Former nursing home owner charged in $6 million employment tax scheme

by Kimberly Marselas

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A former nursing home owner has been indicted on charges that he willfully failed to pay more than $6 million in taxes that were withheld from employees’ paychecks.

The Department of Justice on Tuesday said Paul Walczak of Palm Beach Gardens, FL, owned multiple healthcare companies between 2009 and 2019, including NuVista, a three-site nursing home company with a checkered past. He also owned Palm Health Partners and PHP Employment Services, a healthcare employment company he founded in 2010.

As the owner of the employment firm, Walczak allegedly exercised control over the businesses’ finances and was responsible for paying over to the IRS employment taxes, including federal income, Social Security and Medicare taxes, a press release noted.

A federal grand jury accused Walczak of not paying to the IRS more than $6 million in withholdings he had collected between 2016 and 2019. During most of that time, Walczak was being paid a combined annual salary of $360,000 by the healthcare companies, authorities said.

In addition, he allegedly received significant wire transfers from those companies. Instead of using them to pay employees’ tax obligations as was intended, he used the funds to invest in his businesses, purchase a yacht, lease luxury vehicles and charter private international flights, the Department of Justice said.

Tax issues at NuVista’s skilled nursing facilities had been widely known since at least 2018, when a Palm Beach Post investigation found that a payroll company owned by Walczak and his mother owed $8.3 million to the IRS for back payroll taxes. That figure had grown to more than $10 million by 2019, but the paper reported then that Walczak “mostly blamed changes in Medicare reimbursements for their money problems.”

In that same article, a company that took over at least one of NuVista’s buildings said it spent months trying to win back contracts with hospitals and other medical providers that refer patients to NuVista, as well as vendors that had been paid late while Walczak was in charge.

The Post said Walczak operated NuVista Living in Wellington with his mother, Elizabeth Fago, before the pair were replaced after the property owner went to court to evict them. The mother-son duo also had previously owned a larger Florida nursing home chain, which they sold in 2007.

Fago is a well-known political donor, described recently by the New York Post as having “made a fortune in the nursing home business.” Last year, she sold her Jupiter, FL, mansion for $12.5 million.

Fago was not named in this week’s indictment.

Walczak, however, also was charged with not filing personal income tax returns for 2018, 2019 and 2020.

If convicted, he faces up to five years in prison for each employment tax count and one year for each failure to file a tax return count. He also faces a period of supervised release, restitution and monetary penalties.

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Former nursing home owner charged in $6 million employment tax scheme