The former chief executive officer of American Senior Communities and three others with ties to the company were arrested Wednesday and charged for their alleged roles in a $16 million healthcare fraud and kickback scheme.
Former CEO James Burkhart was charged with conspiracy to commit healthcare fraud, mail fraud, wire fraud, money laundering and conspiracy to violate the federal anti-kickback statute. The indictment includes similar charges against former ASC Chief Operating Officer Daniel Benson, Burkhart’s brother Joshua Burkhart, and Burkhart friend and associate Steven Ganote.
The four men allegedly engaged in side deals with outside vendors between 2009 and 2015, intentionally overcharging Indianapolis-based ASC and Health & Hospital Corporation of Marion County (which owns the facilities and pays American Senior to operate them) for products and services. ASC and Health & Hospital’s owners were unaware of the scheme, according to officials.
In one example provided by federal officials, Burkhart allegedly instructed a landscaping vendor to inflate its invoice to ASC by 45%; the extra $2.3 million in funds garnered in the landscaping scheme were then funneled through one of Burkhart’s shell companies. In another instance, an unnamed pharmacy services vendor reportedly paid three of Ganote’s shell companies $5.5 million in exchange for doing business with ASC.
ASC operates nearly 100 senior living and skilled nursing facilities, including 70 in Indiana that are operated on behalf of Health & Hospital. It currently ranks as the 17th largest skilled nursing provider in the United States.
The alleged fraudulent proceeds — more than $16 million in total — were regularly split between the men and spent on golf trips, Rolex watches, casino chips, vacation homes, gold bars and political contributions.
In a statement released Wednesday, ASC said it will continue to cooperate with federal agencies investigating the “betrayal of trust by two of its former officers.”
“ASC has emerged from this process a stronger, more vital organization,” the statement reads. “ASC has implemented many safeguards, and strengthened the organization with new leadership under the direction of CEO Donna Kelsey.”
If convicted, the four could face sentences of 20 years in prison for the conspiracy to commit healthcare fraud charge, 20 years for each mail or wire fraud count, and between 10 and 20 years for each money laundering charge. James Burkhart, Benson, and Ganote also face the possibility of an additional 5 years in prison for conspiracy to violate the anti-kickback statute.
Burkart was fired from the company in September 2015, days after FBI officials raided his home and ASC’s headquarters. Benson was fired the next month.
