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Ex-Lewiston nursing home owner pleads guilty in fraud case
Niagara Gazette - 11/15/2018
Nov. 15--BUFFALO -- The former owner of a pair of local nursing homes, including one in Lewiston, has pleaded guilty to defrauding banks and the IRS.
Marc I. Korn, 62, of East Amherst, pleaded guilty to bank theft and willful failure to pay tax before Senior U.S. District Court Judge William Skretny.
Together, the charges each carry a maximum penalty of two years in prison and a $200,000 fine.
As part of a plea agreement with federal prosecutors, Korn also agreed to pay more than $2.5 million in restitution to three different private entities along with approximately $850,000 to the Internal Revenue Service.
Korn is the former owner of the Batavia Nursing Home in Batavia and the Fairchild Manor Nursing Home in Lewiston.
He admitted to bank theft in connection with his use of a credit card and the proceeds of a loan from Fifth Third Bank.
He also admitted deliberately failing to pay employment taxes, related to his nursing homes, over the course of three fiscal quarters in 2009.
Prosecutors charged that, in 2008, Korn sought a loan to refinance the Batavia Nursing Home from Fifth Third Bank.
In June 2008, Fifth Third Bank provided $3.9 million to refinance the nursing home and provided Korn with a credit card.
As part of his application, Korn submitted a personal financial statement and a guaranty that the bank relied on when it funded the loan.
Prosecutors said the financial statement contained inaccurate information, including an overvaluation of Korn's home.
Korn claimed his property was valued at $1.465 million, when, at the same time, he was contesting that valuation with the Town of Amherst assessor.
In an apparent effort to lower his property taxes, Korn claimed to the town that his home was only worth between $500,000 and $550,000.
Prosecutors also charged that Korn provided Fifth Third Bank with phony bank statements.
The prosecutors said Korn claimed to own a bank account containing $50,000 in February 2008, when the account actually contained $1 and belonged to someone else.
Korn defaulted on the loan and failed to make his credit payments. Fifth Third Bank lost more than $2,400 as a result.
Prior to March 2009, Korn used a service to collect and pay employment taxes owed for both Batavia Nursing Home and Fairchild Manor Nursing Home.
However, after that time, he stopped using the service and failed to pay employment taxes owed to the IRS for the second, third and fourth quarters of 2009.
Prosecutors charged that Korn spent the unpaid taxes on personal expenses including restaurants, hockey tickets, jewelry and to pay his children's college tuition.
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