On a Thursday in September 2019, Philip Esformes arrived for his sentencing at the federal courthouse in downtown Miami looking pale and gaunt. The previous April, after an eight-week trial, Esformes, heir to a large, successful chain of nursing homes, had been convicted of fraud, kickback and money laundering crimes, and obstruction of justice. Citing more than $1 billion in false reimbursement claims, prosecutors described him as the linchpin of the “largest single criminal health care fraud case ever brought against individuals by the Department of Justice.” Esformes, then 50, had been in jail since his arrest more than three years earlier. The deep tan he ordinarily cultivated had faded. He’d developed skin rashes and shed some 50 pounds.
His father, Morris, an Orthodox rabbi, philanthropist, and founder of the family business, was notably absent, but the courtroom gallery was filled with other relatives, friends, and associates, some of whom had benefited from the family’s charitable giving. Several addressed the court, attesting to the defendant’s decency and asking for leniency. At the appointed moment, Philip, who’d remained silent throughout his trial, rose to speak.
“I want to talk from the heart to tell you the hard lessons I have learned,” he said. Through tears, he apologized to his family. “I stand before you a humbled and broken man…I have lost everything.” Referring to covert recordings played at his trial, Esformes continued, “The tapes depict me as a man willing to cut corners without fear of consequences, unappreciative of all the good that surrounded me, a man who acted as if the rules do not apply.” Now, he said, “I accept responsibility for what I have done.”
It was a striking departure from the defense’s closing arguments that March, wherein one of his lawyers had compared Esformes to Tom Robinson, the Black man falsely accused of rape in To Kill a Mockingbird. Yet Esformes went on to project a sense of victimhood. Behind bars, he’d been threatened and had witnessed terrible violence, he said. At night, “the inmates begin to shout, swear through the vents and the toilets, throw things against the walls.” He was sometimes prevented from speaking to his family or bathing regularly. “I haven’t felt the sun,” he said. “I have no control over any aspect of my life.”
Witnesses at the trial had detailed conditions at Esformes’ nursing facilities not dissimilar to those he was describing, but if he perceived the irony, he didn’t acknowledge it. Nor, Judge Robert Scola observed, did the defendant take full ownership of his crimes. His apologies were vague, seemingly crafted to preserve his ability to deny guilt on appeal. “I don’t know what he was accepting responsibility for,” Scola remarked, and, as such, Esformes would be ineligible for a reduced sentence. The judge gave him 20 years in prison.
By the time Esformes was indicted, he and his father had spent decades dodging a steady stream of lawsuits, criminal investigations, and regulatory inquiries. Court documents and testimony, together with dozens of interviews with experts and associates of the Esformeses, offer a vivid tale of how Morris and Philip, by exploiting the perverse incentives of the health care system, had managed to turn society’s failure to ensure proper care for the elderly, the mentally ill, the addicted, and the unhoused into an engine of enormous profit.
Again and again, Morris and Philip used loopholes and payoffs to escape serious consequences for alleged wrongdoing. Even a prison sentence didn’t mark the end of their lucky streak. Amid Philip’s prosecution, Morris donated $65,000 to the Aleph Institute, a Jewish criminal justice nonprofit with ties to Jared Kushner, and whose founder, Rabbi Sholom Lipskar, was on hand for the sentencing. Morris’ philanthropy more broadly appears to have paved the way for a decidedly unorthodox clemency grant from none other than President Donald Trump, who commuted Philip’s sentence shortly before leaving office.
Now, Justice Department officials, in an unorthodox move of their own, have decided to retry Esformes on outstanding charges, setting up a postclemency showdown that may well be unique in the annals of American jurisprudence.
When Philip Esformes was young, his father used to talk about building an empire. Wiry, with angular features and heavy eyebrows, Morris was witty and fiercely intelligent. An old friend from Chicago, Harry Maryles, remembers him as “one of the coolest guys in the Yeshiva.” Morris married, and after being ordained as a rabbi, he took a job at a Hebrew day school. Philip, the first of his three children, was born in 1968. To help support the family—and with a loan from his parents, according to Maryles—Morris bought his first nursing home the following year.
Then, as now, the nursing home industry was dominated by for-profit operators. It was also expanding, bolstered by longer life expectancies and payments from Medicare and Medicaid, which were introduced in 1965. Nursing home capacity nearly doubled between 1966 and 1973; by 1980, the federal government was spending almost $21 billion a year subsidizing facilities. (As of 2021, roughly 14 million Americans were receiving some form of long-term care.)
In the absence of strong oversight, the reimbursement bonanza was accompanied by rampant patient abuse and neglect—the subject of multiple congressional hearings. But federal regulation remained vague and ineffectual; inspections to ensure proper staffing, safety, and quality of care were—and largely still are—left to state agencies.
By the late ’90s, Morris was among the most successful nursing home owners in Chicago, with additional facilities in Missouri and Florida. Decades of federal incentives had resulted in a glut of nursing home beds in Illinois and elsewhere, but Morris insulated himself. During the 1980s, with state psychiatric hospitals shutting down in response to President Ronald Reagan’s spending cuts for mental illness, Morris flung open his doors. States, in turn, received federal money for the psych patients they were able to place in nursing homes. Morris “would have regular meetings with the Illinois Department of Mental Health,” Alan Litwiller, the former chief nursing home inspector for Northern Illinois, told me. “He would say, ‘An empty bed in a nursing home makes no money. How many residents can you give me?’”
By 2013, roughly one-quarter of new nursing home residents nationwide had been diagnosed with a mental illness. “States have relieved themselves of long-term care for the mentally ill,” said Beatrice Coulter, a veteran psychiatric nurse and co-founder of the group Advocates for Ethical Mental Health Treatment. “Where there’s a vacuum, something will fill it. And that’s what happened.”
Morris filled hundreds of beds this way. He and a business partner, Leon Shlofrock, together housed more psychiatric patients than anyone else in Illinois; Morris would eventually even come to employ “bed brokers” to trawl shelters and soup kitchens for potential residents. “There is a vacancy issue out there,” he explained to a journalist in 1998. “And people are fighting for patients.” To help maintain a hospitable business climate, Shlofrock founded a lobbying group for which Morris served as vice president. The two men doled out hundreds of thousands of dollars to lawmakers and candidates. In return, they got access to the halls of power. “It’s almost impossible not to make money,” Shlofrock told one reporter, “unless you’re a total and complete idiot.”
As he grew wealthy, Morris remained in the modest home he shared with his family in suburban Lincolnwood. He owned hundreds of tailored suits but favored gym clothes, and his vices were pedestrian: the Sun-Times sports section, Crown Royal whisky, cigarettes. He spread his riches around, ultimately giving out more than $122 million, largely to Jewish causes. His grandparents had emigrated from Salonika, a Greek city whose once-vibrant Jewish community was largely effaced by the Nazi occupation, and Morris harbored a deep sense of communal peril. Jewish schools, hospitals, and community centers in the United States and Israel benefited from his largesse. A professorship at the University of Chicago and a Jewish museum in Alaska, among other things, came to bear the family name. The Esformeses “built the Chicago Jewish community and infrastructure into what it is today,” noted a family friend.
In Israel, Morris befriended eminent Jewish scholars. “They recognized him as a true servant of Torah,” another friend, a rabbi, said, “awaiting orders to be fulfilled without question.”
But Morris’ reputation was challenged in 1998, when the Chicago Tribune ran a series questioning his business practices. Unlike most nursing home residents, many of the psych patients Morris recruited into his facilities were not elderly, the Tribune reported. Some were men and women in their 30s and 40s who struggled with addiction. Housing younger patients in nursing homes isn’t illegal, but Morris’ homes were often understaffed and generally unequipped for psychiatric care. One of his facilities, the Sovereign Home, erupted in chaos after several men were transferred there from a shelter and began menacing employees and accosting neighbors. Another, Emerald Park Health Care Center, was beset by neglect. “The majority of homes with the greatest number of mentally ill patients consistently fail to provide adequate treatment for psychiatric disorders or provide clean facilities,” one article noted.
The state opened an inquiry, but Morris was by then used to tangling with investigators. He’d been run out of Kansas—unfairly, in his view—after a home he owned there failed inspections. In 1982, the FBI had investigated him for allegedly bribing a state lawmaker to help him escape charges involving the death of a patient from infected bedsores. Woody Enderson, a former FBI agent who worked the bribery case, told me his investigation also surfaced evidence that Morris had billed Medicaid for services that were unnecessary or fictitious. But such charges are difficult to prove and require jurors to parse technical medical records and testimony. The prosecution was abandoned. Subsequent state and federal investigations into four heat-related deaths at an Esformes facility in Missouri also failed to bring indictments.
In 2009, Tribune reporters David Jackson and Gary Marx set out to determine what had changed since their paper’s series a decade earlier. Not only were the Esformes facilities still taking in surplus psychiatric patients, they found, but Morris was now also warehousing large numbers of former convicts. This arrangement, combined with inadequate staffing, resulted in dozens of assaults and the fatal bludgeoning of an elderly man in a wheelchair. “It wasn’t like he could stand up and protect himself,” the victim’s sister said.
Deep into their reporting process, Jackson and Marx landed a sit-down interview with Morris at his office in Lincolnwood. Morris loved The Godfather, once even having his car horn customized to play the film’s theme. In person, he channeled a Jewish Don Corleone. “He was an enormously powerful figure,” Jackson told me. “Constantly, a secretary would come in with a message for him or a phone call. It was clear that he was not just funding synagogues and schools, but helping individual people in a way that was dramatic.” Morris was dressed for the interview in a purple-and-gold Lakers uniform and matching yarmulke. “There was something clownish about him,” Jackson recalled, but also frightening.
Morris complained to the reporters that the Tribune’s coverage was unfair and anti-Semitic. “He said, ‘You can’t be Jewish if you are asking me these questions,’” recalled Marx, who is Jewish. “He believed that he could do no wrong.” He also let it be known that he had the ear of a powerful Chicago alderman, Ed Burke, who has since been indicted on federal racketeering and extortion charges. Morris “was an extremely manipulative person,” Jackson said. “He was trying to poke his way into the journalism to see how he could influence it, change it, or stop it.” In subsequent conversations, Morris told Marx and Jackson that a council of rabbis in Israel had preemptively absolved him of spiritual consequences should any harm befall the reporters. Fed up with the unwelcome attention, he said, he would divest from Chicago and focus on his interests in Florida.
Philip Esformes often rose before dawn to exercise. As an overweight child, he’d enjoyed acting out the final fight scene from Rocky II, always playing the underdog while casting a playmate as the defeated Apollo Creed. By his senior year of high school, Esformes was captain of the basketball team. He’d grown up tall and handsome, with olive skin, a flashing smile, and the simpering manner of a man acutely aware of his good looks. He attended business school in New York and then returned to Chicago, where he helped launch and later sell a hospice and a rehab company before committing himself to the family business.
In the mid-’90s, Morris began buying up skilled nursing and assisted living facilities in and around Miami that would eventually be co-owned by his son; they also acquired an ownership interest in a small area hospital. Philip took charge of the family’s Miami operations. In 2001, seeking to expand his access to ancillary providers of prescription drugs, lab services, and medical equipment, he formed a business alliance with Nursing Unlimited, a home health company co-owned by three young men: Nelson Salazar, Guillermo (Willy) Delgado, and Willy’s kid brother, Gabriel (Gaby) Delgado.
Gaby grew close to Esformes; he became Philip’s wingman, driving him between the family’s Miami properties, which came to include seven skilled nursing facilities (SNFs) and 10 assisted living facilities (ALFs). Esformes had multiple cell phones and would sometimes conduct several conversations at once. As Gaby later testified, the calls revolved around keeping his beds filled. Every day, he listened as Esformes recorded census numbers for each facility, often repeating them aloud like a Bingo host: “288, 60, 15.” He then frequently called his father with the latest figures.
Some numbers were more important than others. Assisted living facilities house residents who need help with basics like meals, dressing, and bathing. They cannot provide medical services, and as such are not covered by Medicare, and only partially by Medicaid at low rates. Skilled nursing facilities, on the other hand, offer short-term rehabilitation and physical therapy for people recovering from serious illness, injury, or hospitalization. Patients tend to be older and relatively immobile: stroke victims undergoing speech therapy, people with wounds that require expert nursing care, recipients of knee and hip replacements regaining the ability to walk again. Most of Esformes’ SNF patients were covered by Medicare at rates of up to about $800 per day.
An occupied skilled nursing bed can be quite profitable, but the eligibility rules are strict. A new patient must have been hospitalized for at least 72 hours within the previous 30 days, and a doctor must certify that their condition warrants placement. Patients who fail to make progress, or who deteriorate, must be discharged. And Medicare only covers skilled nursing treatment for up to 100 consecutive days. SNFs are often units within larger nursing homes, so patients who need 24-hour care after their SNF benefit lapses often end up as long-term residents of the same facility, at a far lower reimbursement rate.
Even in Florida, with its large elderly population, only so many patients are eligible for skilled nursing at a given time. Dr. Roberto Del Cristo, who worked for Esformes during the 2000s, estimated that SNFs in Miami were 85 to 90 percent full on average. But Esformes wanted his facilities running at 100 percent capacity. In this the Delgados proved valuable partners. Large, fun-loving men, they excelled at drumming up referrals from ethically flexible physicians and assisted living owners. They would pick up the check for parties at high-end restaurants and nightclubs and even invite sex workers to entertain doctors at Willy’s condo in Coconut Grove. “We were hustlers,” Willy later testified. “I was the master at the orgies.”
Their social connections greased the skids. “Phil would tell me, ‘Hey, Gabs, if anybody you can get from the ALFs you deal with,’” Gaby recalled, “‘and the doctors you know, if they could refer me a patient, we will take care of them.’”
In an echo of Morris’ Chicago operations, many of the patients recruited to boost Esformes’ census numbers in Florida—a state whose spending on mental health care is among the nation’s lowest—were relatively young and living with psychiatric disorders and addiction. To justify their admission, court records show, unscrupulous doctors deployed a common set of descriptions, exaggerated or wholly fictitious: unsteady gait, weakness, muscle wasting. “What I would do is…embellish,” Del Cristo later testified. “If the patient had pain in his shoulder, doesn’t mean that it was dislocated” (an injury that, if severe, might justify admission). “But instead of giving him medicines, I prescribed physical therapy.”
The commingling of these patients, whom SNF staffers called “walkie-talkies,” with frail seniors gave some employees pause. “We could have the 35-, 45-, 49-year-old men on very heavy psych drugs put into a room with an elderly patient that is bedbound,” Ada Maxine Ginarte, a former nurse at an Esformes skilled nursing facility, testified. These men often were visibly disturbed and could be intimidating, even to medical professionals, she added. “You could have them walking around among the little ladies in their wheelchairs.”
Court records and testimony cast light on other aspects of the operations as well. As payment for his dubious referrals, Del Cristo received access to a pool of Esformes patients for whom he could then bill insurers, earning about $100,000 extra per year. Other doctors—and assisted living owners—took cash kickbacks from Esformes’ lieutenants. Nursing Unlimited’s relationship with Esformes was similarly tainted. Salazar and the Delgados paid Esformes for access to hundreds of assisted living residents and would then bill Medicare for unnecessary equipment and services, including diabetes care, intravenous injections, and mobility devices. “We are banging up all these Medicare numbers, running them like credit cards,” Gaby testified. “And I’m kicking back to Phil.”
Larkin Community Hospital, in which the Esformeses owned a stake, played a crucial role, often hosting the 72-hour stays that made patients eligible for SNF reimbursement. Esformes also employed “marketers” who found physicians at other hospitals who were willing to play ball. As before, society’s failings offered a sheen of legitimacy. “They took very difficult patients,” explained Julia Capote, who worked in social services at a Miami Beach hospital prior to taking a job with Esformes. “You are calling all these places to help you place patients. They don’t want them—and you need to get the patient out as fast as possible. And then you call somebody who is willing to help you, and that is really good.”
Within the Esformes network, patients were fungible. After exhausting Medicare’s 100-day skilled nursing maximum, they were frequently transferred to one of Esformes’ assisted living homes, where, after 60 days, they became eligible for another round of skilled nursing. “It’s a fairly closed system,” Del Cristo testified. Billing at the highest rates possible was Esformes’ priority. Court documents show how he pressured his employees to find more patients whose needs were covered by Medicare—a practice he called “building skill.” In one exchange with an admissions coordinator, Esformes texted “build skill” three times in four minutes. “Time to move,” he wrote.
Some staffers looked askance at the questionable SNF admissions and at co-workers who were hustling to grow the census. “Your nasty admissions person is gonna continue to not listen to me & bring in criminals!!” one nursing director texted Esformes. “De madrePhilip!” Stephen Sugar, an SNF administrator, messaged his boss regarding two patients Esformes didn’t want discharged: “I can get mds to write rx for additional therapy but the therapists will fight it.” Frequently, Esformes demanded outright that his employees scare up patients: “Get more,” he ordered a beleaguered admissions director in 2015. “Do what I say.”
Soon after taking over in Miami, Esformes and his wife, Sherri, bought a large home on North Bay Road, in an exclusive Miami Beach neighborhood. They purchased the adjacent property as a guest residence and office for their house manager, overseer of gardens, private chef, and housekeepers. A third house nearby was converted into a training facility with a gym and basketball court for their kids. They also had homes in Chicago and Los Angeles, and Esformes’ cars included a LaFerrari Aperta with a sticker price of $1.65 million. Like his father, Philip was a philanthropist, but even when he gave quietly, it bore a trace of ego. “Giving charity is close to being angel-like,” he told a friend. “Giving charity anonymously is close to being godlike.”
Esformes resisted Miami’s most illicit temptations at first, steering clear of the Delgados’ orgies. “Philip did not engage,” Del Cristo, a regular, testified. “He was a hardworking, religious gentleman who was very family-oriented.” By 2014, though, he was having affairs, often with young models. Gaby took Philip’s kids Jet Skiing and arranged his boss’s liaisons, booking suites at the Ritz-Carlton and the Mandarin Oriental and visiting the rooms in advance to set the thermostat to Esformes’ preferences and lay in a supply of his favorite teas. “I knew all his intimate things,” testified Gaby, who proffered his own credit card for incidentals—charges included a $786 spa treatment for a former Playboy Venezuela cover model—and sometimes paid the women, too.
These and myriad other payments were all part of a complex web of financial relationships connecting Esformes, the Delgados, and dozens of outside health care operators and hangers-on. To increase billings, as the prosecutors demonstrated at trial, the Delgados created new companies that peddled items like hospital beds and suction pumps. The kickbacks grew in kind; for roughly a decade, Gaby estimated, he delivered Esformes about $20,000 a month in cash, often wrapped in Publix bags. The Delgados also arranged pay-to-play access to his assisted living facilities for several pharmacies. Esformes, Gaby testified, would exhort him to open new relationships with laboratories, psychiatrists, home health agencies, and equipment providers; “Get in your A game!” he would say.
The illicit payments were disguised using doctored invoices and phony leases and consulting agreements. The Esformeses also conducted business through dozens of nested shell corporations, which allowed them to obscure their financial interests and write off payments for rent or staff that were in fact going to other family-owned LLCs. This engineered complexity, a common practice in the elder care business, allows its lobbyists to use the appearance of meager profits to push for minimal staffing and hefty government reimbursements. (The industry’s true profitability is reflected in its private equity investment—some $10 billion today.)
As their crime network expanded, Gaby and his partners increasingly served as a protective layer between Esformes and the vendors paying kickbacks—of which Salazar and the Delgados enjoyed a cut. To a certain kind of Miami health care operator, Gaby’s fixer role was common knowledge. “Everybody knew in the street,” Willy explained, “if you wanted to provide any services for [Philip], you had to meet with my brother.”
Among the firms doing business with Esformes was American Therapeutic Corporation, which ran partial hospitalization programs across Florida. Partial hospitalization is an alternative to inpatient treatment, providing half-day courses of therapy for people with severe depression, mental illness, and addiction. ATC’s business model was not dissimilar to that of Esformes. Owners Lawrence Duran and Marianella Valera sourced patients from hundreds of halfway houses and assisted living facilities—including Esformes’—and maintained a kickbacks budget of some $350,000 per month, Valera would later testify. Payments to Esformes were funneled through Salazar, who held a no-show job with ATC.
Most of the patients at ATC’s facilities were too impaired to be good candidates for partial hospitalization, which requires that participants be sober and fully oriented, capable of meaningfully participating in therapy. Some had dementia or psychosis. Others were actively using drugs. And even within this population, the patients Esformes sent over stood out. They appeared so neglected, Valera said, that her staff brought in clothing for them. “They haven’t been bathed on a regular basis,” she recalled. “Some of them came high to the facility.”
Esformes’ patients drew attention elsewhere, too—especially the ones from Oceanside Extended Care, a dingy SNF with unreliable elevators and a poor, troubled patient population. In testimony, Borinquen Hall, a homelessness liaison for the Miami Beach police, recalled encountering Oceanside patients at a nearby bus stop, “getting high, drinking, causing havoc.” He added, “A lot of times, we didn’t think they were patients in Oceanside because they seemed homeless.”
One such patient was Robert Dingman, now 53, who arrived in Miami Beach in 2007, unhoused, alcoholic, and addicted to crack. When the street grew unbearable, he learned what to say to get himself admitted to a hospital. “Then I would be sent to a shelter for a period of time,” he recalled. Oceanside was ideal. “It was a good spot for a homeless person,” said Dingman, who got sober in 2015. “My drinking and drugging weren’t hindered there.” After a brief physical therapy session each morning—during which “I had to move my ankle back and forth”—he walked to the beach, where he and other patients took turns panhandling and drinking. The facility itself was hellish, a warehouse of neglected long-term residents and younger patients with mental illness who got little treatment beyond antipsychotic drugs. “I couldn’t get drunk enough not to hear the screaming, yelling, smell diapers on the floor,” Dingman recalled.
Stephanie Jones described a similar experience. Now 47, Jones has bipolar disorder and has been addicted to opioids. She, too, stayed in Esformes’ facilities to escape homelessness. In court, when a lawyer showed her the long list of services billed in her name at Oceanside and elsewhere, she was flabbergasted. “I remember very clearly what they did,” Jones said. “And it was not all these things that they are saying they did.” At Superior Living, another Esformes ALF, she testified, staffers bribed her and other residents with opioids to get them to stay. “There were many different kinds of people thrown together,” a former staffer at a different Esformes assisted living facility told me, from teens to octogenarians with dementia: “We had a client that should have been in a locked facility” and was known to torture and kill stray cats that prowled the grounds. In 2016, another resident wandered off and was found drowned in a canal.
This wasn’t an isolated incident. In 2013, an elderly patient at Esformes’ South Dade Nursing and Rehabilitation Center was beaten to death by his mentally ill 41-year-old roommate. A second drowning, of 75-year-old Coleman Felts, occurred two years later at another Esformes skilled nursing facility. Local reporting in Florida and Missouri, and court records in Illinois, show that families filed more than two dozen wrongful death complaints against facilities owned by Philip and his father. (Most were settled without any admission of wrongdoing.) Some of their nursing homes were at the bottom of the federal government’s rankings, with long rap sheets of violations. But the state imposed no meaningful consequences.
Florida’s Agency for Health Care Administration has treated nursing home owners with striking deference. Between 2013 and 2018, according to an investigation by the Naples Daily News, 46 of Florida’s worst homes faced lawsuits related to mistreatment or neglect that led to at least 191 deaths. The state closed only two facilities during that period. The feds have not fared much better. The Nursing Home Reform Act of 1987 mandated in-depth, unannounced “quality surveys” of nursing facilities roughly once a year. Based in part on these surprise inspections, the industry improved in some areas, like reducing the use of physical restraints, which can cause pressure ulcers. But the inspection process is widely considered inadequate; that Covid resulted in the deaths of more than 150,000 residents surprised no one who had been paying attention.
In September, the Biden administration announced its intention to beef up enforcement of the existing rules and proposed a battery of new ones, including stricter staffing requirements, stronger safety standards and penalties, and greater oversight of the industry’s creative accounting practices. But fierce resistance by the industry and the long-standing reluctance of regulators to hold facility owners accountable hardly inspires confidence. “You have a pipeline into nursing facilities because there is nowhere else to send these individuals,” nurse and patient advocate Coulter told me. “There isn’t a big uprising because no one’s gonna fund what needs to happen,” she added. “Among mental health professionals, we normalize that. We don’t have any other choice.”
Amid this Wild West atmosphere, South Florida stands out as ground zero for health care fraud. “Not only perpetrated by independent, scattered groups,” a special agent from the Department of Health and Human Services’ Office of the Inspector General told NBC News in 2011, “but also by competitive, organized businesses complete with hierarchies and opportunities for advancement.” A Miami-based federal prosecutor uninvolved with the Esformes case recently told me that health care fraud in Florida “has replaced cocaine trafficking as the crime du jour.”
Gaby Delgado awoke to pounding on his front door in the wee hours of May 12, 2014. He’d been on edge for some time. In 2011, 20 people associated with American Therapeutic Corporation were arrested and charged in a $200 million Medicare fraud case. The next year, Jose Carlos Morales, a pharmacy owner and associate of the Delgados in several schemes, pleaded guilty in a separate fraud case and ultimately got a 14-year sentence. In March 2014, Salazar was visited by inquisitive FBI agents and hadn’t been himself since. Gaby and Willy suspected, correctly, that Salazar was wearing a wire and cooperating against them. Still, Gaby’s first thought that morning was that someone was breaking in, and he reached for his gun.
Outside, he saw a cluster of cruisers illuminated by blue and red lights. “Gaby, we are here for you,” a cop on his front step informed him, “and we’re doing the same thing at your brother’s house.” The jig was up. The Delgados were indicted for receiving kickbacks, money laundering, and conspiracy to commit health care fraud. A superseding indictment charged Willy with opioid trafficking, significantly increasing his potential sentence.
The brothers saw themselves as honorable crooks who would never cooperate with the feds. “I didn’t want to be a rat,” Gaby later testified. After they were released on bail, he went to see Esformes. To prove he wasn’t wired, Gaby undressed in front of him, and they talked in Esformes’ pool. “Phil’s telling me, ‘I got your back, man. Just stay firm, and we are going to get through this,’” he recalled. “Philip had always told us that he had always an ace up his sleeve,” Willy said. “He told me one day that he had connections to make things go away.”
There was reason to take the claim seriously. Philip and Morris had demonstrated a knack for getting out of tight spots. Ten years earlier, for $15.4 million and without admission of wrongdoing, they’d settled a civil fraud case brought by the Justice Department in relation to the revolving door between Larkin Community Hospital and their skilled nursing facilities. (The Esformeses sold their interest in Larkin soon thereafter but continued sending and receiving patients to and from there.) Philip was also implicated as a co-conspirator during the 2009 federal criminal trial of a Chicago facility owner convicted of participating in a bribery and kickback conspiracy—but he was never charged. A lawyer who deposed both Esformeses in one of several additional cases that were dropped or settled told me that they seemed to consider themselves “untouchable.”
But as the Delgados’ September 2015 trial approached, Philip clearly perceived the brothers as a threat. Court documents show he pressured them to sign affidavits swearing they’d never done anything illegal with him and to fire their lawyers in favor of a defense team of his choosing. He suggested to Willy that he should flee the country and alter his appearance with plastic surgery; Gaby could then use an “empty chair” defense at trial, blaming everything on his absent brother.
The Delgados actually thought about it, but Willy was reluctant. He had been married more than 20 years and had two daughters; Gaby, too, had a wife and kids. Their parents were elderly and frail, and their lawyers were talking to the government about a plea deal. Then, sometime that May, Esformes said something that brought everything into focus. If he were in their position, he told the Delgados, he would kill himself. “I was at a loss for words,” Gaby recalled. He and Willy, born in Puerto Rico, had seven other siblings. They’d come to the mainland as young children and grew up in a Miami that was then one of the nation’s poorest cities. Such a comment from a man of inherited wealth and privilege drove home the imbalance in their relationship. “This guy won’t hold any heat for me,” Gaby realized. “This guy gets confronted, he’s going to fucking talk like a canary.” He and Willy decided to cut a deal with the feds.
Philip Esformes was arrested in July 2016 and charged with health care fraud, paying and receiving kickbacks, and money laundering, among other crimes. His trial, which began in Miami three years later, included dramatic testimony from the Delgados and from Jerome Allen, the former coach of the University of Pennsylvania men’s basketball team, who said Esformes had paid him hundreds of thousands of dollars to ensure his eldest son’s admission. (Evidence showed that Esformes also paid at least $400,000 to Rick Singer, ringmaster of the Varsity Blues admissions scandal, to get his daughter into the University of Southern California as a phony soccer recruit.) At one point, Scola, otherwise forbearant and good-humored, felt compelled to caution Esformes’ 71-year-old mother for staring down witnesses. He later ejected her from the courtroom.
During the trial, Esformes’ defense team tried to claim that his operations met urgent social needs. “The United States government does not provide health care,” his lawyer Roy Black told the jury. “They’ve created a system run by businessmen who take over a health system they do not want to provide.” The defense also suggested that the way Esformes cycled through patients was altogether legal. “I want to make sure that we are clear that doctors referring patients to a nursing home and a nursing home assigning patients to a doctor—that symbiotic relationship, cross-referrals—that is not a kickback,” argued Howard Srebnick, another Esformes lawyer.
Nor, his lawyers argued, did this referral system depart entirely from the norm. In 2021, roughly 40 percent of hospitalized Medicare beneficiaries were discharged to a rehab facility, where they often deteriorated and were subsequently readmitted to a hospital. Dr. Sarguni Singh, who researches geriatric care at University of Colorado Hospital, told me that, like the psychiatric patients in Esformes’ SNFs, many seriously ill elders who end up in nursing homes are unlikely to make the rehabilitative gains they hope for. What’s more, the government reimbursement structure encourages facility owners to send long-term patients to the hospital for minor issues, knowing they will likely return to the skilled nursing unit at a far higher reimbursement rate. The cycling of patients can result in harmful losses of physical and mental dexterity. “In many cases, there’s no clinical need for the patient to be in the nursing home, but it’s the default,” Howard Gleckman, a senior fellow at the Urban Institute focused on health care policy, told me. Singh added, “Setting aside nefarious intent, nursing home operators will behave in whatever way the system incentivizes them to.”
A lawyer who represents whistleblowers in health care cases offered an even less generous view: “If you are honest and not taking kickbacks, it is hard to make a go of it, because Medicaid does not pay enough,” the lawyer told me. “Usually if they are making it, they have all kinds of side deals.”
The timing of Esformes’ conviction, in April 2019, proved serendipitous. Federal clemency grants are normally the result of a slow, tightly controlled process in which the Justice Department plays a large role. Past presidents have sometimes deviated from standard operating procedure, notably by pardoning Richard Nixon (Gerald Ford) and the disgraced financier Marc Rich (Bill Clinton). But Trump went further in dispensing with the process. “It was a free-for-all,” said attorney Sam Morison, who specializes in federal executive clemency. Trump’s pardons and commutations, not surprisingly, overwhelmingly favored the wealthy and well connected. They included his disgraced former campaign chair, Paul Manafort, who’d committed bank and tax fraud; adviser Roger Stone, convicted of lying to Congress, witness tampering, and obstruction; Judith Negron, who got 35 years for her role at American Therapeutic Corporation; and Jared Kushner’s father, Charles, who’d served time for tax evasion.
Kushner, an Orthodox Jew, was closely involved in Trump’s clemency decisions. So was the Aleph Institute, the group that received $65,000 from Morris after his son’s arrest, and to which Kushner has ties. Kushner’s wife, Ivanka Trump, spoke in 2016 at founder Lipskar’s Shul of Bal Harbour, near Miami, and Lipskar attended a December 2019 Hanukkah ceremony at the White House. “Of the 238 total pardons and commutations granted by Mr. Trump during his term, 27 went to people supported by Aleph, Tzedek [another Jewish organization], and the lawyers and lobbyists who worked with them,” the New York Times reported. Celebrity lawyer and Trump ally Alan Dershowitz, who has volunteered with the group, told the Times that Aleph advocated extensively for Esformes’ release. An Aleph spokesperson told Mother Jones that the group has returned Morris’ donations, which it claims were unrelated to its advocacy. (Esformes did not respond to questions submitted for this story via a family representative.)
In any case, Trump commuted Esformes’ sentence and ordered his release in December 2020—though the conviction remained intact, as did a $44.2 million restitution and forfeiture order. (Court filings put Philip’s net assets at $78 million.) A White House statement said the commutation was supported by former Republican attorneys general John Ashcroft and Edwin Meese and that Esformes had “been devoted to prayer and repentance” since his 2016 arrest. He was sprung just in time to attend his daughter’s New Year’s Eve wedding at his Miami Beach mansion, where guests in formal attire danced beneath a disco ball in the backyard. The nuptials were officiated by Aleph’s Lipskar.
The clemency decision was “a kick in the teeth,” Paul Pelletier, a former federal prosecutor who supervised the early stages of the Esformes investigation, told the Times. “It sends the wrong message to crooks,” Pelletier, now in private practice, told me. “You make enough money, you can fucking buy your way out of jail. I find it appalling.”
So did Esformes’ prosecutors. But they appear to have found a work-around. Although the jury convicted him on more than two dozen charges, they weren’t able to reach a verdict on a handful of others, including perhaps the most significant original count: conspiracy to commit health care and wire fraud. The hung charges might have seemed like a victory for Esformes, but the double-jeopardy principle that protects defendants from re-prosecution only applies to charges for which jurors have rendered a verdict. Blessed with a second chance, the Justice Department promptly signaled its intent to try Esformes again. Though highly unusual, “I think it’s the right move,” Pelletier said. “I know how big the fraud was. And I know how important messaging is in stopping health care fraud. That’s exactly what I would do.”
The revived prosecution angered Trump loyalists. Sen. Mike Lee (R-Utah) depicted it as an attempt to undermine a grant of clemency. Rep. Andy Biggs (R-Ariz.) wrote to Attorney General Merrick Garland, decrying “your selective, vindictive, and unconstitutional prosecution” and the “dangerous precedent” it creates. It also drew criticism from less biased onlookers. Josie Duffy-Rice, a lawyer and former editor of the progressive legal news website The Appeal, told me that even if the decision to re-prosecute is technically legal, in her view, it violates the spirit of executive clemency and risks setting an unsound precedent. “It immediately set off alarm bells as being completely outrageous and a pretty serious violation of important constitutional protections,” she said.
But the Justice Department appears to be within its rights. Esformes has lost several appeals alleging prosecutorial misconduct, and in March, the Supreme Court declined to stay his prosecution. A hearing to determine the new Miami trial date was scheduled for November; Esformes’ lawyers have petitioned the Supreme Court to hear his case instead, which could further draw out the timeline. (The Justice Department declined to comment.) “I don’t see it as a difficult question,” said Morison, who spent 13 years as a staff lawyer at the federal Office of the Pardon Attorney. “Unless these hung counts were expressly included within the scope of the [clemency] grant, they aren’t covered.”
After Philip was arrested, Morris became more involved in day-to-day management of the Miami facilities. In a letter to the court, he wrote, “I am questioning how the son I raised put himself in the position in which he now finds himself. As I followed his case, I was deeply disturbed by what I learned about my son’s behavior. Philip had veered from the path that his family had paved for him.” (Esformes and his wife divorced in 2020.)
Yet it stretches credulity that the man after whom Esformes fashioned himself had no inkling of his son’s crimes. An ongoing lawsuit against several Esformes-related entities, filed in 2017 by Mario Gonzalez, a former longtime manager at an Esformes SNF in Florida, suggests that Morris was well aware of what was going on. When Gonzalez refused to unnecessarily extend skilled nursing therapy for several patients as ordered, the suit alleges, Morris had him demoted and transferred—a tactic more aggressive than any that Philip appears to have applied. “I think what motivated Philip,” defense lawyer Srebnick said at the sentencing, “is he wanted to prove to his father, living in the shadow of his father, that he could be successful, that he could run the facilities with no bed left empty.”
Morris died last December. He was 76. At his funeral, a procession of rabbis spoke with emotion about his deep religiosity and his support for Jewish communities. “When a person comes into this world, we don’t know what their life will be like,” one said. “But when they leave this world and you can make an accounting of what they accomplished, that’s a day of simcha[joy].”
Rebecca, Morris’ elder daughter, spoke last, thanking siblings Philip and Rachel for caring for their father in his final days. She remembered Morris’ devotion to family and how he always sent flowers. He loved Elvis, she said, Frank Sinatra’s “My Way,” and the old Perry Mason TV series, whose titular attorney defends clients wrongfully accused—often by slow-witted agents of law enforcement. Morris once said that regulators treated him like “we are in Nazi Germany,” and it is easy to imagine his affinity for Mason’s clients, beset by unfounded charges but always vindicated at last. Up to a point in his own life, he’d had comparable experiences. It was in part the reversals of fortune that he enjoyed, Rebecca recalled. “He would say, at the end of every episode, ‘Now that I didn’t see coming.’”
Morris may have gone to his grave believing in the rightness of his actions, and perhaps even taking pleasure in having had the chutzpah to evade his would-be punishers. One of his ultimate acts was to help secure the same kind of last-minute escape for his son that he’d orchestrated many times for himself. But his family’s story may yet contain a final reversal, in which Philip Esformes is at last called to account.
This article was supported by the Economic Hardship Reporting Project.
