A West Monroe businessman whose two home health agencies became the subject of a federal probe amid allegations of embezzlement and check-kiting owes more than $27 million to Medicare, the government says.
John “Danny” Jones, of West Monroe, owes $27,363,003.95, not including interest, to the U.S. Centers for Medicare & Medicaid Services, according to a Medicare deputy group director. The basis of the claim was “Medicare overpayments,” apparently stemming from payments claimed by his now-defunct home health agencies.
The Ouachita Citizen obtained a copy of the proof of claim against Jones, which was signed by Victoria Abril, with Medicare, and filed on Jan. 22 in U.S. Bankruptcy Court for the Western District of Louisiana.
Jones filed for Chapter 7 bankruptcy in federal court last October. He has claimed he did not earn enough wages to pay down his debts. He asked the court for a bankruptcy discharge, releasing him from having to pay certain debts.
He previously owned and operated two Medicare-certified home health service providers, United Home Care Inc. and Trinity Home Health Care Inc., neither of which are in active operations.
As previously reported by The Ouachita Citizen, Jones’ two companies are the subject of a handful of lawsuits as well as an investigation by the Federal Bureau of Investigation. Lawsuits involving Jones claimed United Home Care officials engaged in check-kiting and embezzled millions of dollars. Many of those lawsuits are ongoing at Fourth Judicial District Court.
Allegations of embezzlement surfaced during United Home Care Inc. and others v. Charlie Simpson and others. The principal defendants in the lawsuit were Charlie Simpson, United Home Care’s former chief operating officer, and Charles Gardner, United Home Care’s former chief financial officer.
Jones sued Simpson and Gardner in April 2017. He accused the pair of embezzling money from the home health agency. Simpson and Gardner filed a counter lawsuit against Danny Jones, arguing he was using litigation to conceal his participation in the embezzlement.
The three executives — Jones, Simpson, and Gardner — allegedly used company funds for personal gain, whether by using millions of dollars to pay personal credit card debts, cover personal travel expenses, and more, according to court filings.
Judge warns Jones
Jones’ personal finances drew further scrutiny in recent months because of his application in bankruptcy court to liquidate assets and erase his debt. Shreveport attorney Todd Benson, who is Gardner’s legal counsel, recently asked the federal court to find Jones and Paramount Healthcare Consultants owner Dawne Smith in contempt of court. Benson also asked the court to sanction Jones and Smith.
According to Benson’s Dec. 18, 2019 motion for contempt, Jones committed tax evasion and bankruptcy fraud by concealing payments for work he performed for Smith. (Gardner had standing in Jones’ bankruptcy proceeding because he was one of Jones’ creditors.)
According to records filed with the bankruptcy court, Jones had only collected wages totaling some $21,000 in the time since his exit from United Home Care in January 2018. In 2017, his income totaled $4.3 million.
In his motion for contempt, Benson said he received an anonymous envelope containing credit card statements that suggested Jones had received much more money from Smith’s company than previously disclosed during the bankruptcy proceeding.
The anonymous envelope containing an excerpt from an American Express statement in the name of Dawne S. Walsworth and Paramount Healthcare (Smith was previously married to former state Sen. Mike Walsworth, though the pair have since divorced). The American Express statement revealed Jones had a credit card through the American Express account and had charged $11,582.41 to the account during a one-month billing period.
Benson later obtained credit card statements that showed Jones had charged a total of $113,713.04 to Smith’s Paramount Healthcare account.
“Undersigned counsel believes that the Debtor concealed these payments in order to effectuate bankruptcy fraud and tax evasion, and to conceal violations of Medicare laws,” stated Benson’s motion for contempt and sanctions. “Undersigned counsel believes that Ms. Smith concealed these payments in order to conceal violations of Medicare laws (and in the process committed bankruptcy fraud).”
Jones and Smith have each diminished the extent of their business relationship.
In a Jan. 16 answer to Benson’s motion for contempt, Jones denied he was a business associate of Smith’s.
Smith and Jones also have disputed Benson’s characterization that the pair lived together. In previous testimony, Jones said he lived in a room at Smith’s home. He has since listed Smith’s home as his official residence in the bankruptcy proceeding. During a hearing at bankruptcy court last week, Smith disputed the implication that she and Jones lived together in a romantic relationship.
During last week’s hearing, Benson questioned Smith on the stand about the credit card statements. Smith was represented during the Jan. 23 hearing by New Orleans attorney Thomas Beh, who represents Jones in his lawsuits at Fourth Judicial District Court.
In response to Benson’s questions, Smith repeatedly claimed she did not consider Jones’ use of her company’s credit card to be “income” or a payment for services.
“We did not consider American Express statements income,” Smith said. “I don’t consider credit cards income.”
According to Smith, Jones obtained an American Express account through her company but that did not make him an employee. According to her testimony, Paramount has 95 American Express accounts but only eight are for Paramount employees. Jones’ card was for business development, not personal use, she explained.
When Benson asked Smith whether she had provided Jones with anything of value, she said she had not. The American Express card was a business expense, not something of value, she argued.
“At the time, you knew Mr. Jones had been using the card, correct?” Benson said.
“Yes,” Smith said.
“You gave him the card, correct?” Benson said.
Jones received the card through her company, she noted.
“You authorized it, correct?” Benson said.
“Yes,” Smith said.
Later, she said she did not authorize him to use the card for any personal purchases.
“There are other charges, I was not aware of,” Smith said.
Benson asked her about numerous charges on the American Express account used by Jones: Amazon.com purchases, iTunes, Kindle purchases, utility bills, cable television bills, groceries, cell phone plans for family members, CrossFit memberships, vitamins and supplements, haircuts, pharmacy bills, visits to a spa among other charges on the American Express card statements.
“Is Netflix a legitimate business expense?” Benson said.
“I would not consider that a legitimate business expense,” Smith said.
Smith said she did not examine the statements before producing them.
“He’s still got the card to this day?” Benson said.
“Yes, sir,” said Smith, looking at Jones.
“Have you sought reimbursement from Mr. Jones?” Benson said.
“No, sir,” Smith said.
“Do you plan to?” Benson said.
“Yes, sir,” Smith said.
U.S. Bankruptcy Court Judge John Hodge interrupted the proceeding to suggest Jones either agree to face his creditors or proceed with the presentation of evidence that might land him in a criminal prosecutor’s crosshairs.
“I don’t see a need to continue this hearing if the debtor waives his discharge,” said Hodge, referring to Jones’ option to voluntarily dismiss his request for a bankruptcy discharge.
Hodge recommended taking a break so that Jones and his attorney, Ralph Scott Bowie, of Shreveport, could discuss whether to waive the discharge.
“Consequences of an adverse ruling in this matter are enormous,” Hodge said. “If the court finds that it is appropriate to grant the relief requested, the dominoes fall.”
One domino might include an argument by the U.S. Trustee that Jones filed a false and fraudulent bankruptcy application and the potential penalties.
“And then the other domino: if the judge, or any federal judge...if they hear evidence that suggests the commission of a felony, they — me — I am statutorily required to make a criminal referral to the United States attorney,” Hodge said.
After a lengthy break, Jones’ attorney, Bowie, said his client planned to sign a written waiver of discharge. Jones has up to 60 days to decide whether to proceed with a written waiver of discharge or continue with the hearing of evidence in support of Benson’s motion for contempt and sanctions.
Bank agreed not
to press charges
In a Nov. 6, 2019 deposition, Smith revealed that the board of directors at Origin Bank — then Community Trust Bank — asked her company to manage the finances at United Home Care after the bank met with two of United’s executives (Gardner and Simpson) about a $3.5-million negative balance. According to Smith’s testimony last week, Origin agreed not to press charges for check-kiting and over-drafting as long as Paramount Healthcare managed United Home Care’s finances.
Benson’s motion for contempt and many of his questions last week focused on why Smith and Jones had not produced the American Express credit card statements during discovery. It was not until the anonymous envelope arrived that he was able to request all credit card statements associated with the account. Those statements should have been disclosed before, he argued.
During last week’s hearing, Smith said she believed Benson’s client, Gardner, or his friend had taken the American Express statements from her office and delivered them to Benson in an “anonymous” envelope. She said she recently installed a security system to prevent further theft. Smith also claimed that Gardner and Simpson had stalked her outside her home and called her business, too.
Jones has failed to produce documents in other court proceedings, too. In late 2017, Fourth Judicial District Court Judge Daniel “Danny” Ellender ordered Jones to produce numerous documents concerning United Home Care in United v. Simpson, but Jones flouted those court orders. In early 2018, Ellender imposed sanctions of more than $105,000 in attorney fees because of Jones’ failure to produce documents.
According to Smith, Jones could not produce documents as required by Ellender because the documents were stolen or shredded and the FBI had many of them, too.
“It was unprecedented in Louisiana,” said Smith, of Ellender’s ruling.
When mention was made of Ellender’s ruling, Judge Hodge interjected a question: Are you telling me that these parties have litigated this matter and it resulted in a fine of $100,000 against the debtor?
“Yes, sir,” Smith said.
Hodge raised his eyebrows and wrote a note of it.