Subpoena scuffle puts American Senior Communities fraud case on contentious course

Keywords Courts / FBI / Fraud
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You knew the fraud case against former American Senior Communities CEO James Burkhart was going to be a battle royal once Burkhart enlisted the indefatigable defense attorney Larry Mackey, who won acclaim for prosecuting the Oklahoma City bombing suspects two decades ago.

We’re still months from the January 2018 jury trial, but already maneuverings by Mackey and attorneys for Burkhart’s three co-defendants are creating fireworks. In a mid-May court filing, federal prosecutors charged the defendants went way overboard in issuing to third parties dozens of subpoenas that were overly broad, overly burdensome and “an abuse of process.”

The filing asserts that the subpoenas lack the specificity required by law and are being used by defendants to conduct “fishing expeditions” and, in some cases, to “harass witnesses by subpoenaing personal information related to their employment.”

“The defendants’ requests are the opposite of specific—they are a shot in the dark in all directions and should be rejected as such,” according to the motion, which asks the court to quash all the subpoenas and for the defendants to start the process over.

The court case has been draped in drama from the start. Indictments unsealed last October alleged Burkhart, former ASC Chief Operating Officer Dan Benson, Burkhart’s brother Joshua and Burkhart’s friend Steve Ganote brazenly orchestrated a $16 million overbilling and kickback scheme that ran from 2009 to 2015.

According to prosecutors, the victims were nursing home giant ASC, which is owned by the Jackson family of Indianapolis; the Health & Hospital Corporation of Marion County, which hired ASC to operate its nearly 70 nursing homes; and federal health care programs.

Prosecutors charge the defendants used proceeds from their crimes to fund lavish lifestyles, including vacation homes and expensive jewelry. At a press conference the day charges were unveiled, U.S. Attorney Josh Minkler declared, “The scheme was characterized by unbridled greed.”

Mackey, a partner with Barnes & Thornburg, and the attorneys for the other defendants acknowledge they’ve issued 58 subpoenas but say doing so was completely appropriate in light of their clients’ constitutionally protected rights to collect documents and information needed for their defense.

“The government has charged defendants with a conspiracy of staggering breadth,” the attorneys wrote in a May 26 filing, arguing that the effort to throw out subpoenas “is illustrative of the government’s true goal: to prevent defendants from receiving and using documents that do not conform to the government’s theory of the case.”

The filing continued: “This is a massive case involving approximately 7.5 million pages produced by the government alone, involving a multitude of vendors, third parties, witnesses and document sources.

“In the face of same, defendants’ requests are thoughtful, specific and tailored to the circumstances of the case, in that they seek documents that will assist defendants in proving their defenses, including most fundamentally that none of the defendants acted with criminal intent to defraud.”

The FBI’s American Senior Communities’ investigation splashed into the headlines in September 2015 when agents conducted a series of raids, including at Burkhart’s swanky Carmel home.

IBJ reported this spring that, before the raids, one of the targets of the investigation—Burkhart’s friend Dave Mazanowski, founder of Fishers-based Mainscape Inc., which landscaped ASC nursing homes—had begun secretly assisting investigators.

In a separate case filed hours after a judge unsealed the 32-count indictment against the other four defendants, the U.S. Attorney’s Office charged Mazanowski with profiting from the overbilling and kickback scheme.

Mazanowski last fall agreed to plead guilty to one count of conspiracy to commit mail, wire and health care fraud. But his sentencing has been put off indefinitely, raising the specter that he will be a witness for the prosecution in Burkhart’s trial, cooperation that could translate into leniency.

The indictment alleges that Mazanowski, Burkhart and Joshua Burkhart pocketed more than $2 million through fraudulent Mainscape invoices. Some invoices overbilled ASC for landscaping services, while others charged it for “consulting” services that had not been performed, according to investigators.

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