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Former nursing home chain owner Joseph Schwartz was taken into custody Thursday afternoon to face more than 20 federal labor and income tax-related fraud charges, according to authorities.

An insurance broker until 2015, Schwartz quickly built the Skyline Healthcare chain only to see it crumble from 2017 to 2019 amid allegations of mismanagement and wrongdoing. The Department of Justice alleges Schwartz did not pay employment and unemployment taxes for more than 15,000 employees at 95 facilities in 11 states.

“From mid-2017 through June 2018, Schwartz failed to pay over $29.5 million in payroll and unemployment taxes to the IRS,” a DOJ press release said.

Schwartz was taken into custody at his New York home, according to an NBC News report, citing information from a pair of unnamed law enforcement officials. Later, he appeared at a hearing in nearby Newark, NJ. His lawyer did not respond to NBC’s request for comment, the news organization said.

Schwartz was indicted on 22 counts by a federal grand jury in New Jersey since Skyline was headquartered there. The company’s small office and relatively thin infrastructure left veteran industry watchers scratching their heads over how more than 100 facilities could be adequately administered without more support. As it turns out, they couldn’t, authorities say.

Emergency arrangements were made in a handful of states to tend to the housing and care for hundreds of patients as the chain fell apart and some facilities closed. At one time, Skyline facilities served more than 7,000 patients.

Further Skyline troubles

Last month, Schwartz was accused of Medicaid fraud worth $3.6 million in Arkansas. He faces 10 state felony charges there.

Arkansas Attorney General Leslie Rutledge said last month that in addition to not paying its bills, Schwartz made false statements in monthly Medicaid cost reports. An attorney for Schwarz said he will strongly fight those charges, according to an NBC report.

Civil charges filed by Nebraska Attorney General Doug Peterson accuse Schwartz and his wife, Rosie, of falsely filing Medicaid documents that led to $59 million in overpayments for Skyline’s 22 facilities there. 

He also is involved in a variety of civil lawsuits in states where Skyline operated.

Schwartz, 62, is expected to face numerous lawsuits filed by former patients and their estates, alleging substandard care. That is in addition to a 2020 complaint filed by employees in four states, claiming Schwartz stole $2 million from them after they paid for insurance coverage that wasn’t delivered.

His facilities were owned or managed via a variety of subsidiaries. A significant number were leased from Golden Living Centers. Holdings ranged from the Plains states to Pennsylvania, Florida and Massachusetts, the last of which fined Skyline operators more than $85,000 in 2019 for wage theft.

Schwartz still holds business interests in at least a handful of facilities, according to ownership records cited in various reports. His sons were vice presidents of Skyline and at least one remains an operators in the industry.

He sold his insurance business in 2015 to an unnamed company, in part, to finance acquisitions to build the Skyline presence. He then became a highly paid agent of that company, earning commissions for selling insurance to Skyline facilities and their employees, according to

Each of two counts of 401K benefit plan fraud he was charged with Thursday is punishable upon conviction by a maximum of 10 years in prison and a $100,000 fine. Two counts of unemployment tax evasion could result in up to five years in prison and a fine up to $100,000. Charges relating to failure to collect and pay employment taxes, and tax evasion, are punishable by a maximum of five years in prison and a maximum $10,000 fine, according to DOJ.