PRINT PAGEEsformes Fights Forfeiture On Money Laundering Convictions

By Nathan Hale

Law360, Miami (April 8, 2019, 10:30 PM EDT) -- Miami area nursing home mogul Philip Esformes pushed back Monday against the government's bid to strip him of millions of dollars in assets as it presented its forfeiture request to jurors who convicted him on 20 counts in a health care fraud case last week.

The federal government and Esformes' counsel presented testimony and arguments in the second phase of a trial in what the government has called the largest health care fraud case it has ever brought. The jury will commence deliberations Tuesday morning.

Jurors found Esformes, 50, guilty on various counts of paying and receiving kickbacks, money laundering, bribery, and obstruction of justice at the end of a two-month criminal trial in Miami. Prosecutors say he made payments to doctors to send patients to his South Florida network of facilities, to state health agency officials to get inspection schedules and complaint reports, and to former University of Pennsylvania men's basketball coach Jerome Allen to get his son a spot on the school's basketball team and admission into its Wharton School of Business.

The government is seeking forfeiture of a variety of assets it says can be tied to Esformes' money laundering conspiracy, including his interests in 16 assisted living facilities and skilled nursing facilities referenced in the case; four pieces of real estate property, including his Miami Beach home; 19 bank accounts; a $360,000 Greubel Forsey watch he owned; and a $52,800 Hermes Birkin bag owned by his wife.

Esformes attorney Howard Srebnick of Black Srebnick Kornspan & Stumpf PA took a light approach in his opening statement, acknowledging the defense must "accept and respect" the jury's findings of guilt, but his partner Roy Black followed later in the day with a more forceful stance in closing arguments, slamming the government for what he repeatedly claimed were wildly excessive forfeiture claims.

Black conceded right off the bat that Esformes should give up three bank accounts that the jury found were used to conceal the movement of Medicare and Medicaid proceeds from Esformes' skilled nursing facilities for personal transactions.

But he contended the government was overreaching by pursuing Esformes' business interests in his nursing homes, saying the government had no basis for using money laundering convictions covering $85,000 in concealed transactions to go after five facilities worth millions in investments.

"This is a money grab by the United States government. There is no basis for it. Our Constitution doesn't allow it to happen," Black said, referencing the Eighth Amendment's prohibition against excessive fines.

Black also accused the government of shifting its position by acknowledging during closing arguments in the criminal trial that many of Esformes' patients had legitimate medical needs, but then seeking forfeiture Monday based on all of his business.

"There's no integrity to it, there's no honesty to it, and you should reject it," he told the jury.

Black also contested the government's bid to seize three homes Esformes owns on Miami Beach based on government analysis that checks to pay the property taxes included Medicare and Medicaid proceeds, saying this was the opposite of concealment and there was no crime. Similar arguments apply to a property purchased in Chicago and the Hermes bag, he added.

On rebuttal, Assistant U.S. Attorney Daren Grove challenged Black's presentation of the law and what the government is seeking. The government does not want to seize the skilled nursing facilities, only to strip Esformes' interest in them, he said.

"We're interested in removing them from Mr. Esformes so he can't use them again as he did in this case," Grove said. "There is an old adage, 'Crime does not pay.' In the end, this proceeding is about bringing meaning to that saying. 'Crime does not pay, and the tools of your crime will be removed from you.'"

The word "concealment" does not apply to the forfeiture claims, Grove said. Jurors are tasked simply with finding if the various listed properties facilitated — or made less difficult — the money laundering offenses for which they found Esformes guilty, or could be traced to the proceeds.

"Ask yourself, 'Is it possible that conspiracy could have continued for 14 years if Philip Esformes didn't have those facilities?'" Grove told the jurors. "The answer is absolutely not."

The government presented testimony from a single witness, Michael Petron, a managing director at Stout Risius Ross LLC who specializes in financial and health care fraud investigations and testified as an expert witness during the criminal trial.

Petron testified how his analysis of claims data and bank records traced proceeds from Medicare and Medicaid to the transactions cited in the eight money laundering counts, and also through the bank accounts and nursing facility entities that are the subject of the government's forfeiture request.

From 2006 through Esformes' arrest in July 2016, his facilities billed Medicare and Medicaid for $832 million in claims and were paid $493 million by the government programs, Petron said he found.

Looking at the narrower period from January 2010 through July 2016, after Esformes had personally signed anti-kickback and compliance certifications for five of his skilled nursing facilities, Petron said he traced more than $205 million that passed from those facilities through the subject bank accounts — and sometimes between the accounts.

During those years, Esformes ultimately received nearly $38.8 million for his personal accounts from his facilities and related companies, Petron said, stressing that this represented only a portion of the time covered by the entire fraud scheme, according to available bank records.

The government is represented by Daren Grove and Nalina Sombuntham of the U.S. Attorney's Office for the Southern District of Florida, and James V. Hayes, Elizabeth Young and Allan Medina of the U.S. Department of Justice's Criminal Division.

Esformes is represented by Howard M. Srebnick, Roy Black, Jacqueline Perczek and Rossana Arteaga-Gomez of Black Srebnick Kornspan & Stumpf PA, Marissel Descalzo of Tache Bronis Christianson & Descalzo PA, and Bradley Horenstein of The Horenstein Firm PA.

The case is U.S. v. Esformes et al., case number 1:16-cr-20549, in the U.S. District Court for the Southern District of Florida.

--Editing by Adam LoBelia.

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