Since the dramatic FBI raids became known three years ago, there have been few long-term care stories more compelling than the “looting” of American Seniors Communities by some of its former executives.
The $19.4 million maze of financial subterfuge and brazen fraud has had all the elements of a script made for Hollywood.
And now we know the rest of the story, which includes federal authorities apprehending some of the suspects just before they boarded a helicopter loaded with thousands of dollars of cash, headed out of state to a pro golf tournament.
Thanks to some outstanding reporting by Greg Andrews of the Indianapolis Business Journal this week (linked below), we learn the background on how Indiana’s largest nursing home chain was fleeced from the inside. The conspirators’ brazen plot flew under the radar for years, and then fell apart, at times under almost comical circumstances.
We learn the identity of the “hero,” a furniture vendor who refused to join the massive deception and alerted federal authorities. Reading about the subsequent sting operation, with flipping of informants, undercover deals, the recovery of gold bars and revelations of lavish spending is page-turning stuff.
The tragi-drama climaxed earlier this month, with the sentencing of its five main players, all of whom took plea deals. Grabbing the most headlines was James Burkhart, the former company CEO. His sentence hearing landed him a 9½-year term behind bars and drew an overflow crowd that included an impromptu video production of its own, streaming a live feed so those who couldn’t fit even into an adopted, substitute courtroom could witness a federal judge’s decision.
In a most-recent twist, Burkhart’s inner circle contends that government malfeasance is actually at the core of his downfall. He never would have taken a plea deal, copping to three of 20 counts against him, if certain facts were brought to light, confidants told McKnight’s, and select other media outlets, making thus far unconfirmed allegations.
The ‘hero’
Law officials were clear that they have David Bratton, the president and chief operating officer of Business Furniture LLC, to thank for toppling the ring. Bratton called the FBI in June 2015 after being recruited to join the scheme by one of the defendants, Steven Ganote.
“Bratton then turned over emails and other records and agreed to record phone conversations, one of which captured Ganote implicating his friend James Burkhart,” reporter Andrews wrote in the IBJ.
That led to an FBI interview of landscaper David Mazanowski, who admitted to wrongdoing even before federal agents suspected him. Mazanowski flipped and wore a wire to breakfast meetings with Burkhart, who had created shell companies for converting illegal kickbacks and billing proceeds.
“Those two cooperators and the information they provided, along with the covert recordings they were able to make, provided critical evidence in this case,” said one of the Assistant U.S. Attorneys who led the prosecution. “Without human cooperators, we don’t make cases like this, or they’re a lot harder to make.”
As for Bratton and colleagues’ roles in collapsing the house of cards, a Business Furniture spokesman said in a statement: “When they saw this, they really felt in their heart of hearts they needed to do the right thing, and that’s what they did.”
Prosecutors said that more than two dozen other entities were involved in overbilling and kickback arrangements. Many kinds of good and services were involved in kickbacks, including everything “from landscaping and nurse call lights to American flags and hospice services.”
Bratton’s role is only part of the virtue in this saga. Another includes halting the fraudulent flow of millions of dollars from state and federal government programs, such as Medicare and Medicaid. At least some will be repaid, as we’ve earlier reported. Authorities discovered more than $1 million in gold bars, gold coins and cash stashed in a home safe when they raided Burkhart’s residence and offices. Officials said more than $7 million in real estate, jewelry and other items has already been seized.
Another big learning point from all of this has been on the part of the remaining ASC leaders and their overseers. They’ve re-enforced controls and installed new back-up procedures; prosecutors concede that the complexity and level of deception was so intricate, it would have been hard to uncover without special help. Last fall, the company filed civil suit against Burkhart and various others for “looting” the company.
At the time of his arrest, Burkhart earned well over $1 million per year and had been paid more than $7.4 million in additional consulting fees by the Jackson family, which owns ASC, in addition to vast holdings in other industries.
But clearly, wiretapped conversations revealed, Burkhart thought he was entitled to much more, authorities said. This somehow led him down an audacious path that, who knows, some day could land on the big screen.
Follow Editor James M. Berklan @JimBerklan.
