Former American Senior Communities Chief Operating Officer Daniel Benson was sentenced Friday to 57 months in federal prison for his role in a $19.4 million fraud, kickback and money-laundering scheme that netted his former boss, CEO James Burkhart, a 9 1/2 year sentence a week earlier.
In December, Benson had pleaded guilty to conspiracy to commit mail, wire and healthcare fraud; conspiracy to violate the anti-kickback statute; and money-laundering.
“Dan Benson accepts full responsibility for his conduct in this matter and in the acts charged, and does so with profound sorrow, remorse and regret,” his attorneys said July 5 in their sentencing memorandum, in which they recommended “a sentence well below the guidelines, even a sentence involving home detention.”
Burkhart used his position as CEO of Indiana’s largest operator of senior housing and care facilities to cut secret side deals with more than a dozen of ASC’s vendors between 2009 and 2015, prosecutors previously said. Those deals involved the submission of inflated bills or bills for services that were never provided or the payment of kickback payments “in exchange for him allowing them to service ASC’s large number of facilities,” they said.
“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,” the Justice Department said.
Federal agents raided Burkhart’s home in Carmel, IN, and the ASC headquarters in Indianapolis, among other locations, in September 2015. Days later, ASC fired Burkhart. Benson was fired, and ASC Chief Financial Officer Roger Werner resigned, in October 2015.
By October 2016, a federal grand jury had indicted James Burkhart and his brother Joshua as well as Benson and Burkhart friend and associate Steven Ganote. And by January 2018, all of the defendants had pleaded guilty to federal felony charges.
Ganote and Josh Burkhart are scheduled to be sentenced Monday. Former landscape company founder David Mazanowski is scheduled to be sentenced Tuesday after having pleaded guilty to one felony count of conspiracy to commit mail, wire and healthcare fraud.
ASC previously told McKnight’s Senior Living that “Mr. Burkhart’s actions have not impacted the high standards of care to the residents who ASC has the privilege to serve. We are pleased to move forward by continuing the tradition of quality care.”
Benson maintained that he was unaware of some of James Burkhart’s activities, had never spoken with Ganote on the phone and had met him in person only four or five times, and had met with Josh Burkhart only “on a few occasions over about 7 years.”
“Jim Burkhart and Steve Ganote deliberately concealed from Dan Benson a great deal of information about their management of the joint ventures,” Benson’s attorneys said in their sentencing memo. “In that regard, the material information relating to the joint ventures that Dan was not a part of or did not know about is extensive. Unfortunately, most of this information he learned about only from reviewing discovery materials produced post-indictment.”
Of the activities of which Benson was aware, Benson’s attorneys said that James Burkhart assured him that they were legal. His attorneys pointed out that the former COO had set up a limited liability corporation to accept payments using his own name and home address and that he had answered questions from law enforcement when they raided his home in September 2015 — and noted that he was the only defendant to do so — as well as questions from the ASC owners’ attorneys in 2015 and from law enforcement again in December 2017.
“The government has argued that Dan Benson is pretending to be an ‘unwitting dupe,’ and that he knowingly participated in the conspiracy. Yet in every single opportunity given to him since the outset of this investigation, he has been fully cooperative and answered all questions, whether from the government or ASC,” they wrote.
Contrary to prosecutors’ contentions that Benson used proceeds from the activities to buy an Indiana home, a vacation home, a Manhattan apartment and a $50,000 watch, Benson’s attorneys said he donated all of the income to charity “long before he became aware of the federal investigation.”