There is a certain level of trust involved in committing to an assisted living facility (ALF), whether one is seeking care for him or herself, or they are seeking care for a loved one. Lists of questions arise during the search for an ALF, but how often do individuals question the possibility of fraud? The Department of Justice recently issued a news release revealing how one chain of ALFs may cause care seekers to add that question to their search.
A chief executive office (CEO) and chief financial officer (CFO) of an ALF chain, located throughout North and South Carolina, pleaded guilty to tax fraud in 2012. According to the charging documents, the duo co-owned/operated the chain of ALFs and managed and co-owned another North Carolina-based company. (Convenient: they have no one to report to except the U.S. government.? As co-owners and operators of the two entities, the duo was responsible for ensuring the companies collected, reported and paid federal employment taxes to the Internal Revenue Service (IRS). An investigation discovered that the fraudsters received about $4.5 million in employment tax liabilities between 2003 and 2006, a result of filing false IRS forms reporting full payment of employment taxes. In fact, they had paid barely a portion, if any at all. (We forgot to enclose the check.)
To complicate the situation even more, the fraudsters gained ownership of a company that provided prescription drugs and related services to their chain of ALFs. Shortly thereafter, they sold it, receiving $1.6 and $1.4 million respectively. (These two keep cashing in!)<i? When it came time to deposit the funds, the duo had to prevent the IRS from discovering their proceeds, so they attempted to use separate bank accounts for receiving the proceeds. (Ok, so this isn’t lying?)<i? Both men were convicted of tax fraud and sentenced to 60 months imprisonment. Each was ordered to pay $4.8 million in restitution.
When owning and operating an ALF, you would think that ”care” would be the number one concern. It’s obvious that the care was not a key piece of the equation here. And, I think once the reality of jail hits, they are going to wish they cared a lot more.
Source: Today’s ”Fraud of the Day” is based on a news release titled, ”CEO and CFO of Assisted Living Facility Chain Sentenced in North Caorlina to Five Years in Prison for Tax Fraud,” published by the U.S. Department of Justice on January 16, 2013.
Ronald E. Burrell, former chief executive officer (CEO) of Caremerica Inc., and Michael R. Elliott, former chief financial officer (CFO) of Caremerica Inc., were sentenced today in Wilmington, N.C., the Justice Department and Internal Revenue Service (IRS) announced. Judge James C. Fox sentenced both Burrell and Elliott to 60 months imprisonment and ordered them each to pay restitution of over $4.8 million.
Burrell, a resident of Wilmington, N.C., pleaded guilty to conspiracy to defraud the IRS on Jan. 3, 2012, and Elliott, a resident of Loris, S.C., pleaded guilty to conspiracy to defraud the IRS on July 18, 2012.