For-profit nursing home South Jersey Extended Care (SJEC), has been removed from the Medicaid program, after a trio of owners were found to have defrauded the state program out of millions of dollars. All the while, patient care deteriorated and the facility had a one-star rating for a number of years.

SJEC demonstrated a pattern of waste and abuse of public funds, financial mismanagement, substandard care and a disregard of federal and state oversight requirements among its leaders, according to an ongoing investigation conducted by the New Jersey Office of the State Comptroller.

Between April 1, 2018 and March 17, 2023, the Comptroller’s office uncovered a scheme by those in control to misrepresent their roles in order to avoid scrutiny and maximize profits. SJEC leadership funneled tens of millions in profits toward owner distributions, “consulting” fees, and charitable donations to organizations they controlled.

SJEC was owned by Mordechay “Mark” Weisz and managed by Steven Krausman through his company Comprehensive Health Care Management Services. Michael Konig, with family ties to Weisz and Konig, helped operate the facility through his company Broadway Health Care Management, along with other entities he controlled and/or owned, the Comptroller’s office said in a statement.

In addition to SJEC, Medicaid suspension was placed on Sterling Manor Nursing Center, Konig, Krausman, Weisz and their related entities and partners, with the approval of the New Jersey Attorney General.

“This was a massive scam, perpetrated for years,” Acting State Comptroller Kevin Walsh said in a statement. “These individuals were able to amass a fortune by pretending to be independent parties. In reality, they operated as one unit, providing terrible care to the sick, the elderly, and the poor, so they could make big profits.”

The state investigation revealed that Weisz was a “straw owner” of SJEC, with Krausman and Konig in control of operations, administration and finances. Konig transferred ownership of SJEC to Weisz after he was banned in the 1990s from owning nursing homes in Massachusetts and Connecticut.

Konig, Weisz and Krausman entered into multimillion-dollar, inflated-cost contracts with businesses they owned and controlled, but failed to provide substantial goods and services.

Weisz took $1.3 million out of nursing home distributions, while Krausman and Konig, via their businesses, collectively allocated $45.5 million in profits to themselves, the Comptroller’s office reported.

Leaders failed to report these related-party transactions to state and federal governments, as required, the Comptroller’s office found. During the five-year investigation, SJEC received $35.6 million in Medicaid funds but spent $38.9 million in contracts with entities controlled or owned by Krausman and Konig.

Meanwhile, the facility was one of the worst-rated facilities in the state with one star in the Five Star Rating System for nearly every rating period since 2013.