Warehouse where nursing home patients died charged $1M rent. Bob Dean pocketed it, feds say.

The U.S. Department of Justice filed a complaint Thursday against embattled Louisiana nursing home magnate Bob Dean, alleging that Dean misspent and misallocated $4 million from his nursing homes, lining his personal bank accounts with the misspent money.

The DOJ lawsuit may be the most daunting of Dean's escalating legal troubles, though he also faces state criminal charges in Tangipahoa Parish for cruelty to the infirm and Medicaid fraud, as well as a slew of lawsuits from former nursing home residents, banks and creditors. Dean evacuated 843 nursing home residents to a warehouse in Independence during Hurricane Ida in 2021, which flooded and was short on supplies.

State officials say Dean refused help and kicked them off-site as they witnessed residents calling out in pain and suffering. They later returned to evacuate his hundreds of ailing residents. Several died in the immediate aftermath, with coroners classifying five of the deaths as storm-related, while many more were injured, lost limbs and sustained bed sores.

Attorneys for the feds argue that Dean required four of his nursing homes — Maison Deville in Harvey and Houma, Maison Orleans and West Jefferson Health Care Center — to pay rent of more than $1 million for the warehouse. Each of the homes had loans insured by the federal government, and one of the conditions of such loans is that recipients must agree to spend assets and income from those nursing homes only on goods and services that are necessary to operate them.

But the feds found that Dean instead spent money on himself, using the ill-prepared warehouse as a major focus of their complaint against him. Dean did little work to equip the warehouse as an evacuation center, beyond ripping out metal shelving and adding a few showers, according to the complaint. Dean transferred most of the money he received for the warehouse between 2016 and 2021 into his personal bank account, the complaint says.

For example, in the eight months leading up to the hurricane, nursing homes made nearly $122,000 in combined "rent" payments for the evacuation center. Just $26,000 went to third-party vendors for goods and services, while Dean pocketed the remaining $95,000, the complaint says. In January 2021, every cent of the $18,850 collected in "rent" went to Dean's personal accounts.

"Not a penny was spent on expenses that could ostensibly be considered reasonable operating expenses of the nursing homes, namely the upkeep of, or improvements to, the Calhoun Street Warehouse," DOJ alleges.

Dean's attorneys did not return messages Thursday.

Even after state officials moved Dean's residents out of the warehouse and revoked his nursing home licenses in 2021, Dean remained focused on pocketing income and directed his employees to misspend money, DOJ says.

"As the tragedy at the Calhoun Street Warehouse unfolded, Dean's buildings, businesses, and bottom line were his top priorities," the complaint states.

According to the complaint, the mortgage lender over Dean's Federal Housing Administration-backed nursing homes declared Dean's entities in default, triggering restrictions on how he could use the funds. The lender exercised control over the nursing homes' bank accounts a week after Hurricane Ida.

But according to the complaint, Dean learned that the lender accidentally failed to terminate some of his accounts. Dean ordered his bookkeepers to drain them, texting one staffer to "sweep all the accounts that I have including the escrow account for a nursing home, the insurance account, the workman's comp account, everything," the complaint says.

In six fund transfers that the feds say were improper, Dean sucked $877,000 from those accounts and funneled them to his personal accounts.

Millions of dollars were funneled out of other nursing home accounts in the three months following Ida and were sent to Bob Dean Enterprises, the complaint states. Dean then spent $1.75 million at an auction house for antique and collector firearms, $100,000 for a luxury car, and more to pay down personal loans and hand out gifts to family members – all while nursing home bills went unpaid, the complaint states.

The complaint says the U.S. Department of Housing and Urban Development's Office of Inspector General served subpoenas on Dean's business entities last May, seeking financial records. Dean hasn't responded.

"Federal loan guarantees are designed to facilitate the care of our most vulnerable citizens," said Ronald Gathe Jr., the U.S. Attorney for the Middle District of Louisiana, in a statement Thursday. "It is unfortunate that some chose to use the tragic landfall of Hurricane Ida as an opportunity to take advantage of the system to unjustly enrich their business."

If DOJ is successful in their case, they stand to recover around $8 million, as the U.S. National Housing Act of 1934 allows DOJ to recover twice the amount of any misspent money for nursing homes that are insured through the federal program. But Dean's attorneys have argued in other cases against him that he's broke, a largely successful argument in a recent class action lawsuit filed on behalf of the 843 residents.

A Jefferson Parish judge signed off on a plan last November to split $12.5 million in insurance funds among Dean's residents through a class-action lawsuit, with each of them likely receiving less than $10,000 apiece. He said Dean was in debt of about $40 million, which hurt his residents' ability to be "fully compensated for the damages that they suffered from a terrible situation."