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3 who ran nursing homes face jail terms


Des Moines, IA - Executives who took over management of a troubled chain of nursing homes with ties to Iowa now face prison terms after being convicted of defrauding the nation's taxpayers of $34 million.

Prosecutors say the three officials bilked the government between 1999 and 2006 by creating 150 fictitious foreign corporations that, in theory, employed all 4,500 employees at the chain's nursing homes.

In reality, the corporations were nothing but mail drops, and the confusing array of companies was designed to enable the men to keep the payroll taxes they collected from workers.

According to court records, the executives diverted other money that could have paid for improved care and supervision of 6,000 seniors living in the company's 70 nursing homes. Instead, the money was used to pay for luxury cars for the executives, antiques, monthly trips to England and Australia, and shopping trips to the Gap, Saks Fifth Avenue and Wal-Mart.

The executives had been brought in because of the history of problems with the quality of care provided to residents of the chain's nursing homes.

But conditions at many of those facilities only grew worse.

July 15, 2008

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