The FHA, which is part of the U.S. Department of Housing and Urban Development (HUD), provides mortgage insurance on loans that cover residential care facilities, such as nursing homes, pursuant to the NHA. To encourage lenders to make loans to such facilities, FHA mortgage insurance provides lenders with protection against losses that result from borrowers defaulting on their mortgage loans. To obtain such FHA-insured loans, loan recipients must enter into Regulatory Agreements with the FHA that provide, among other requirements, that the assets and income of an FHA-insured nursing home may only be spent on goods and services that are reasonable and necessary to the operation of the nursing home. The NHA permits the United States to recover twice the amount of any assets and income of FHA- Health Care Cinsured nursing homes that were improperly distributed or misspent.
The United States’ complaint, filed in U.S. District Court for the Middle District of Louisiana, alleges that, from 2016 to 2021, Dean required the nursing homes to pay “rent” on an industrial warehouse he had acquired supposedly to serve as a hurricane evacuation center. The rent, which totaled more than $1 million, was paid to one of his corporate entities. Rather than using the funds to prepare the warehouse for a hurricane, he funneled much of that money to his personal bank accounts. In the days leading up to Hurricane Ida’s expected landfall in August 2021, Dean evacuated the residents of the four nursing homes to the warehouse. After residents arrived, sanitation was not maintained, and the nursing homes’ staff did not prepare sufficient food, provide wound care, or ensure adequate medical care and support for the residents. As a result, on Sept. 2, 2021, the Louisiana Department of Health removed the residents from the evacuation center and revoked Dean’s nursing home licenses.
The complaint further alleges that after the residents had been evacuated and the licenses revoked, Dean and his corporate entities continued to misdirect and misspend the nursing homes’ assets and income. Specifically, Dean directed his bookkeeper to sweep all of the nursing homes’ bank accounts and transfer the millions of dollars of funds to his personal accounts. The United States alleges that Dean did not use these funds to operate or maintain the nursing homes, which at this point were not operating because of the hurricane, and instead used this money to purchase personal goods and services, including antiques, firearms, and cars, and to fund allowances for his family members. The complaint alleges that, in total, Dean misspent and misallocated more than $4 million of the nursing homes’ assets and income.
“The department is committed to protecting our nation’s seniors and the important federal programs designed to support them,” said Principal Deputy Assistant Attorney General Brian M. Boynton, head of the Justice Department’s Civil Division. “When individuals seek to exploit these programs for their own financial gain, we will use all of the appropriate tools at our disposal to hold them accountable.”
“Federal loan guarantees are designed to facilitate the care of our most vulnerable citizens,” said U.S. Attorney Ronald C. Gathe Jr. for the Middle District of Louisiana. “It is unfortunate that some chose to use the tragic landfall of Hurricane Ida as an opportunity to take advantage of the system to unjustly enrich their business. This office will continue to work with our partners to hold those accountable who misappropriate federal funds.”
“Upon learning of the callous manner in which residents of nursing homes owned by Bob Dean were treated during Hurricane Ida, HUD referred this matter to the Justice Department to investigate Dean’s alleged misuse of HUD’s funds,” said General Counsel Damon Smith of the HUD. “By working with our partners at the Justice Department and supporting this action, HUD reaffirms that it takes the obligations of nursing home owners seriously.”
“Dean’s alleged actions represent a gross disregard for human life and our most vulnerable community,” said Acting Special Agent in Charge Robert Lawler of HUD Office of Inspector General (HUD OIG). “HUD OIG will continue to work with its law enforcement partners to diligently pursue, investigate, and hold accountable bad actors who willfully misuse and mismanage Federal assets and place HUD beneficiaries in harm’s way.”
The complaint is the result of an effort by the Civil Division’s Commercial Litigation Branch, Fraud Section, and the U.S. Attorney’s Office for the Middle District of Louisiana, with substantial assistance from HUD and the HUD OIG. This matter is being handled by Fraud Section Trial Attorney Christopher Reimer and Assistant U.S. Attorney Davis Rhorer Jr. for the Middle District of Louisiana.
The case is captioned United States v. Bob Dean, Jr., et al., 3:23-cv-00019 (M.D. La.).
The United States’ complaint stems from an investigation that the Department of Justice initiated as part of its Elder Justice Initiative, which supports the efforts of state and local prosecutors, law enforcement, and other elder justice professionals to combat elder abuse, neglect, and financial exploitation, with the development of training, resources and information. Learn more about the Justice Department’s Elder Justice Initiative at http://www.justice.gov/elderjustice.
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