NEWARK, N.J. — Joseph Schwartz, 65, of Suffern, New York, has been sentenced to 36 months in federal prison for orchestrating a $38 million employment tax fraud involving a network of nursing homes he operated nationwide, the U.S. Attorney’s Office for the District of New Jersey announced.
Schwartz, who previously pleaded guilty before U.S. District Judge Susan D. Wigenton, faced two charges: willful failure to pay over employment taxes and willful failure to file a required financial report for a company-sponsored retirement plan.
Between October 2017 and May 2018, Schwartz withheld payroll taxes from employees at health care and rehabilitation facilities run by his company, Skyline Management Group LLC, which was headquartered in New Jersey. However, instead of remitting the funds—over $38 million—to the Internal Revenue Service (IRS) as required by law, Schwartz diverted them elsewhere, according to court documents.
In addition to the tax violations, Schwartz also failed to file Form 5500, a federally required document outlining the financial status of the Skyline 401(k) retirement plan, which he administered.
At its peak, Skyline operated nursing homes in 11 states, making it one of the largest long-term care providers in the U.S. The company collapsed amid widespread financial and legal troubles, including unpaid employee wages, state agency debts, and now, this federal tax prosecution.
The case stemmed from a multi-agency investigation involving the IRS-Criminal Investigation Division, the Department of Labor’s Employee Benefits Security Administration, the FBI, and the Department of Health and Human Services, Office of Inspector General.
Schwartz’s prosecution was led by Assistant U.S. Attorneys Daniel H. Rosenblum and Kendall R. Randolph, along with Trial Attorney Shawn Noud of the Justice Department’s Tax Division.
