Department of Justice

US Attorneys' Office

Indictment of Melville Borne, Jr.

Jim Letten, United States Attorney for the Eastern District of Louisiana, Steven R. Eischen, Dallas Regional Director of the U.S. Department of Labor, Employee Benefits Security Administration (EBSA), Dara Corrigan, Acting Principal Deputy Inspector General of the U.S. Department of Health and Human Services Office of Inspector General, and Louis M. Reigel, III, Special Agent in Charge of the Federal Bureau of Investigation New Orleans Division, announced the 24 count indictment today of Melville Borne, Jr., age 58, of 136 E. Ruelle, Mandeville, Louisiana, and Dynastar, L.L.C, a corporation owned by Borne, for health care fraud, pension fund fraud, and mail fraud in connection with the diversion of over $6.5 million dollars from three nursing homes which Borne owned in Louisiana and mail fraud involving a $19,450,000 bond offering in New Jersey. The three nursing homes, Evangeline of Ormond located in Destrehan, Louisiana, Evangeline Village located in Houma, and Evangeline of Natchitoches located in Natchitoches, were operated by Borne through his management company, Evangeline Health Care. The defendant Dynastar and Evangeline Health Care are located at 109 Northpark Blvd., Covington, Louisiana.

The indictment alleges that Borne defrauded Medicare, Medicaid and nursing home residents by diverting over $6.5 million dollars paid to the nursing homes by Medicare, Medicaid and the residents to his own personal use, instead of providing the care, services and proper environment for residents as required by law.

It further alleges that Borne improperly handled the employee pension fund. Instead of putting the employees' 401(k) money into the employees' pension plans, he used the money to pay his personal expenses and obtained an unauthorized loan from the pension plan.

In addition, the indictment alleges that Borne defrauded vendors by obtaining their services for the nursing homes, and then did not pay for those services.

The indictment explains that nursing home residents prepaid their room and board at the beginning of the month, and that the unused room and board fees be refunded. Borne failed to pay any refunds that were due.

The indictment states that Borne used the diverted money to pay for, among other things, a corporate airplane, an executive MBA degree from Harvard, over $300,000 of the expenses of Annedale Gardens which is Borne's 150-acre estate located on the Bogue Falaya River in Folsum, Louisiana, which contained four ponds, exotic swans, a refurbished home and two full time grounds keepers; and over $5 million dollars for the expenses of DYNASTAR, and other companies owned and operated by the defendant, Borne that were unrelated to the nursing homes.

The indictment also sets forth a scheme to defraud the New Jersey Economic Housing Authority and the GMS Group, a financial underwriter located in Philadelphia, Pennsylvania out of over $2 million dollars in connection with a $19,450,000 bond offering that was approved to build an assisted living facility in Windsor, New Jersey. It is alleged that Borne and his company Dynastar represented to the Housing Authority and the underwriter that Borne had paid a local engineering company over $2 million dollars for the preparation of architectural and engineering plans when in truth Dynastar employees prepared the plans and the engineering company received $800 a month. Based on this fraudulent representation, the Housing Authority and underwriter reimbursed Borne and Dynastar over $2 million dollars at the time of the bond closing.

If convicted, Borne faces a possible maximum penalty of one hundred twenty-five (125) years imprisonment, a $6,000,000 fine, or both. Dynastar faces a possible maximum penalty of a fine of $12,000,000. In addition, if convicted, the indictment calls for asset forfeiture of over $25 million dollars.

U. S. Attorney Jim Letten stated that, "Abuses of the responsibility to care for our communities' elderly and infirm citizens by economic predators will not be tolerated, nor will thefts from citizens' employee pension funds, as well as other economic crimes which place at risk our economic stability and which harm our most vulnerable victims. We will continue to deploy all the prosecutive resources at our disposal to protect our health care institutions, our pension funds, and most importantly, Americans who in the tender and vulnerable years of their lives, deserve a basic standard of decent, attentive care, and not theft, neglect, and victimization."

DOL Dallas Regional Director Steven Eischen stated that, " I hope this sends a clear message to all who sponsor or transact business with employee benefit plans that the federal government will aggressively pursue those who deprive participants of their promised benefits. We will use all investigative resources of the federal government to pursue these cases. Employers and workers can reach us at (214) 767-6831 for help with any problem relating to private-sector pension and health plans."

"The welfare of nursing home residents is a major concern of my office. This indictment will protect them from nursing home providers more interested in the bottom line than in the health of their residents. This should send a clear message to nursing home owners and operators that they will be held accountable for management decisions that have an adverse impact on Medicare and Medicaid beneficiaries, " stated Dara Corrigan of HHS-OIG.

The U.S. Attorney reminds citizens that an indictment is an accusation, and that as such, charged defendants are presumed innocent until guilt is established by competent evidence.

The investigation was conducted by Assistant United States Attorneys Dorothy Manning Taylor and Paul Weidenfeld, the United States Department of Labor, Employee Benefits Security Administration, the United States Department of Health and Human Services, Office of Inspector General, and the Federal Bureau of Investigation.