Two more defendants were sentenced Monday for their roles in a $19.4 million fraud, kickback and money-laundering scheme that previously led to prison terms for two former American Senior Communities executives.
Steven Ganote, described as a friend and associate of former ASC CEO James Burkhart, received a five-year prison sentence. Joshua Burkhart, brother of the former CEO, received a sentence of four months plus two years of supervised release, the first eight months during which he will be electronically monitored.
Joshua Burkhart’s attorneys had requested a sentence of probation in their sentencing memorandum.
ASC, in a statement to McKnight’s Senior Living, said: “ASC is grateful for the justice that was served in the legal case against its former executives who were removed from their positions nearly three years ago, and their co-defendants, who were not ASC employees. As reported previously, their actions never impacted the quality of care provided to the residents we have the privilege to serve. ASC is proud of the nearly two decades we have served seniors and are pleased to move forward by continuing to honor our commitment to quality care.”
Ganote in December had agreed to plead guilty to conspiracy to commit mail, wire and healthcare fraud; conspiracy to violate the anti-kickback statute; and money laundering. Joshua Burkhart in November had agreed to plead guilty to one count of conspiracy to commit mail, wire and healthcare fraud.
The pleas followed an investigation that led to a September 2015 raid of James Burkhart’s home in Carmel, IN, and the ASC headquarters in Indianapolis, among other locations. Days later, ASC fired James Burkhart. Chief Operating Officer Daniel Benson was fired, and ASC Chief Financial Officer Roger Werner resigned, in October 2015.
The 2009-to-2015 scheme, prosecutors said, involved secret side deals, inflated bills or bills for services that were never provided, and kickback payments that involved more than a dozen of ASC’s vendors as well as shell companies that would inflate vendors’ bills and submit them to ASC as if the shell companies were the real vendor.
James Burkhart, whom prosecutors said led the scheme, was sentenced June 29 to 9 1/2 years in prison and three years of supervised release. Benson was sentenced Friday to 4 1/2 years in prison for his role.
Prosecutors called Ganote “the quintessential ‘bagman” and said he “caused a loss of over $8 million. And in the process, he personally pocketed millions, which, like [James] Burkhart, he used to fly on private jets, gamble in Las Vegas, purchase and renovate a vacation home in Marco Island, Florida, purchase Rolexes and diamond jewelry, and buy gold bars.”
James Burkhart gave his brother the role of “consultant” to a company that overcharged ASC by 5% for landscaping work, prosecutors said. Those overcharges — “several hundred thousand,” according to the federal government — were sent to Joshua Burkhart through another company. Joshua Burkhart also was in charge of a company that sold flags to ASC at a high mark-up, prosecutors said.
Landscaping company Mainscape founder David Mazanowski is scheduled to be sentenced Tuesday for this role in the scheme.