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Joseph Schwartz, 62, was arrested at his Suffern home last Thursday. A federal judge in Newark released him to home confinement hours later, with conditions, pending trial.
Then came the unsealing announcement on Monday, also out of Newark.
Schwartz’s Skyline Healthcare LLC amassed 95 nursing homes in 11 states nationwide in less than two years – including in New Jersey and Pennsylvania, authorities said.
The company soon began bleeding cash and eventually collapsed, flinging the care of 7,000 residents and the fates of 15,000 or so employees into limbo, they said.
State authorities closed some facilities while forcing others into receivership or simply finding new operators themselves. Meanwhile, employees and vendors went unpaid.
Schwartz quickly became a poster boy, of sorts, for advocates demanding greater scrutiny of nursing home license applicants.
Last month, the state of Arkansas has charged Schwartz with overbilling Medicaid by $3.6 million. Last week, the attorney general of Nebraska accused him, his wife, Rosie Schwartz, and Skyline with nearly $60 million worth of Medicaid fraud.
Civil suits also have been filed against Schwartz and his businesses in several states.
Schwartz’s son, Louis, is an officer with a Sussex County nursing home where the bodies of 17 dead residents were found stacked in a makeshift morgue during the initial days of COVID in 2020.
The indictment unsealed Monday in federal court in Newark charges the elder Schwartz with “willfully failing to withhold and pay over employment taxes on behalf of his employees, tax evasion, and failing to file benefit plan reports,” U.S. Attorney for New Jersey Philip Sellinger said.
Schwartz “failed to collect, truthfully account for, and pay over millions of dollars in payroll taxes owed to the IRS on behalf of his employees as required by law,” the indictment says.
Schwartz and an associate created several businesses in late 2016 to provide staffing and management services for employees of the Skyline-owned health care and rehabilitation facilities, Sellinger said.
Although the staffing companies were nominally owned by other individuals, Schwartz allegedly controlled their finances and operation – and made himself an employee of some of them, the U.S. attorney said.
From mid-2017 through June 2018, Schwartz “caused the staffing companies to not pay approximately $38,982,016 in payroll taxes and unemployment taxes due the IRS,” Sellinger said.
To dodge unemployment taxes owed by the staffing companies, Schwartz “used nominees to hide his control of the companies,” the U.S. attorney said.
He also “provided, and directed others to provide, insufficient funds to pay the taxes owed,” Sellinger said.
On top of that, Schwartz – as trustee of Skyline’s 401K retirement plan -- didn’t file required reports with the Department of Labor “relating to the financial condition, investments and operation” of the plan, he said.
He listed his office in a Wood-Ridge, NJ building that houses a pizzeria, federal records show.
Sellinger made Monday’s announcement with Acting Deputy Assistant Attorney General Stuart M. Goldberg of the Justice Department’s Tax Division, Special Agent In Charge Michael Montanez of IRS-Criminal Investigation’s Newark Field Office and a representative of the U.S. Department of Labor Criminal Investigations Program.
Trial Attorney Shawn Noud of the Justice Department’s Tax Division and Senior Litigation Counsel Vincent Grady O’Malley of Sellinger’s office are handling the case, investigated by IRS-Criminal Investigation and the Department of Labor Criminal Investigations Program.
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