Sun Sentinel Palm Beach Edition
Mogul gets 20 years for $1.3B fraud
Prosecutors: Esformes used bribes to bring patients to his nursing homes
Former Illinois and Florida nursing home mogul Philip Esformes wept and pleaded for mercy Thursday before being sentenced to 20 years in prison for what the U.S. Justice Department called the largest single health care bribery and kickback scheme in American history.
A separate hearing will be held in November to determine the amount of money and property Esformes may be required to forfeit.
Esformes, who once controlled a network of more than two dozen health care facilities that stretched from Chicago to Miami, garnered $1.3 billion Medicaid revenues by bribing medical professionals who referred patients to his Florida facilities then paid off government regulators as vulnerable residents were injured by their peers, prosecutors said.
He housed elderly patients alongside younger adults who suffered from
mental illness and drug addiction — sometimes with fatal results. In Esformes’ Oceanside Extended Care Center in Miami Beach, “an elderly patient was attacked and beaten to death by a younger mental health patient who never should have been at (a nursing facility) in the first place,” prosecutors wrote in a pre-sentencing memo.
As he handed down the sentence, Judge Robert N. Scola Jr. said the length and scope of Esformes’ criminal conduct were “unmatched in our community. … Mr. Esformes violated the trust of Medicare and Medicaid in epic proportions.”
But Scola meted out a punishment significantly less than the 30 years prosecutors requested, saying Esformes also had an extraordinary history of helping people in need. Attorneys for Esformes had described him as a selfless philanthropist who had donated more than $15 million to synagogues, schools and needy individuals, often anonymously.
Said Scola: “I think he should get some consideration for his philanthropy, although it’s dangerous to say because he was stealing money from Medicare, so people might say he was giving that money to charity. But the vast majority of the money he made, he made legitimately. More importantly he was a true friend to people known and unknown to him, and that is worthy of mitigation.”
In arguing for a 30-year sentence, prosecutors said his yearslong bribes-for-patients schemes involved the corruption of medical professionals and government regulators, and entailed grievous injuries to a massive number of elderly patients.
“Miami is the epicenter of health care fraud, there was no one like Philip Esformes, he was king,” prosecutor Allan J. Medina told the judge in court Thursday.
Many of his younger, drug-addicted patients spent the daylight hours wandering the streets of Miami while he collected government payments for services that were never delivered, prosecutors said.
“Phillip Esformes used deceptive and calculated means to orchestrate a fraud of the magnitude that we have not seen before,” Medina said. “People who needed to get better, who wanted to get better, they had no shot.”
“His fraud involved thousands of patients, 16 nursing homes, the systematic payment of bribes, a complex web of bank accounts, and brazen obstruction of justice to try to prevent it all from coming to light,” prosecutor Elizabeth Young wrote in a sentencing memo filed with the court this week.
Esformes, who has been in maximum security detention for 37 months since his 2016 arrest, called himself a shattered, repentant man when he stood before the judge. His shoulders drooped beneath his baggy khaki prison shirt as he began rocking back and forth.
“I want to apologize to, your honor, the United States. Sorry. And my community.” As Esformes began to recite the names of his children, he briefly became incoherent. Groans and cries of “Oh God!” escaped from his family and supporters in the gallery.
“I’ve lost everything I love and cared about with the utmost intensity,” he said. “There is no one to blame but myself, me.”
While preparing his defense, Esformes told the judge, he had listened repeatedly to wiretapped conversations that revealed him arranging bribes. “I am disgusted by what I heard,” he said, at one point pounding a courtroom podium with his fist. “The Phil Esformes you heard was reckless … an arrogant man.”
Esformes said he was studying the Torah and praying for redemption. “I won’t miss that opportunity,” he said.
Prosecutors said Esformes should be forced to pay $207 million in restitution to Medicaid and Medicare; attorneys for Esformes sharply questioned that amount in court Thursday.
Judge Scola closely questioned prosecutors about how they calculated the value of the Medicaid proceeds Esformes stole over the years, ultimately finding the loss to be between $4.8 million and $8.3 million.
Federal authorities arrested Esformes at one of his $2 million estates on the Miami Beach waterfront in 2016 and immediately placed him in the Miami Federal Detention Center.
At the time, he had a net worth of $78.9 million in bank accounts and investments, and hardly any debts, according to court papers filed by prosecutors. He maintained a Chicago Water Tower penthouse and a mansion in Los Angeles.
Esformes was deemed an extraordinary flight risk in part because he had been caught on a wiretap offering to help his business partner Guillermo Delgado flee from the U.S. to avoid prosecution as the federal investigators closed in on them.
Delgado, who helped Esformes defraud Medicare for mental health and prescription drug services, instead helped federal investigators bring Esformes to justice. He and his brother Gabriel Delgado are now serving prison time.
In one of Esformes’ crimes, prosecutors said, he used some $300,000 in stolen Medicare and Medicaid proceeds to bribe the head men’s basketball coach at the University of Pennsylvania to admit Esformes’ son to the school.
That coach, Jerome Allen, pleaded guilty in October to a money-laundering charge related to the Esformes bribes. He testified as a government witness against Esformes at the Miami trial. Allen received a probationary sentence and is now in his third season as an assistant coach with the Boston Celtics.
The dozens of nursing facilities Esformes ran with his father and business partner Morris Esformes for decades earned millions of Medicaid and Medicare dollars annually despite repeated federal law enforcement probes and Chicago Tribune investigations alleging substandard care and incidents when disabled patients were assaulted by fellow residents.
“Instead of changing his ways or expressing remorse after these settlements, Esformes simply altered his criminal scheme to avoid detection,” prosecutor Young wrote in the court filing.
The latest case wasn’t the first time that Esformes faced fraud accusations.
In 2006, Philip Esformes was among the current and former owners of Larkin Community Hospital in Miami who were required to pay $15.4 million to settle federal and Florida civil health care fraud claims.
In that matter, one of the other defendants was Dr. Jack Michel, CEO of Larkin Community Hospital, who made his own headlines in 2017 after the 12 heat-related deaths of patients at the Rehabilitation Center at Hollywood Hills. Michel isn’t affiliated with Esformes in the latest Medicaid fraud legal battle that is sending Esformes to prison.