The Providence Journal had an article about the federal government seeking more than $12 million from former nursing home executive Antonio L. Giordano and his associates, claiming they enriched themselves by diverting millions of dollars from nursing homes as the homes slipped into debt, in violation of an agreement with the U.S. Department of Housing and Urban Development.
The government, on behalf of HUD, accuses Giordano; his longtime chief financial officer John J. Montecalvo; Pasquale V. Confreda, a general partner with Coventry Health Center Associates, and Coventry Health Center Associates itself of illegally channeling money from two nursing homes to themselves and businesses that included two consulting firms, one owned by Giordano’s daughter and the other by his son.
The nursing homes — Mount St. Francis Health Center, in Woonsocket, and the Coventry Health Center — were backed by HUD-insured financing and later went into receivership. Those named in the suit were barred from transferring money or property belonging to the nursing homes while the homes were not financially solvent under the terms of the HUD mortgage insurance.
Giordano and Montecalvo oversaw the management of both nursing homes. Confreda was a general partner of Coventry Health Associates, which owned the 344-bed Coventry Health Center.
The suit filed in September in U.S. District Court says Montecalvo and Giordano misused $4.2 million in Mount St. Francis funds in violation of the HUD agreement reached when the parties secured an $8.6-million HUD-insured mortgage. The government by law is allowed to seek double the amount that was allegedly misspent, or $8.5 million, including legal fees.
Giordano, Montecalvo, Confreda and CHC Associates are accused of diverting another $1.8 million from Coventry Health Center, equaling $3.6 million, with legal fees. In that case the parties secured a $15.3-million HUD-insured mortgage after refinancing.
The case grew from an audit done by the Office of the Inspector General of the nursing homes’ operations from Jan. 1, 2000, to Dec. 31, 2003, the suit says. According to the suit, $958,675 associated with the 194-bed Mount St. Francis was disbursed in violation of the HUD agreement.
The largest sums included $224,720 paid to a consulting firm run by Giordano’s son, Antonio A. Giordano, and $272,200 to a firm led by his daughter, Mary D. Gentili. Another $104,520 went to the now-closed Hillside Health Center that Montecalvo managed as well as $109,000 to the Sterling Health Care Management Co., where Montecalvo acted as general manager.
In addition, according to the suit, Giordano and Sterling, under Montecalvo, received $1.4 million each in management and partnership fees that violated the agreement.
The suit claims $1.4 million in funds related to the Coventry Health Center were diverted to eight entities in violation of the HUD agreement. The largest sums in that batch included $250,000 that went to Management Realty Service, a Rhode Island company where Giordano’s daughter served as president, and $267,000 that went to the consulting firm she led. Another $425,816 went to Sterling, the suit says.
Giordano and Montecalvo pleaded guilty in 2006 to federal charges that they misused money from the two homes and from the now-closed Hillside Health Center in Providence. Giordano was sentenced to 2½ years in prison and Montecalvo to 2 years.
They later admitted to embezzlement and conspiracy charges in state court, where they agreed to pay about $1.1 million in fines and restitution but avoided additional jail time. Giordano and Confreda were also named as major delinquent borrowers in the state’s credit-union crisis of the early 1990s. In 2005, the state agreed to accept a $3-million payment to settle the debts left over from the banking crisis. The deal, approved by the DEPCO Asset Review Committee, cancels out more than $10 million in delinquent loans Giordano and his business partners owed Rhode Island taxpayers.
They be placed under the jail.