James Burkhart’s conspiracy reaped nearly $19.4 million in
fraud and kickbacks, funding
private jets, vacation homes, diamond jewelry, and gold bars
INDIANAPOLIS B United States Attorney Josh J. Minkler today
announced the sentencing of the former CEO of American Senior Communities (ASC)
in a massive fraud, kickback, and money laundering conspiracy. James Burkhart,
53, of Carmel, was sentenced to 114 months imprisonment by U.S. District Court
Judge Tanya Walton Pratt.
“In spite of receiving a salary of over $1 million, Burkhart
abused his official position of trust to steal tax payer dollars intended to
benefit this community’s sick, elderly and mentally challenged,” said Minkler.
“Because this thief was motivated by nothing other than corruption and greed,
we sought a justifiably harsh sentence. Hopefully, the sound of the prison door
slamming shut on this 9.5 year sentence will deter other officials from the
culture of corruption and greed we see in this district.”
Today’s sentencing caps a three-year federal investigation
and prosecution of Burkhart, who was charged with ASC Chief Operating Officer
Daniel Benson, Burkhart friend and associate Steven Ganote, and Burkhart’s
younger brother, Joshua Burkhart. In September 2015, federal agents executed
search warrants at Burkhart’s residence and ASC office, among other locations.
By October 2016, a federal grand jury indicted Burkhart and his co-defendants.
And by January 2018, all of the defendants had pleaded guilty to federal felony
charges.
For his part, Burkhart pleaded guilty to three federal
felony offenses: conspiracy to commit fraud, conspiracy to violate the health
care anti-kickback statute, and money laundering. All told, he and his
co-conspirators funneled nearly $19.4 million in fraud and kickbacks to
themselves through a web of shell companies. The majority of the money they
stole came from the Health & Hospital Corporation of Marion County, part of
Indiana’s public health system and the operator of health care facilities like
Eskenazi Hospital.
Burkhart’s fraud and kickback schemes, which spanned nearly
six years, exploited numerous aspects of ASC’s operations. ASC is Indiana’s
largest nursing home chain. It manages approximately 70 senior care facilities
throughout the state, and to run those nursing homes, ASC purchases a wide
variety of goods and services provided by outside vendors. The bulk of the
money to pay those vendors’ bills comes from Health & Hospital.
Burkhart used his position as ASC’s CEO to cut secret side
deals with over a dozen of ASC’s vendors. He dangled the golden carrot of the
purchasing power of the State’s largest nursing home chain. All they had to do
was pay something back.
In some cases, Burkhart had vendors inflate their bills to
ASC, which Burkhart would pay with Health & Hospital’s money, and the
vendor would kick the overage back to Burkhart and his co-conspirators. In
other cases, he formed shell companies that would inflate vendors’ bills and
submit them to ASC as if the shell companies were the real vendor. In still
other cases, he caused vendors or shell companies to submit completely false
bills for fictitious services that were never provided. And finally, in some
cases, he simply demanded vendors to pay him kickbacks in exchange for him allowing
them to service ASC’s large number of facilities.
This last category included home health and hospice care,
where Burkhart received a kickback for each patient ASC referred to Burkhart’s
chosen home health or hospice company.
Landscaping, electrical generators, employee uniforms,
patient gifts, American flags, furniture, heating and air conditioning, wound
care creams, medical supplies, air fresheners, speech therapy, pharmacy
services, food services, home health care, and hospice care – Burkhart concocted
secret side deals involving all of those aspects of ASC’s operations.
His motive was pure greed. He was caught on tape telling an
informant, in reference to one of his schemes that netted him over $600,000 per
year, “I ain’t givin’ that up. . . . It doesn’t sound like much money, but it’s
money.” Over the six years, Burkhart use the money he stole to buy lakefront
real estate on Lake Wawasee, golf vacations, trips to Las Vegas, political
contributions, diamond jewelry, gold coins and gold bars. In addition, Burkhart
spent over $1.5 million of other peoples’ money on over 150 flights on private
jets.
As Burkhart told the informant, “I’ll get mine, I always
told ya, I’ll get mine one way or another.” That was true until 2015, when a
vendor Burkhart tried to ensnare went to the FBI. Burkhart and his co-conspirators had asked
the vendor to inflate his bills by 30% and pay the overage to a shell company.
The vendor thought that did not sound right or ethical, so he reported it to
law enforcement. What followed was an extensive investigation involving
multiple undercover informants, search warrants, and a detailed analysis of
numerous shell companies and nearly 100 bank accounts – all of which culminated
in the indictments, guilty pleas, and ultimately, today’s sentencing of
Burkhart to 114 months in federal prison.
This case was jointly investigated by the Federal Bureau of
Investigation (FBI), the Internal Revenue Service-Criminal Investigation
Division (IRS-CID), and the Department of Health and Human Services, Office of
Inspector General (HHS-OIG).
"This defendant
was paid a large salary and viewed as an industry leader, but he chose to abuse
his power and position out of pure greed,” said Grant Mendenhall, Special Agent
in Charge of the FBI’s Indianapolis Division. “The FBI works diligently with
partner agencies to uncover and investigate corporate executives who enrich
themselves through kickbacks and theft. We applaud the concerned citizen who
brought this fraud to our attention, and we encourage anyone else who wants to
bring these types of fraudulent behavior to light to contact us.”
David Talcott, Acting Special Agent in Charge of IRS
Criminal Investigation's Chicago Field Office said, "Burkhart’s theft from
the most vulnerable citizens of our communities is sickening. Taxpayers deserve
honesty and integrity from business leaders. IRS-CI's thoroughness of the
financial investigation represents our commitment to protect the taxpayers of
this community."
“Health Care Fraud is fueled by greed and is perpetrated by
criminals with the intent of concealing their acts and securing financial
riches at the expense of taxpayers”, said Lamont Pugh III, Special Agent in
Charge, U.S. Department of Health & Human Services, Office of Inspector
General. “Mr. Burkhart spun a web of deceit through side deals, inflated
invoices and shell companies in order to pilfer funds from Medicare and
Medicaid which ultimately led him to the doorstep of law enforcement and
prosecutorial authorities. The OIG will continue to work with our federal,
state and local law enforcement partners to uncover these schemes and hold
those who execute them accountable.”
“I am eager to collaborate with other public offices and
agencies to stop fraudsters from stealing money from Medicaid,” said Attorney
General Curtis Hill. “This is a program intended to help people who truly need
it. We will stay vigilant in holding accountable all those who seek to bilk
taxpayers by misappropriating funds.”
According to Assistant U.S. Attorneys Nick Linder and Cindy
Cho, who prosecuted the case, the gold bars, gold coins, and other assets
seized from Burkhart will be criminally forfeited. In addition, Burkhart must pay full
restitution and serve three years of supervised release following his sentence.
Burkhart’s co-defendants will be sentenced on the following
dates and times:
Daniel Benson on
July 6 at 9:00 a.m.
Steven Ganote on
July 9 at 9:00 a.m.
Joshua Burkhart on
July 9 at 2:00 p.m.
David Mazanowski
on July 10 at 2:00 p.m.
In October 2017,
United States Attorney Josh J. Minkler announced a Strategic Plan designed to
shape and strengthen the District’s response to its most significant public
safety challenges. This prosecution demonstrates the Office’s firm commitment
to prosecuting complex, large-scale fraud schemes, particularly those that
exploit positions of trust. See United States Attorney’s Office, Southern
District of Indiana Strategic Plan 5.1
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