American Senior Communities filed a lawsuit on Friday against several of its former executives and vendors, alleging they “systematically looted” the long-term care provider over the course of seven years.
The complaint, filed in the United States District Court for the Southern District of Indiana, claims the executives and vendors engaged in a “pattern of racketeering activity” that exploited the company from 2008 up until an FBI raid on its headquarters and former CEO James Burkhart’s home in September 2015.
Along with Burkhart, former COO Daniel Benson, former CFO Roger Werner, Burkhart’s business associate Steven Ganote, and Burkhart’s brother Joshua Burkhart are named as defendants in the complaint. Neither Ganote or Joshua Burkhart worked at ASC, but owned businesses that provided services or products to the company, the complaint said. Also listed are several vendors and shell companies owned by the defendants.
Both Burkhart brothers, Benson and Ganote were indicted last year on multiple healthcare- and fraud-related charges.
ASC’s nearly 80-page complaint contends that the defendants sought to enrich themselves through a variety of kickback schemes, unapproved bonuses and money spent on personal travel and entertainment. Among the “inappropriate expenditures” reportedly charged by Burkhart and Benson between 2012 and 2015 is more than $1.6 million spent on sporting events, $140,000 on travel to China and $73,000 for gift cards.
Burkhart also allegedly sought to limit communication and “create distrust” among ASC employees and the company’s owners in an effort to conceal overcharging to vendors while the scheme was ongoing, the complaint reads.
“During this time period, ASC was focused on its mission: to care for some of society’s most vulnerable persons, the sick and the elderly,” the complaint reads. “Defendants exploited ASC’s singular focus on providing first-class care to its patients to defraud the Company out of tens of millions of dollars.”
ASC’s complaint requests a jury trial, as well as damages and attorneys’ fees for for the provider.