NJ nursing homes accused of millions in fraud, mismanaged care

🔲️ NJ nursing home operators called out
️🔲 State report alleges millions in fraud
️🔲 Medicaid funds being cut to ‘bad actors’

The operators of some New Jersey nursing homes have been accused of rampant fraud and mismanagement in a scathing report from the Office of the State Comptroller.

Acting State Comptroller Kevin Walsh said two brothers-in-law have funneled millions of dollars in Medicaid funds into their businesses while under-staffing and exploiting vulnerable residents.

The team avoided detection while siphoning Medicaid funds, by hiring another relative as a “straw owner” to hide their involvement and control, Walsh continued.

South Jersey Extended Care in Bridgeton and its sister facility, Sterling Manor in Maple Shade, have received notice that their Medicaid funds would be cut in 60 days, Walsh said.

In the five-year period looked at in the comptroller’s report, the team operated 10 nursing homes around New Jersey. At some point, the operators sold off most of these properties, he said.

Following the money

With a number of nursing homes consistently getting bad care ratings, Walsh said they started with what was arguably the worst and followed the money.

From April 2018 to mid-March 2023, the office examined bank records and other financials for South Jersey Extended Care to see where funds went and who benefitted.

The investigation found that owner Mordechay “Mark” Weisz had an “on paper” arrangement, yielding all control and operations to his cousin, Michael Konig, and Konig’s brother-in-law, Steven Krausman.

Krausman and Konig avoided detection while siphoning Medicaid funds because they used corporate structures to mask their involvement and control, Walsh continued, based in part on interviews with Weisz, Konig, and Krausman, among others.

The Bridgeton nursing home received $35.6 million in Medicaid funds — but paid $38.9 million to businesses owned and controlled by brothers-in-law, Krausman and Konig during that same span.

The team grossly inflated prices since they were both seller and buyer, vendor and customer, according to the 52-page report.

“This was a massive scam, perpetrated for years,” Walsh.

“These individuals were able to amass a fortune by pretending to be independent parties. In reality, they operated as one unit, providing terrible care to the sick, the elderly, and the poor, so they could make big profits.”

During the five years reviewed, Krausman, Konig, and their related businesses managed, operated, and/or provided services to 10 nursing homes — South Jersey Extended Care, Sterling Manor and the following:

▪️ Providence Nursing & Rehabilitation Center (Trenton)
▪️ Royal Health Gate Nursing & Rehabilitation (Trenton)
▪️ Manhattanview Nursing Home (Union City)
▪️ Manahawkin Convalescent Center (Manahawkin)
▪️ Amboy Care Center (Perth Amboy)
▪️ Teaneck Nursing Center (Teaneck)
▪️ Oceana Rehab and Nursing Center (Cape May Court House)
▪️ Shore Meadows Rehab & Nursing Center (Toms River)

In total, Krausman and Konig owned/controlled businesses received a total of $253 million from these 10 nursing homes – 76% of the total amount of Medicaid funds these homes collectively received during the five-year span.

During that time, at the Bridgeton facility, critical positions were filled with unqualified individuals, and shifts were routinely understaffed, the comptroller report found.

The report also found that Konig, Krausman and Weisz drove the Bridgeton nursing home to the brink of insolvency. In 2018, the Bridgeton site had $1.5 million in assets.

By 2022, it reported just $171,913 in assets while its liabilities spiked by over $4 million to $14.8 million.

The report has recommendations for avoiding such massive fraud, starting with a better vetting process for nursing home owners.

“We give them a lot of money,” Walsh said, “We should know who they are and whether we can trust them.”

While the report entailed civil findings, Walsh confirmed on Thursday, adding it would be "for others" to decide whether there would be charges or other repercussions.

The full OSC report on the Bridgeton and sister sites was posted online.

As of 2022, there were 15 NJ nursing homes (long-term care facilities) that were repeatedly rated one-star for the quality of resident care, according to the Office of the State Comptroller.

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