Crimes and Misdemeanors, Survival of the Frummest – Systemic Fraud [Opinion]

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This opinion piece is being posted with full permission of the Author, Rabbi Yossi N. Minor edits and formatting changes have been made from the original which can be found on Facebook, here.

Survival of the Frummest, Part 3 — Crimes and Misdemeanors –

One of the most troubling aspects of today’s ultra-Orthodox community is the systemic fraud perpetuated by so-called frumme Yidden. This fraud, aka geneivishe shtick, comes in many varieties and flavors, but the common denominator is that it’s all illegal. The most prevalent of these frauds are those perpetrated against government social welfare programs.To the extent that there is welfare abuse within the hareidi community, one may ask, what makes it systemic? The answer is simple: the various Hareidi community councils (BP, CH, Willie, etc.) actively encourage and assist community members to sign up for every welfare program available. Now, it is true that many of these individuals were eligible for the programs at the time they signed up, but as their income grows, they become ineligible. However, once a hareidi individual with little secular education is dependent on government welfare, he will be reluctant to give up welfare benefits.And this is precisely the Hareidi communities’ game plan from day one. In other words, the community consciously regards the government’s social safety net — food stamps, medicaid, wic, section 8, etc. — as part of their budget, not as a last resort for a few struggling individuals. Every year, hundreds of Hareidim get married with the intention beforehand of relying on government welfare to make ends meet. The Crown Heights Community Council and the various other Hareidi community councils in NYC were established with the purpose, among others, of filling out welfare forms for community members. Thus, to use yeshiva language, welfare for Hareidim is not a believed, but rather a lechatchillah.An integral part of the welfare fraud and abuse within the Hareidi community is the wide-spread phenomena of working off the books, or under the table. Without working off the books, families’ income may increase over time to the point of risking losing welfare benefits. This is the reason that most, if not all, yeshiva teachers, rebbes, and administrators work either completely off the books or half on and half off. By working off the books, the Hareidi community also ensures that their taxes will be lower than otherwise – or that they’ll pay no taxes at all. In short, as the Talmud teaches, aveirah goreret aveirah, a transgression brings another transgression in its wake.

This is how Hareidi welfare fraud leads to tax fraud.

One might assume that welfare fraud would be more likely to be committed by the 40% of Hareidim who live below the poverty line. But Hareidi fraud is not confined to the poor alone. On the contrary, as you climb up the food chain, the fraud only gets larger and more pernicious.

Rubashkin from Crown Heights and Samet from Kiryas Joel are perhaps the most colorful and well-known criminal defendants within the Hareidi community. However, the minyan at the Otisville Correctional Facility is large and ever-changing as new members join and old members leave .This is not to say there is no fraud within the Modern Orthodox Jewish community.

The implosion of Platinum Partners — the shady hedge fund run by Murray Huberfeld and Mark Nordlicht — is one example of fraudulent activity perpetrated by members of the MO community. Overall, though, MO fraud is not a community organized activity. An MO council to help individuals apply for welfare does not exist in Teaneck. The same cannot be said for the Hareidi community, where the fraud is wide-spread and systemic and where many members are semi-literate at best in English.

One may ask, how can systemic fraud be so prevalent in ultra-Orthodox communities? Aren’t they meant to be the ones upholding the Torah, which directly forbids stealing?

The answer is rather straightforward: stealing from the government, ie. gentiles, is not considered stealing. The logic behind this notion goes something like this: the Talmud rules that one need not return the lost object of a gentile or excess money paid for goods by mistake. Welfare benefits are akin to a lost object or excess money – and thus need not be returned. This is where racism also comes into play. Hareidim claim that welfare fraud is pervasive among other minority communities, so why shouldn’t we also get money from the government? At least we’re using it for Torah and Mitzvot!

It’s only a matter of time before the government wakes up and realizes the systemic nature of welfare fraud within Hareidi enclaves. When that time comes, which it will eventually, Hareidi society will have to begin preparing its youth for the real world. Until then, the fraud continues.

By: Rabbi Yossi N.

The Nursing Homes that Misused Federal Funds and Our Elderly Died -Covid-19 pt.1

THE DETERIORATION OF THE HEALTH OF OUR ELDERLY AND THE FAILURES OF U.S. NURSING HOMES AND THE OVERSIGHT THAT SHOULD BE PROTECTING OUR AGED…

PAYOFFS, KICK-BACKS AND FRAUD

Dear Reader:

As many of you know, the blogger behind most of the stories on these pages is, in my career life, an attorney. I focus on finance, investments, securities, transactional work and legal fraud/due diligence.

The reason for my anonymity had always been because I did not want these stories to gain or lose credibility on the basis of the numerous well-studied and earned letters I could put after my name. The takeaway of this blog’s readership should have come from someone nameless and faceless, not my personal schooling. While anonymity also served to keep me safe from those who know I am holding a deck of information, it was not a grand deception, as many might think. It simply provided objectivity.

However, the nursing home story is different. It is very personal. The substandard care and the lack of oversight in US nursing homes is one of the major reasons why this blog got started, beyond the fraud components; and, at the end of the day, it is heartbreaking, breathtaking in scope and ingrained in our entire medical care system. 

Nursing home facilities – a term I will use going forward, refers to rehabilitation centers, step-down facilities, sub-acute facilities, traditional long-term nursing care, assisted living and the entire umbrella of facilities geared toward sick or elderly patients who will either never recover from their ailments or who need these facilities on their way back to recovery. 

In my life as an attorney and fraud analyst, I am good at what I do. I see everything in patterns. And, when people commit frauds, they don’t change up their methodology; their patterns are always the same.

Most fraudsters don’t have the personal capacity to conduct themselves differently. When something works, why change it up? I have conducted hundreds, if not thousands of investigations and sometimes I am not quite sure what’s wrong with what I am seeing; but I know it is bent, out of place, mismatched. And generally, history tells me everything else I need to know to fill in the blanks.

Fraudsters, morally challenged people, humanity’s ingrates take a theme and commit the same variation built on that theme over and over again. It is an addiction and there is no cure. And, in my experience, people don’t change. If someone cheated on his SEC Series 7 or 63 exam, for example, he will cheat on everything that follows. There will be no future for honest deal-making.  The first lie is hard to tell. After that, it’s a matter of following the same action to the next level.

The most egregious Nursing home facility owners are the same. Once they discount the humanity of the patients in their care, once ownership becomes a game of finance and not human life, the rest comes easily. It is like playing a game of Monopoly. The nameless and faceless patients are just that, squares on a board game. The patients in these facilities are no more than Boardwalk or Park Place or another of the many colored properties that can be bought off the board in the quest for huge financial gains, for owning the bank.

The fact that the moral imperative is to provide quality care for people who have lived much of their lives and are thus nearing their end is largely irrelevant. Nursing home ownership is about the profit. And, the steps toward profit bar no unacceptable crime. Medicare/Medicaid fraud, Insurance policies and payouts on death benefits, Covid-19 Neglect, Abuse, under-staffing, Government subsidies that are manipulated and misused, charges never provided are all in the rules of play. Humanity? It just doesn’t matter. The bottom line is profit. 

Esformes, Sentenced to 20 Years, Refused Offer of 4-Year Reduction in Exchange for Admission of Guilt and Plans Appeal

Miami healthcare exec Esformes sentenced to 20 years in biggest Medicare fraud case

Philip Esformes, who once reigned over a healthcare kingdom that made him a super-rich man, was sentenced to 20 years in prison Thursday for paying bribes and receiving kickbacks in a massive $1 billion Medicare fraud case touted by federal prosecutors as the biggest in the nation.

U.S. District Judge Robert Scola said Esformes’ scheme to generate thousands of Medicare patients for his chain of assisted-living and nursing-home facilities in Miami-Dade was “unmatched in our community, if not our country.”

The judge said the taxpayer-funded Medicare program for the elderly and indigent was built on an honor system, and that “Mr. Esformes violated that trust in epic proportions.”

Before Scola issued his punishment, the wealthy Miami Beach business executive sobbed as he apologized to the judge. “I lost everything I loved,” Esformes, 50, said, admitting he was a “broken” man who was “disgusted” by his criminal activity. “I destroyed my marriage. I scarred my three children. There is no one to blame but myself. I accept responsibility for what I have done and regret it.”

Convicted at trial in April of 20 healthcare-related bribery, kickback and money-laundering charges, Esformes gave an emotional 16-minute speech that generally acknowledged his criminal life but also aimed for mercy. He has been held in the Miami federal detention center since his arrest three years ago.

“Your honor, I don’t want this [crime] to be the only legacy I leave behind,” said Esformes, whose lawyers and supporters in the courtroom spoke of his personal and financial charity, especially in the Jewish, medical and academic communities.

Justice Department prosecutor Allan Medina said Esformes not only exploited patients to line his pockets at his chain of 16 assisted-living and skilled-nursing facilities, but “corrupted” the whole Medicare system in his zeal to fill patient beds without providing actual care.

“He corrupted the entire system — the Medicare and Medicaid system,” Medina said. “Philip Esformes had every opportunity. He had wealth, [making] $78 million in 2017. … He has no excuse for what he did. He has no respect for the law. He has no remorse whatsoever.

“He was the boss,” Medina said. “He bullied people to get what he wanted.”

Justice Department prosecutors Medina, Elizabeth Young and James Hayes argued that Esformes had billed $1 billion to the federal health insurance program for questionable services that patients largely didn’t need or even receive between 2006 and 2016. For his sentencing, they estimated the government’s loss at more than $550 million and urged the judge to give Esformes 30 years in prison.

However, one of Esformes’ defense attorneys, Howard Srebnick, argued that the government’s estimated loss to Medicare was grossly inflated. He said the loss was as low as $690,000 and argued for a 10-year sentence.

Scola then cut Esformes a break, saying the loss was between $4.9 million and $8.3 million, which helped reduce the defendant’s potential sentence significantly. Scola called his estimate “highly conservative.”

At a critical juncture before he imposed Esformes’ punishment, the judge seemed willing to lower his final sentence by four years if the defendant agreed to elaborate on his “acceptance of responsibility” in his original statement to Scola. The judge said he would only acknowledge Esformes’ acceptance if he specifically admitted he paid bribes and committed other crimes. But, after Srebnick consulted with counsels Roy Black and Jackie Perczek, Esformes’ legal team chose not to go that route because it would have precluded their appeal of his trial convictions.

“There’s not much more Mr. Esformes will say today about his feelings and remorse,” Srebnick told the judge, arguing he has suffered greatly in federal detention, endured unending shame, and is no longer the arrogant man he was before his arrest.

After the sentencing hearing, Srebnick said Esformes plans to raise critical pre-trial allegations on appeal that had attacked how federal authorities obtained documents and recordings that led to the defendant’s indictment.

“For three years, the government alleged a $1 billion fraud, but today the district judge rejected that grossly exaggerated characterization,” Srebnick told the Miami Herald. “We are optimistic that the [federal] court of appeals will reinstate the magistrate judge’s findings of deplorable prosecutorial misconduct and will vacate the convictions and sentence.”

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College Scandal Tied to Massive Medicare Fraud Case and the Key Worldwide Foundation – Esformes and Singer

FBI found clues to college admissions scandal years earlier in massive Medicare fraud case

Federal authorities were combing through the finances and phone records of a Miami businessman suspected of Medicare fraud when they came across a curious name: Rick Singer.

Philip Esformes, who was accused of farming out patients from his nursing homes to steal millions in bogus insurance claims, had sent hundreds of thousands of dollars to a foundation Singer controlled. And in text messages discovered on Esformes’ phone, the men discussed how one of Esformes’ sons had performed on his college entrance exams.

Only years later would authorities learn what Esformes had paid Singer to do: Slip his daughter into USC as a fake soccer player and fix his youngest son’s college entrance exam, according to statements a prosecutor made in court and sources familiar with the case.

Singer has said he struck similar deals with dozens more parents, an admission that has roiled higher education and implicated elites from Hollywood, Silicon Valley and the Newport coast.

But in 2016, when agents seized the iPhone Esformes used to text Singer and obtained their messages, Singer was a peripheral, if curious, player in an enormous healthcare fraud investigation. The Esformes case marks the first time Singer is known to have crossed the radar of law enforcement.

Singer would run his admissions scam undisturbed until another team of investigators, working in Boston on an altogether different case, caught a second glimpse of his operation in 2018 and unraveled it.

Andrew Lelling, the U.S. Attorney in Massachusetts, unveiled that investigation in March. Fifty people were charged, including dozens of parents and coaches at such elite schools as Yale, Stanford, Georgetown and USC, who were accused of selling spots that their schools reserved for recruited athletes.

Esformes has not been charged in the college admissions case. Convicted in April of paying and receiving kickbacks in connection with a federal healthcare program and other crimes, he faces decades in prison when a judge sentences him in September. His attorneys declined to comment.

Spokespeople for federal prosecutors in Boston and Miami declined to comment.

It is unclear how much federal authorities uncovered of Esformes’ dealings with Singer while investigating his case. But at his trial in March, a fraud expert used by the government to make sense of his finances testified that Esformes had made $400,000 in payments over several years to Singer’s foundation. At least some of the money was traced to Medicaid and Medicare funds, the expert testified.

Singer has since admitted that his Key Worldwide Foundation was little more than a sham used to launder money from clients and parcel out bribes to coaches, test proctors and bagmen.

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Nursing Homes and the Utterly Senseless Lack of Oversight, States Need to Ask about Other State Businesses [VIDEO]

The Toppling of a Nursing Home Empire and the Elderly and Disabled Residents Who Suffer, Where’s the Oversight?

Terri Thompson’s mother has dementia and wandered out of a locked unit through two broken doors and was found in ice and snow at 4:30 in the morning with severe frostbite.Hannah Rappleye / NBC News

A nursing home chain grows too fast and collapses, and elderly and disabled residents pay the price

By Laura Strickler, Stephanie Gosk and Shelby Hanssen

NEW BEDFORD, Mass. — Once a week for two years, police Lt. Jeannine Pettiford had visited the nearby nursing home where her 52-year-old cousin with cerebral palsy lived. But on their daily phone call in early May, her cousin had bad news.

“I’m getting kicked out,” he told her.

In disbelief, Pettiford asked to speak with a nurse, who told her there were rumors of closure. Her alarm rose when she visited the facility and saw nurses crying. The nursing home’s owner, Skyline Healthcare, had told its staff there was no more money.

Skyline’s four other nursing homes in Massachusetts were facing the same crisis. Funds were so short, staff had begun buying toilet paper with money from their own pockets, according to former employees. Residents and their families discovered from local newscasts they had just 30 days to find somewhere else to live.

“Nobody from the nursing home ever called me to tell me,” Pettiford said. She was angry. And, she later learned, so were many others.

At its peak, Skyline Healthcare owned or ran more than 100 facilities in 11 states, overseeing the care of more than 7,000 elderly Americans. But during the past two years, the chain has collapsed, and more than a dozen Skyline-operated nursing homes have shut their doors, throwing residents, vendors, employees and state regulators into chaos.

For more watch Stephanie Gosk tonight on “NBC Nightly News With Lester Holt” at 6:30 p.m. ET / 5:30 p.m. CT (or check your local NBC station).

Many homes ran out of money. Others were shut down over neglect documented in government records. Fourteen homes were forced to close permanently, displacing more than 900 residents to new facilities, sometimes hours away.

The story of Joseph Schwartz and Skyline Healthcare is one of swift expansion, alleged mismanagement and catastrophic failure. An NBC News investigation reveals the scale of the Skyline debacle, in which one man built an empire that quickly crumbled, with painful consequences for vulnerable people.

It also shows the failure of state and federal authorities to keep up with just who owns and runs America’s nursing home facilities, which house 1.3 million elderly and disabled Americans — about three-quarters of them in beds paid for by taxpayers via Medicare and Medicaid. The states are responsible for tracking ownership and conditions at nursing homes within their borders, but only the federal government can monitor the performance of firms that own or operate facilities across the nation. The allegations of negligence at a major nursing-home chain come as the Trump administration is moving to ease, not increase, accountability for the industry, reducing penalties and terminating fewer contracts with problem owners.

Schwartz, meanwhile, still has ownership stakes in 53 nursing homes, according to federal records. He has not returned multiple messages and emails requesting comment from NBC News.

“I just don’t think I’ve ever seen anything like it,” said Stephen Monroe, an industry analyst of three decades who is the managing editor for the nursing home trade magazine Senior Investor. “I have no idea what that family was thinking. To go from 10 to 100 in two years with no real back office? I looked at that and said from day one, ‘Impossible.”

‘The Home Life You Crave’

A Brooklyn, N.Y.-based insurance broker and landlord, Joseph Schwartz entered the nursing home business more than 10 years ago after he sold a Florida-based insurance company.

In a 2017 deposition for a malpractice lawsuit filed by a family alleging neglect at one of his homes in Pennsylvania, Schwartz explained why he’d gotten into the industry. “”Basically, I used to do a lot of servicing in selling insurance policies to long-term care industry,” he said, “and I felt that I could, that I understand the quality care … and I will do a very good job in doing the quality care for residents.”

Joseph Schwartz listed a tiny office above this New Jersey pizzeria in Wood Ridge, New Jersey, as the location where he ran over 100 nursing homes nationwide.NBC News

He started with a half dozen homes, but after creating Skyline Healthcare he began expanding rapidly in November 2015 with the purchase of 17 homes.

Schwartz ran Skyline out of a tiny office above a New Jersey pizzeria. He was CEO, his wife Rosie co-owned most of the properties and his two sons, Michael and Louis, served as vice presidents. The company had a bare-bones website and a slogan, “Skyline: The Home Life You Crave.”

During the 2017 deposition, he said, “Skyline is an entity that is me.”

His net worth is hard to compute but real estate records show he owns over $9 million worth of real estate in the New York metropolitan area, including a gated house in Suffern, N.Y.

Within a year of his purchase of 17 nursing homes, Schwartz had taken on another 64, and by 2017 was operating more than 100.

Schwartz wouldn’t provide a number when the plaintiff’s attorney asked him repeatedly in June 2017 how many homes he ran. He confirmed it was more than five, but asked if it was more than 100, he said several times that he couldn’t recall.

 

Esformes Must Forfeit Interests in Long-Term Care Companies, if Only Others Would Follow

Esformes must forfeit interest in long-term care operating companies, judge rules

Philip Esformes, the Florida assisted living and skilled nursing facility owner found guilty in April of more than 20 charges in a case that the federal government described as “the largest single criminal healthcare fraud case ever brought against individuals by the Department of Justice,” must forfeit his interest in seven operating companies related to his facilities, a federal court has ruled.

The decision, issued July 1 in the U.S. District Court for the Southern District of Florida, was a denial of Esformes’ motion asking the court to acquit a jury’s verdict that the assets were forfeitable. The judge’s order applies to Esformes’ interest in the operating companies for the following assisted living or skilled nursing properties: Eden Gardens in Miami, Fair Havens Center in Miami Springs, Flamingo Park Manor in Hialeah, Harmony Health Center in Kendall, North Dade Nursing and Rehabilitation Center in North Miami, Nursing Center at Mercy in Miami and the now-closed Oceanside Extended Care Center in Miami Beach.

“Esformes’s operating companies gave his business a facade of legitimacy as he used them to hold bank accounts and operate the various SNFs and ALFs engaged in the elaborate money laundering and kickback scheme,” U.S. District Judge Robert N. Scola Hr, wrote. “Accordingly, the Court finds that there is sufficient evidence to ‘permit a reasonable jury to conclude that the Government has proven, by a preponderance of the evidence, that the property is subject to forfeiture.’ ”

Scola also denied Esformes’ motions seeking acquittal and a new trial.

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