Joseph Schwartz, Nursing Home Owner Pardoned by Trump, Owes Patient Families Millions — ProPublica

Doris Coulson remained spirited even as her illness progressed — watching cooking shows on TV, working crossword puzzles and wheeling herself down the hallways of her nursing home to show off her granddaughter when she came to visit.

Coulson had been admitted to Hillview Post Acute and Rehabilitation Center in Little Rock, Arkansas, in January 2016, after Parkinson’s disease left her at risk of choking when she swallowed. That April, the facility’s operations were taken over by Skyline Healthcare, a New Jersey-based company that was buying up nursing homes across the country.

Medical records for the retired cardiac nurse, then 71, were marked “NPO” — nothing by mouth.

Then that September, a nursing assistant found Coulson unresponsive and hanging off the side of her bed, her skin ashy and her breathing shallow. She was taken to a hospital in a coma and died several days later. The chief cause of death was aspiration pneumonia, according to her death certificate.

“The doctors said they found scrambled eggs in her lungs,” said her daughter Melissa Coulson.

Coulson’s death and the circumstances surrounding it led her family to file a lawsuit against Skyline and its owner, the New Jersey businessman Joseph Schwartz, alleging that cost-cutting at Hillview left Coulson without the care she needed. It was one of several lawsuits tied to patient outcomes as Schwartz’s empire expanded and then unraveled, with much of the chain collapsing by 2018.

Schwartz didn’t contest the case, and a judge in 2020 awarded nearly $19 million in damages. Coulson’s family has never been able to collect. Schwartz had by that time relinquished all of his property in Arkansas, so there was nothing left in the state for the family’s lawyer to try to seize, nor was there enough information about assets he may hold in other states.

Coulson’s civil action was one of several efforts to hold Schwartz accountable for what happened at his nursing homes. In perhaps the most sweeping move, federal prosecutors in New Jersey charged Schwartz with orchestrating a $39 million payroll tax scheme connected to his nursing home empire.

He pleaded guilty last April to failure to pay the IRS taxes withheld from employees and failing to file a financial report for his employees’ benefit plan. A federal judge sentenced him to three years in prison.

But Schwartz served just three months. In November, President Donald Trump granted him a full pardon, negating his criminal conviction — part of a series of clemency decisions in the president’s second term that have benefited well-connected defendants, including political allies with access to the White House and individuals like Schwartz who had spent heavily on lobbyists.

Often overshadowed in the attention around Trump’s decisions is the emotional and financial devastation left behind. Few clemency decisions illustrate that more clearly than the case of Schwartz, who paid himself millions of dollars from his nursing homes while diverting tens of millions owed to taxpayers and employees, and who has failed to satisfy at least three multimillion-dollar judgments awarded to grieving families.

In the Coulson case, Schwartz later claimed he never received key filings and had mistaken the complaint for the same lawsuit first filed in 2017, which he believed his insurer had already handled before it was withdrawn and refiled. And he argued the company that took over Hillside and canceled insurance coverage — not him — was the proper defendant. He also said he was representing himself, in poor health and isolating because of COVID-19 risks. A judge denied his request to put the case on hold.

Kevin Marino, a lawyer representing Schwartz and Skyline, said he and Schwartz had no comment. He did not respond to a follow-up email containing a detailed list of questions.

Trump has granted clemency to several figures in major health care fraud cases. In 2020, he commuted the 20-year federal prison sentence of Philip Esformes, a Florida nursing home magnate convicted in a scheme that prosecutors said involved about $1.3 billion in fraudulent Medicare and Medicaid claims. The White House cited allegations of prosecutorial misconduct, echoing claims from Esformes’ defense that prosecutors improperly invaded attorney-client privilege by reviewing documents seized in an FBI raid. Although appeals courts did not overturn the conviction based on this argument, Esformes had support from two former U.S. attorneys general.

That same year, Trump commuted the sentence of Judith Negron, convicted in a $200 million Medicare fraud case. Trump’s clemency grant said the “ends of justice” did not require her to serve another two decades in prison.

Lawyers for Esformes and Negron did not respond to requests for comment.

Trump has also nominated nursing home owner Benjamin Landa as ambassador to Hungary. The nomination has remained in place even as a facility Landa co-owns faces a federal audit alleging there were more than $31 million in Medicare overpayments. Landa is suing the administration to block repayment. An attorney for Landa did not respond to a request for comment but has previously denied wrongdoing by his client, saying in a statement the issues identified in the audit occurred during the COVID-19 pandemic when nursing homes were in the midst of a crisis and that the company was committed to patient care.

Schwartz’s case was highlighted by the far-right activist and Trump ally Laura Loomer, who had previously worked with the lobbyists Schwartz hired to press his case in Washington. Loomer published a series of posts on X that falsely claimed that Schwartz was not responsible for the tax violations, that he had been unfairly blamed for the collapse of his nursing home chain and that he had paid back “every dime.”

She also accused the judge in the case of antisemitism against Schwartz, who is Jewish, though she offered no evidence. She also said Schwartz was in “extremely poor health” and that prison would be a “death sentence,” though the judge found no evidence that Schwartz was unfit for prison.

Versions of Loomer’s narrative surfaced in the White House’s explanation for the pardon. A White House official said in response to questions from ProPublica that Schwartz “relied on a third-party entity” to manage tax filings, that he paid restitution, that no funds were used for personal enrichment, that the sentence was exceptionally harmful to a 65-year-old man in deteriorating health and that it was “an example of over prosecution.”

But those claims are contradicted by the court record and Schwartz’s own guilty plea, in which he acknowledged responsibility for the unpaid payroll taxes. While he repaid $5 million, that covered only a fraction of what he owed. Federal prosecutors said that under Schwartz’s plea agreement, the IRS could have pursued the remaining balance — an effort that now appears far less likely following the pardon. And his three-year sentence fell in the middle of the range recommended under federal sentencing guidelines.

Asked about those statements and how they square with the court record, the White House did not respond.

Schwartz’s faith also became part of the Trump administration’s public celebration of the decision. Alice Marie Johnson, who has advised the White House on clemency, wrote online that the pardon meant Schwartz could now join his family for Shabbat, and weeks later, he attended the White House Hanukkah party.

Schwartz paid more than $1 million to lobbyists to press the White House, the Justice Department and Congress on his behalf — including on his efforts to secure a pardon — according to lobbying disclosure forms. The White House has insisted that paid lobbyists have no influence on pardons.

Loomer said she was not paid for her advocacy. She said she heard about Schwartz’s case in a group chat with members of an orthodox Jewish outreach movement, who asked her to look into it. She also pointed to her influence within the Trump administration, citing several instances in which she publicly urged specific actions that the president ultimately took. She said Schwartz approached her at the Hanukkah party to thank her.

Melissa Coulson said Trump’s pardon of Schwartz reinforced her belief that justice is not applied equally.

“Apparently he’s got money somewhere,” Coulson said.

Her lawyer hopes to find it.

From the outside, Schwartz’s operation doesn’t look like a corporate empire. The headquarters of Skyline’s fast-growing nursing home network was a second-floor office above a pizza parlor in Wood-Ridge, New Jersey.

Schwartz entered the nursing home business in the late 2000s and formed Skyline to acquire and operate skilled nursing facilities, initially in New Jersey and Pennsylvania. He sold a Florida-based insurance business in 2015 for $22 million, allowing him to rapidly expand Skyline. By 2017, Skyline and the related companies Schwartz controlled cared for approximately 15,000 residents in roughly 100 facilities in 11 states.

In a 2017 deposition in a wrongful death suit in Philadelphia, Schwartz defended the care at his facilities as “superb” while distancing himself from day-to-day operations by saying he relied on facility-level administrators and nursing directors. The suit was settled without Schwartz admitting wrongdoing.

In the deposition, Schwartz minimized reports of staffing shortages and unpaid bills as simple business “disagreements.” Asked about the facility’s one-star federal staffing ratings from 2010 to 2014 — the lowest possible score under the Centers for Medicare & Medicaid Services’ Five-Star system — Schwartz said he recalled having “a good star rating” and that his nursing homes had tried their hardest to provide as much staffing as possible, insisting that they were “very, very, very, very, very compliant” and that residents were “happy and satisfied.”

The collapse was swift. Skyline facilities failed to make payments for food and medical supplies, and cut hours for nursing home staff. At the same time, Schwartz began to siphon money from multiple sources — overbilling Medicaid and withholding millions of dollars in payroll taxes from workers’ paychecks but never sending the money to the IRS, he admitted later. What’s more, Schwartz paid himself $5 million as what one federal prosecutor described as a “ghost employee” at some of his facilities.

As conditions in the homes deteriorated, health officials in at least six states from Nebraska to Massachusetts seized or transferred control of his facilities or relocated residents. In South Dakota, a vice president who oversaw 18 Schwartz-owned nursing homes began sending increasingly desperate emails to state health officials, according to court records.

Debbie Menzenberg wrote in the emails that Schwartz’s son Louis, an executive officer for Skyline, had called her to say the state “has to do something — there is no money — he told me to discharge residents???”

Then Menzenberg’s emails to the state became more urgent:

“I need water paid at Bella Vista and Prairie Hills today or it will be SHUT OFF — Skyline is SILENT!!!”

“Disconnect notice came today for Pierre May 8 electric.”

“I NEED HELP!!!!!”

“CEO’s are aware of stuff going on!!!”

Neither Menzenberg nor Louis Schwartz could be reached for comment.

A group of employees at Skyline nursing homes across the country later filed a lawsuit alleging that Skyline withheld more than $2 million in health insurance premiums from more than 1,000 workers’ paychecks but failed to provide coverage. That left some of his employees with denied health insurance claims and mounting medical bills.

Schwartz has not defended himself against the claim, and a lawyer for the employees has asked a judge to award a $2.4 million default judgment. The case remains pending in federal court in New Jersey.

One of the plaintiffs in the lawsuit, an activities director at a nursing home in Arkansas, said that she was left with more than $50,000 in medical bills after surgery on her back and neck. She said she couldn’t pay the bills and that the debt ultimately wrecked her credit.

“They withheld over $1,000 from my paycheck for insurance premiums and did nothing with them except abscond with them,” said the employee, Margaret Gates.

Under Schwartz’s ownership, residents suffered — and some died.

In a lawsuit against Schwartz, Zelma Grissom’s family said the conditions at Hillview, the same facility where Doris Coulson was living, left residents without even basic care. The mother of six had entered the facility after brain surgery left her unable to move on her own and dependent on staff to turn her in bed.

Grissom’s son, LeVester Ivy, said Hillview appeared chronically short-staffed. One day, Ivy said, a wound-care nurse called the family into his mother’s room and showed them a severe pressure sore that had developed after Grissom hadn’t been turned regularly. Surgeons had to cut away infected tissue, leaving a large open wound. After that, he said, her health spiraled.

“She started getting infection after infection,” Ivy recalled.

During one late-night ambulance transfer, he said, an emergency medical worker quietly told him how his mother had arrived. “She pulled me to the side and told me how dirty and nasty, how wet she was,” Ivy said.

The family’s lawyers said she died of sepsis from the bedsores that Hillview caregivers allowed to become infected.

A judge in February 2023 ordered Schwartz to pay Grissom’s family $15.7 million after neither Schwartz nor any representative challenged the family’s wrongful death claim. Schwartz later tried to overturn the ruling, claiming poor health, lack of notice and that he was merely an investor with no role in operations, but a judge rejected the effort.

Ivy said the family sued Schwartz because “we wanted nobody else to go through the things we had to go through.” Schwartz has not paid the judgment, and the family’s lawyer said in an interview that he does not have enough information about Schwartz’s assets to try to recover the money.

The suffering described in cases like Coulson’s and Grissom’s was not part of the tax case against Schwartz that landed him in prison. But it loomed over the proceedings when he appeared for sentencing in federal court in Newark, New Jersey, last April. Schwartz had pleaded guilty to withholding $39 million in payroll taxes from his employees and failing to send the money to the IRS.

The investigation never determined where the money went. Prosecutors said they were not able to establish that Schwartz had used the money on a lavish lifestyle. But they said they never completed a forensic accounting of his finances, which moved money through more than 200 bank accounts. They said they believed Schwartz still controlled more than $50 million in assets.

His attorneys argued that his actions were not an attempt at personal enrichment but the result of a businessman who expanded too quickly, fell behind on bills and then made a series of financial decisions — some of them admittedly criminal. But, they argued, he was simply trying to save his company.

Schwartz apologized for his conduct and told U.S. District Judge Susan D. Wigenton that he “always tried to live the right way” and set a good example. But he acknowledged that he’d failed to do so in this instance.

Wigenton said she could not understand why prosecutors had agreed to a sentence of just a year and a day. Even years into the investigation, she noted, it remained unclear where much of the money had gone. And because so many of the letters submitted on Schwartz’s behalf described him as a brilliant businessman, Wigenton said the “number of layers and businesses and LLCs that were created” made it hard to see him as someone who had been fooled or confused.

“Not a single asset is in your name,” she said. “Not one.”

Wigenton said the case was not merely an abstract tax case, citing the collapse of Skyline’s nursing homes and the harm to patients. She said there was a need for deterrence in sentencing.

The judge sentenced Schwartz to three years in prison and ordered him to pay restitution of $5 million — the amount he had paid himself as a ghost employee — which he did. The remaining taxes were not part of the criminal sentence because prosecutors said they were used to fund his collapsing business rather than for personal enrichment. They said the IRS could try to recover the rest through a civil case.

Trump’s pardon wiped away Schwartz’s federal prison sentence — and likely any IRS effort to claw back the rest of the stolen taxes. But it did not affect a separate Arkansas state conviction for Medicaid fraud and tax evasion, in which Schwartz admitted submitting false and misleading information that inflated the Medicaid rates paid to his facilities in the state.

A judge in Little Rock had sentenced Schwartz to one year in state prison, ordered to run at the same time as his federal term. Arkansas Attorney General Tim Griffin, who had announced Schwartz’s conviction as a signature achievement, made clear after Trump’s pardon that the state prosecution stood on its own.

Schwartz, Griffin said at the time, owed the state of Arkansas nine months in prison and $1.8 million in restitution. A spokesman for Griffin said last week that, after making some payments — on schedule — Schwartz owed the state about $1.2 million, which must be fully repaid by April 2027.

One of the lobbyists whom Schwartz hired, Joshua Nass, worked to try to reduce Schwartz’s sentence in Arkansas. Nass declined to comment. He was later charged with attempting to extort $500,000 from a client and his son. Although the victims are not identified in the case, the circumstances match those of Schwartz.

Nass was released from federal custody after posting a $5 million bond. He has not yet responded to the charge. Prosecutors said in a court filing they were negotiating with Nass for a plea deal that could resolve the case without a trial.

Schwartz reported to an Arkansas prison on Dec. 29, creating an opportunity for the lawyers representing families who had won judgments against him. At the height of Skyline’s expansion, the company controlled nearly 1 in 10 nursing home beds in the state. But by the time families won their cases, Schwartz had relinquished or sold his Arkansas facilities, leaving no clear assets for lawyers to pursue.

Because Schwartz was in state custody again, lawyers could serve him with court papers and ask a judge to compel him to answer questions under oath about his finances — requiring him to disclose bank accounts, companies and other assets and to turn over financial records. Those proceedings are often the first step in tracing money and identifying property that might be used to satisfy a judgment. From there, attorneys could ask courts in other states to recognize and enforce the Arkansas judgments so they could pursue assets located elsewhere.

John Landis, an attorney for Reddick Law, which represents the Coulson and Grissom families, said he and another attorney representing yet another client with a judgment against Schwartz, contacted the state prison system to set up depositions of Schwartz. But the window proved too brief. The Arkansas parole board released Schwartz after just three weeks.

Before they could ask a single question, the chance to follow the money was gone.