Joseph Schwartz, Nursing Residence Proprietor Pardoned by Trump, Owes Affected person Households Hundreds of thousands — ProPublica

Doris Coulson remained spirited at the same time as her sickness progressed — watching cooking reveals on TV, working crossword puzzles and wheeling herself down the hallways of her nursing residence to point out off her granddaughter when she came around.

Coulson had been admitted to Hillview Put up Acute and Rehabilitation Heart in Little Rock, Arkansas, in January 2016, after Parkinson’s illness left her susceptible to choking when she swallowed. That April, the ability’s operations had been taken over by Skyline Healthcare, a New Jersey-based firm that was shopping for up nursing properties throughout the nation.

Medical data for the retired cardiac nurse, then 71, had been marked “NPO” — nothing by mouth.

Then that September, a nursing assistant discovered Coulson unresponsive and hanging off the aspect of her mattress, her pores and skin ashy and her respiratory shallow. She was taken to a hospital in a coma and died a number of days later. The chief reason for demise was aspiration pneumonia, based on her demise certificates.

“The docs stated they discovered scrambled eggs in her lungs,” stated her daughter Melissa Coulson.

Coulson’s demise and the circumstances surrounding it led her household to file a lawsuit towards Skyline and its proprietor, the New Jersey businessman Joseph Schwartz, alleging that cost-cutting at Hillview left Coulson with out the care she wanted. It was considered one of a number of lawsuits tied to affected person outcomes as Schwartz’s empire expanded after which unraveled, with a lot of the chain collapsing by 2018.

Schwartz didn’t contest the case, and a choose in 2020 awarded almost $19 million in damages. Coulson’s household has by no means been in a position to acquire. Schwartz had by that point relinquished all of his property in Arkansas, so there was nothing left within the state for the household’s lawyer to attempt to seize, nor was there sufficient details about property he might maintain in different states.

Coulson’s civil motion was considered one of a number of efforts to carry Schwartz accountable for what occurred at his nursing properties. In maybe essentially the most sweeping transfer, federal prosecutors in New Jersey charged Schwartz with orchestrating a $39 million payroll tax scheme linked to his nursing residence empire.

He pleaded responsible final April to failure to pay the IRS taxes withheld from workers and failing to file a monetary report for his workers’ profit plan. A federal choose sentenced him to a few years in jail.

However Schwartz served simply three months. In November, President Donald Trump granted him a full pardon, negating his felony conviction — a part of a sequence of clemency choices within the president’s second time period which have benefited well-connected defendants, together with political allies with entry to the White Home and people like Schwartz who had spent closely on lobbyists.

Usually overshadowed within the consideration round Trump’s choices is the emotional and monetary devastation left behind. Few clemency choices illustrate that extra clearly than the case of Schwartz, who paid himself thousands and thousands of {dollars} from his nursing properties whereas diverting tens of thousands and thousands owed to taxpayers and workers, and who has did not fulfill a minimum of three multimillion-dollar judgments awarded to grieving households.

Within the Coulson case, Schwartz later claimed he by no means acquired key filings and had mistaken the grievance for a similar lawsuit first filed in 2017, which he believed his insurer had already dealt with earlier than it was withdrawn and refiled. And he argued the corporate that took over Hillside and canceled insurance coverage protection — not him — was the correct defendant. He additionally stated he was representing himself, sick and isolating due to COVID-19 dangers. A choose denied his request to place the case on maintain.

Kevin Marino, a lawyer representing Schwartz and Skyline, stated he and Schwartz had no remark. He didn’t reply to a follow-up e-mail containing an in depth listing of questions.

Trump has granted clemency to a number of figures in main well being care fraud circumstances. In 2020, he commuted the 20-year federal jail sentence of Philip Esformes, a Florida nursing residence magnate convicted in a scheme that prosecutors stated concerned about $1.3 billion in fraudulent Medicare and Medicaid claims. The White Home cited allegations of prosecutorial misconduct, echoing claims from Esformes’ protection that prosecutors improperly invaded attorney-client privilege by reviewing paperwork seized in an FBI raid. Though appeals courts didn’t overturn the conviction primarily based on this argument, Esformes had assist from two former U.S. attorneys normal.

That very same 12 months, Trump commuted the sentence of Judith Negron, convicted in a $200 million Medicare fraud case. Trump’s clemency grant stated the “ends of justice” didn’t require her to serve one other twenty years in jail.

Legal professionals for Esformes and Negron didn’t reply to requests for remark.

Trump has additionally nominated nursing residence proprietor Benjamin Landa as ambassador to Hungary. The nomination has remained in place at the same time as a facility Landa co-owns faces a federal audit alleging there have been greater than $31 million in Medicare overpayments. Landa is suing the administration to dam compensation. An legal professional for Landa didn’t reply to a request for remark however has beforehand denied wrongdoing by his consumer, saying in an announcement the problems recognized within the audit occurred in the course of the COVID-19 pandemic when nursing properties had been within the midst of a disaster and that the corporate was dedicated to affected person care.

Schwartz’s case was highlighted by the far-right activist and Trump ally Laura Loomer, who had beforehand labored with the lobbyists Schwartz employed to press his case in Washington. Loomer printed a sequence of posts on X that falsely claimed that Schwartz was not accountable for the tax violations, that he had been unfairly blamed for the collapse of his nursing residence chain and that he had paid again “each dime.”

She additionally accused the choose within the case of antisemitism towards Schwartz, who’s Jewish, although she provided no proof. She additionally stated Schwartz was in “extraordinarily poor well being” and that jail can be a “demise sentence,” although the choose discovered no proof that Schwartz was unfit for jail.

Variations of Loomer’s narrative surfaced within the White Home’s rationalization for the pardon. A White Home official stated in response to questions from ProPublica that Schwartz “relied on a third-party entity” to handle tax filings, that he paid restitution, that no funds had been used for private enrichment, that the sentence was exceptionally dangerous to a 65-year-old man in deteriorating well being and that it was “an instance of over prosecution.”

However these claims are contradicted by the court docket document and Schwartz’s personal responsible plea, by which he acknowledged duty for the unpaid payroll taxes. Whereas he repaid $5 million, that coated solely a fraction of what he owed. Federal prosecutors stated that beneath Schwartz’s plea settlement, the IRS may have pursued the remaining stability — an effort that now seems far much less seemingly following the pardon. And his three-year sentence fell in the course of the vary beneficial beneath federal sentencing tips.

Requested about these statements and the way they sq. with the court docket document, the White Home didn’t reply.

Schwartz’s religion additionally turned a part of the Trump administration’s public celebration of the choice. Alice Marie Johnson, who has suggested the White Home on clemency, wrote on-line that the pardon meant Schwartz may now be a part of his household for Shabbat, and weeks later, he attended the White Home Hanukkah social gathering.

Schwartz paid greater than $1 million to lobbyists to press the White Home, the Justice Division and Congress on his behalf — together with on his efforts to safe a pardon — based on lobbying disclosure varieties. The White Home has insisted that paid lobbyists don’t have any affect on pardons.

Loomer stated she was not paid for her advocacy. She stated she heard about Schwartz’s case in a gaggle chat with members of an orthodox Jewish outreach motion, who requested her to look into it. She additionally pointed to her affect inside the Trump administration, citing a number of situations by which she publicly urged particular actions that the president in the end took. She stated Schwartz approached her on the Hanukkah social gathering to thank her.

Melissa Coulson stated Trump’s pardon of Schwartz bolstered her perception that justice just isn’t utilized equally.

“Apparently he’s bought cash someplace,” Coulson stated.

Her lawyer hopes to seek out it.

From the surface, Schwartz’s operation doesn’t appear like a company empire. The headquarters of Skyline’s fast-growing nursing residence community was a second-floor workplace above a pizza parlor in Wooden-Ridge, New Jersey.

Schwartz entered the nursing home based business within the late 2000s and fashioned Skyline to accumulate and function expert nursing amenities, initially in New Jersey and Pennsylvania. He offered a Florida-based insurance coverage enterprise in 2015 for $22 million, permitting him to quickly broaden Skyline. By 2017, Skyline and the associated firms Schwartz managed cared for roughly 15,000 residents in roughly 100 amenities in 11 states.

In a 2017 deposition in a wrongful demise go well with in Philadelphia, Schwartz defended the care at his amenities as “excellent” whereas distancing himself from day-to-day operations by saying he relied on facility-level directors and nursing administrators. The go well with was settled with out Schwartz admitting wrongdoing.

Within the deposition, Schwartz minimized studies of staffing shortages and unpaid payments as easy enterprise “disagreements.” Requested concerning the facility’s one-star federal staffing scores from 2010 to 2014 — the bottom potential rating beneath the Facilities for Medicare & Medicaid Companies’ 5-Star system — Schwartz stated he recalled having “a superb star ranking” and that his nursing properties had tried their hardest to supply as a lot staffing as potential, insisting that they had been “very, very, very, very, very compliant” and that residents had been “comfortable and glad.”

The collapse was swift. Skyline amenities did not make funds for meals and medical provides, and reduce hours for nursing residence employees. On the identical time, Schwartz started to siphon cash from a number of sources — overbilling Medicaid and withholding thousands and thousands of {dollars} in payroll taxes from staff’ paychecks however by no means sending the cash to the IRS, he admitted later. What’s extra, Schwartz paid himself $5 million as what one federal prosecutor described as a “ghost worker” at a few of his amenities.

As circumstances within the properties deteriorated, well being officers in a minimum of six states from Nebraska to Massachusetts seized or transferred management of his amenities or relocated residents. In South Dakota, a vp who oversaw 18 Schwartz-owned nursing properties started sending more and more determined emails to state well being officers, based on court docket data.

Debbie Menzenberg wrote within the emails that Schwartz’s son Louis, an government officer for Skyline, had referred to as her to say the state “has to do one thing — there isn’t a cash — he instructed me to discharge residents???”

Then Menzenberg’s emails to the state turned extra pressing:

“I would like water paid at Bella Vista and Prairie Hills right this moment or it is going to be SHUT OFF — Skyline is SILENT!!!”

“Disconnect discover got here right this moment for Pierre Might 8 electrical.”

“I NEED HELP!!!!!”

“CEO’s are conscious of stuff happening!!!”

Neither Menzenberg nor Louis Schwartz may very well be reached for remark.

A bunch of workers at Skyline nursing properties throughout the nation later filed a lawsuit alleging that Skyline withheld greater than $2 million in medical health insurance premiums from greater than 1,000 staff’ paychecks however failed to supply protection. That left a few of his workers with denied medical health insurance claims and mounting medical payments.

Schwartz has not defended himself towards the declare, and a lawyer for the staff has requested a choose to award a $2.4 million default judgment. The case stays pending in federal court docket in New Jersey.

One of many plaintiffs within the lawsuit, an actions director at a nursing residence in Arkansas, stated that she was left with greater than $50,000 in medical payments after surgical procedure on her again and neck. She stated she couldn’t pay the payments and that the debt in the end wrecked her credit score.

“They withheld over $1,000 from my paycheck for insurance coverage premiums and did nothing with them besides abscond with them,” stated the worker, Margaret Gates.

Below Schwartz’s possession, residents suffered — and a few died.

In a lawsuit towards Schwartz, Zelma Grissom’s household stated the circumstances at Hillview, the identical facility the place Doris Coulson was residing, left residents with out even primary care. The mom of six had entered the ability after mind surgical procedure left her unable to maneuver on her personal and depending on employees to show her in mattress.

Grissom’s son, LeVester Ivy, stated Hillview appeared chronically short-staffed. At some point, Ivy stated, a wound-care nurse referred to as the household into his mom’s room and confirmed them a extreme strain sore that had developed after Grissom hadn’t been turned often. Surgeons needed to reduce away contaminated tissue, leaving a big open wound. After that, he stated, her well being spiraled.

“She began getting an infection after an infection,” Ivy recalled.

Throughout one late-night ambulance switch, he stated, an emergency medical employee quietly instructed him how his mom had arrived. “She pulled me to the aspect and instructed me how soiled and nasty, how moist she was,” Ivy stated.

The household’s legal professionals stated she died of sepsis from the bedsores that Hillview caregivers allowed to grow to be contaminated.

A choose in February 2023 ordered Schwartz to pay Grissom’s household $15.7 million after neither Schwartz nor any consultant challenged the household’s wrongful demise declare. Schwartz later tried to overturn the ruling, claiming poor well being, lack of discover and that he was merely an investor with no position in operations, however a choose rejected the hassle.

Ivy stated the household sued Schwartz as a result of “we needed no one else to undergo the issues we needed to undergo.” Schwartz has not paid the judgment, and the household’s lawyer stated in an interview that he doesn’t have sufficient details about Schwartz’s property to attempt to get well the cash.

The struggling described in circumstances like Coulson’s and Grissom’s was not a part of the tax case towards Schwartz that landed him in jail. Nevertheless it loomed over the proceedings when he appeared for sentencing in federal court docket in Newark, New Jersey, final April. Schwartz had pleaded responsible to withholding $39 million in payroll taxes from his workers and failing to ship the cash to the IRS.

The investigation by no means decided the place the cash went. Prosecutors stated they weren’t in a position to set up that Schwartz had used the cash on a lavish life-style. However they stated they by no means accomplished a forensic accounting of his funds, which moved cash by means of greater than 200 financial institution accounts. They stated they believed Schwartz nonetheless managed greater than $50 million in property.

His attorneys argued that his actions weren’t an try at private enrichment however the results of a businessman who expanded too shortly, fell behind on payments after which made a sequence of economic choices — a few of them admittedly felony. However, they argued, he was merely making an attempt to avoid wasting his firm.

Schwartz apologized for his conduct and instructed U.S. District Decide Susan D. Wigenton that he “at all times tried to dwell the precise means” and set a superb instance. However he acknowledged that he’d failed to take action on this occasion.

Wigenton stated she couldn’t perceive why prosecutors had agreed to a sentence of only a 12 months and a day. Even years into the investigation, she famous, it remained unclear the place a lot of the cash had gone. And since so most of the letters submitted on Schwartz’s behalf described him as a superb businessman, Wigenton stated the “variety of layers and companies and LLCs that had been created” made it laborious to see him as somebody who had been fooled or confused.

“Not a single asset is in your title,” she stated. “Not one.”

Wigenton stated the case was not merely an summary tax case, citing the collapse of Skyline’s nursing properties and the hurt to sufferers. She stated there was a necessity for deterrence in sentencing.

The choose sentenced Schwartz to a few years in jail and ordered him to pay restitution of $5 million — the quantity he had paid himself as a ghost worker — which he did. The remaining taxes weren’t a part of the felony sentence as a result of prosecutors stated they had been used to fund his collapsing enterprise relatively than for private enrichment. They stated the IRS may attempt to get well the remaining by means of a civil case.

Trump’s pardon wiped away Schwartz’s federal jail sentence — and certain any IRS effort to claw again the remainder of the stolen taxes. Nevertheless it didn’t have an effect on a separate Arkansas state conviction for Medicaid fraud and tax evasion, by which Schwartz admitted submitting false and deceptive info that inflated the Medicaid charges paid to his amenities within the state.

A choose in Little Rock had sentenced Schwartz to 1 12 months in state jail, ordered to run concurrently his federal time period. Arkansas Legal professional Normal Tim Griffin, who had introduced Schwartz’s conviction as a signature achievement, made clear after Trump’s pardon that the state prosecution stood by itself.

Schwartz, Griffin stated on the time, owed the state of Arkansas 9 months in jail and $1.8 million in restitution. A spokesman for Griffin stated final week that, after making some funds — on schedule — Schwartz owed the state about $1.2 million, which should be totally repaid by April 2027.

One of many lobbyists whom Schwartz employed, Joshua Nass, labored to attempt to cut back Schwartz’s sentence in Arkansas. Nass declined to remark. He was later charged with trying to extort $500,000 from a consumer and his son. Though the victims aren’t recognized within the case, the circumstances match these of Schwartz.

Nass was launched from federal custody after posting a $5 million bond. He has not but responded to the cost. Prosecutors stated in a court docket submitting they had been negotiating with Nass for a plea deal that would resolve the case with out a trial.

Schwartz reported to an Arkansas jail on Dec. 29, creating a chance for the legal professionals representing households who had gained judgments towards him. On the top of Skyline’s growth, the corporate managed almost 1 in 10 nursing residence beds within the state. However by the point households gained their circumstances, Schwartz had relinquished or offered his Arkansas amenities, leaving no clear property for legal professionals to pursue.

As a result of Schwartz was in state custody once more, legal professionals may serve him with court docket papers and ask a choose to compel him to reply questions beneath oath about his funds — requiring him to reveal financial institution accounts, firms and different property and to show over monetary data. These proceedings are sometimes step one in tracing cash and figuring out property that is perhaps used to fulfill a judgment. From there, attorneys may ask courts in different states to acknowledge and implement the Arkansas judgments so they might pursue property situated elsewhere.

John Landis, an legal professional for Reddick Regulation, which represents the Coulson and Grissom households, stated he and one other legal professional representing yet one more consumer with a judgment towards Schwartz, contacted the state jail system to arrange depositions of Schwartz. However the window proved too temporary. The Arkansas parole board launched Schwartz after simply three weeks.

Earlier than they might ask a single query, the possibility to observe the cash was gone.