A former Connecticut nursing home owner has been sentenced to 2 1/2 years in federal prison for stealing millions of dollars of employee’s benefits. The former nursing home owner pled guilty to embezzlement and tax offenses last year.
The former owner has already paid $4.9 million in restitution for stealing employees’ pension funds, but he still owes $2.5 million in restitution for stealing their healthcare funding, and owes $2.2 million to the Internal Revenue Service (IRS).
He faced from 70 to 87 months in prison under federal sentencing guidelines. A US District Judge stated that she imposed a lesser sentence because of his lack of a criminal record, his charitable giving, and his family history. The judge’s reasoning included that his mother was a Holocaust victim, his father survived a Nazi labor camp, and he emigrated from Romania to an impoverished childhood in Israel at age 2.
Through his lawyers, he acknowledged the improper diversion of funds. In addition, he claimed that he directed most of the money to investments in his faith-based community that he hoped would generate income that he could use to save the nursing home business.
Compliance Perspective
Issue
Every nursing facility should have a double check system in place for all monetary transactions. All transactions should be legal and checked and approved by a second party to prevent misappropriation of funds. Misappropriation of funds can result in fines, other sanctions, and imprisonment. Additional detailed information is available in the Med-Net Corporate Compliance and Ethics Manual, Chapter 2 Financial Integrity.
Discussion Points
- Review the facility’s policy on accounting and the use of facility funds. Update as necessary.
- Train appropriate staff on your policies for financial accounting and the protection and approved use of facility funds. Document that these trainings occurred and file in each employee’s education file.
- Periodically audit to ensure that all monetary transactions have been double-checked and approved by a second party, and that all transactions have been previously approved. Ensure that an independent audit is conducted at least annually.
FOR MORE INFORMATION ON THIS TOPIC view: FRAUD MODULE 16 – FINANCIAL INTEGRITY.
