedly used to pay for real estate on Lake Wawasee, Indiana, and Marco Island, Florida, elaborate diamond jewelry, Rolex watches, multiple gold bars, dozens of gold coins, gambling chips at Caesars Palace Las Vegas, extensive use of a private plane, and political contributions. In total, the indictment alleges that the defendants received over $16 million from their fraud and kickback scheme.
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