How Did the Cat Get So Fat?

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On the “Fraud of the Day” platform, we highlight a large variety of fraud and fraudsters who engage in all types of schemes, with a wide variety of methods and motivations. And while some fraudsters are motivated by financial hardship or desperate circumstances, others are motivated only by pure greed. Our primary fraudster today from Carmel, Indiana was already unbelievably wealthy and powerful, but that didn’t stop him from stealing millions of dollars from taxpayers.

Today’s healthcare fraud centers on a kickback scheme organized by the CEO of American Senior Communities (ASC), the largest nursing home operator in the state of Indiana. The fraudster used his leverage as the CEO to cultivate a corporate culture of fraud, engaging in a six-year scheme where vendors could do business with the company as long as they paid something back (nice business model ya got there, would be a shame if something… happened to it). Federal officials say that altogether the CEO and his co-conspirators funneled nearly $19.5 million in fraud and kickbacks to themselves through a web of shell companies.

In some cases, the CEO directed vendors to inflate their bills, and then kickback the extra revenue to him, his company, and co-conspirators. In other instances, he formed shell companies that would inflate vendors’ bills and submit them as if the shell company was the real vendor. In still other cases he had vendors submit completely false bills for services that were never provided. And finally, in some cases, he simply extorted kickbacks from vendors just for the privilege of doing business with him (diversification isn’t just for stocks – it’s for fraud too!). This last category included home health and hospice care, where the CEO received a kickback for each patient ASC referred to the CEO’s chosen home health or hospice company. The deals covered everything from American flags and air fresheners to furniture and pharmacy services.

In talking to an undercover informant about a $600,000 scheme, the CEO complained, “I ain’t givin’ that up… It doesn’t sound like much money, but it’s money.” (For comparison, the median income of American households just hit a new high of $60,000 last year – a whole one-tenth of that $600,000 chump change). Over the duration of his many fraud schemes, our Chief Embezzlement Officer used his ill-gotten gains to buy lakefront real estate, golf vacations, trips to Vegas, gold bars and coins, diamond jewelry and even political contributions. He also spent $1.5 million of stolen funds on over 150 private jet flights.

“In spite of receiving a salary of over $1 million, Burkhart abused his official position of trust to steal taxpayer dollars intended to benefit this community’s sick, elderly and mentally challenged,” said U.S. Attorney for the Southern District of Indiana Josh 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.”

The fraudster pleaded guilty to three felonies: conspiracy to commit fraud, conspiracy to violate the healthcare anti-kickback statute and money laundering. In addition to 114 months in federal prison, our fat cat fraudster will be required to pay full restitution for his healthcare fraud scheme. Authorities say the gold coins and gold bars seized at his home have already been forfeited (now he’ll never be able to build that Scrooge McDuck style swimming pool he wanted).

Today’s “Fraud of the Day” is based on an article entitled, Nursing home executive sentenced,” posted on washtimesherald.com on July 3, 2018.

A nursing home executive with operations throughout Indiana, including two homes in Daviess County, has been sentenced in federal court for his part of a fraud scheme. U.S. District Court Judge Tanya Walton Pratt sentenced former CEO of American Senior Communities James Burkhart, 53, of Carmel, to 114 months in federal prison in what has been described as a massive fraud, kickback and money laundering conspiracy.

Federal agents executed search warrants on Burkhart’s home and office and those of several associates in September of 2015, and by October of 2016, a federal grand jury brought indictments against him and three other people. Burkhart pleaded guilty to three federal felonies: conspiracy to commit fraud, conspiracy to violate the health care anti-kickback statute and money laundering.

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Larry Benson
Larry Benson is currently the Director of Strategic Alliances for Revenue Discovery and Recovery at LexisNexis Risk Solutions. In this role, Benson is responsible for developing partnerships for the tax and revenue and child support enforcement verticals. He focuses on embedded companies that have a need for third-party analytics to enhance their current offerings.