A split forms, with homes caught in middle

By DARREN BARBEE

STAR-TELEGRAM STAFF WRITER

International travel. Death threats. Millions of missing dollars.

These could be elements of a spy novel. Instead, federal investigators have alleged, they are tied to a scheme involving what seems a most unlikely target: nursing homes.

Investigators, in a federal search warrant affidavit, state that three North Texas men were tied to a maze of companies with more than 50 homes.

Those companies, investigators suspect, were used to cheat the government out of more than $25 million in taxes.

New companies were founded and folded so quickly that the IRS couldn't keep up. Others, stretching from South Texas to Europe, were merely mail drops. Even as homes were declaring bankruptcy and tax liens were filed, state regulators let the operation grow.

What investigators have described as an alliance among Gary Trebert, Stephen Ewing and Larry May would soon devolve into battles over money. No charges have been filed, and each man has said he did nothing wrong or has blamed the others.

But allegations would mount -- a federal search warrant would depict Trebert as the mastermind, while Trebert would point the finger at Ewing and May.

And the secrets started spilling out.

Gary Trebert was trying to soothe Larry May's concerns. In 2004, May had shown up at his office worried that the IRS was after him. The key was to make the right decision, advised Trebert, an attorney. Maybe cool the travel plans for a few months, maybe choose a new address. May had been visiting a European mail drop a few times yearly for the postmark. That might get May off the IRS "hit list," Trebert said, according to court records. The wheels were turning -- Trebert talked of "plan A" and "plan B" -- however, he was not without sympathy for May: "I understand your concern." But May already had a plan of his own. He was wearing a wire.

By late 2003, Trebert, May and their associate, Stephen Ewing, were fighting among themselves.

Ewing alleged in court documents that Trebert threatened his life more than once, including after Ewing turned down Trebert's request that the company spend $90,000 on automobiles. Trebert's attorney flatly denied that any threats were made.

Over the next two years, Ewing would accuse others of threats and intimidation, including "Armageddon" against himself and his family. Ewing, who hired bodyguards, had already been a cautious man. He sometimes went by the alias Steve Michaels -- he says he doesn't know why.

By December 2003, Ewing was out.

Around that time, Trebert accused Ewing of embezzling several million dollars from the company, according to depositions. Trebert's attorneys later filed suit.

Ewing has said in a deposition that part of the money was used to repay his mother for loans she made to keep the company afloat. In an interview Ewing asked: "How do you embezzle money from your own company?"

On paper, Ewing had been living lean. Tax returns obtained by Trebert's attorneys show that the Ewings listed their total income as about $150,000 during a three-year stretch.

Ewing later filed amended tax returns stating that his income was $1.7 million for those three years. In an interview, Ewing said it was done "for legal reasons."

At about the same time that Ewing was targeted in Trebert's lawsuit, Ewing says he went to talk with federal investigators, though not before paying a criminal defense attorney. Just in case.

May talked to the feds, too. Several months before, he had been hit with a $2.8 million federal tax lien, though it isn't clear from filings whether it was related to nursing home operations.

Both laid out a scheme in which Trebert was the mastermind behind the company's plot to cheat the government.

May allowed investigators to tape a conversation with Trebert, some of which was later included in a federal search warrant affidavit. Trebert's attorneys have said that he was only serving as May's legal counsel and that May was trying to make Trebert look like an accomplice.

But Trebert's side also provided information to investigators, detailing allegations against Ewing, according to attorney Lynne Renfro, who has represented Trebert.

Federal agents stormed Trebert's office in May 2004, though employees said it was common knowledge that it was going to occur.

Investigators began interviewing nursing home workers. Some said later in depositions that they saw nothing illegal. But they also felt something wasn't right. One employee had even taken company documents to show that she wasn't involved in anything.

By the summer of 2004, the men had settled their suit, dividing up nursing homes like poker chips. Some went to a new management company, Foremost Care, which state documents show was operated by Ewing's wife and May's mother.

Trebert got other homes and the keys to a BMW the company had owned.

Only the residents at some homes seemed to be losing.

* * *

The place was a nightmare. Even before the inspectors opened hallway doors at Kirby Manor in Carrollton in 2004, the overpowering smell of mildew hit them. In the kitchen pantry, condensation dripped onto a pan of uncovered toast. In the rooms, the floors were filthy with a buildup of wax and dirt. Wallpaper drooped. An inspector randomly pulled three of the residents' clinical files and found contradictory information about whether they should be resuscitated if their heart or lungs failed. A sticker on each folder called for life-saving measures, but the doctor's orders inside incorrectly stated just the opposite. Told recently of those conditions at the home, Roberta Greene, a gerontology professor at the University of Texas, said, "I assume it was closed." It wasn't.

In 2004, Kirby Manor was caught in the crossfire of the Trebert-Ewing-May split. It fell, for a time, under the control of Foremost Care. Under the terms of a settlement, the home was supposed to be turned over to Trebert, but he didn't want it in that condition.

While many homes met state standards, others, like Kirby Manor, fell short.

In September, in the room of "Resident 13," a blue wastebasket caught the eye of a state inspector. It was there to catch the stagnant brown water leaking from the roof.

Resident 13 also complained of a terrible pain in her teeth and gums that had reached her jaw. The facility's director of nurses said the problem wasn't an emergency. Besides, further treatment was going to be expensive.

A dentist was "going to charge $150. [But] it went up," the nurse told the state inspector.

At one point the home had amassed fines totaling $124,600. State officials settled for $49,500.

Some facilities Trebert controlled were dealing with their own problems.

In Iowa, a Trebert home made the list of the worst 18 homes in the state, according to The Des Moines Register. In Kansas, a rehabilitation center's director of nurses filed suit, alleging that patients healthy enough to go home were not released. The suit, which was settled, alleged that the facility may have been defrauding Medicare by extending patients' stays.

In Virginia, a home closed after it was cut from Medicare and Medicaid when officials saw deteriorating conditions that created safety hazards. A Trebert attorney said at the time that the home was in poor shape when the company took it over about two years previously, according to published reports.

When Texas officials consider licensing an applicant, they don't consider Medicaid problems in other states -- even when they have the information. They sometimes don't receive other financial data.

But Texas regulators would soon be forced to act.

* * *

A Hurst nursing home got a brand-new big-screen television. Wisteria climbed the courtyard walls. Cats, cockatiels, dogs and koi kept residents company. A former employee credits Ewing with trying to change a sterile facility into a real home. But as a bankruptcy trustee would discover, one detail had been left out: How to pay the employees and the IRS at the same time.

Financial information was tumbling out of the three men's companies in federal and state lawsuits, in IRS tax liens, in newspaper reports.

If state officials noticed, they didn't show it.

That changed swiftly in 2005.

Foremost Care had been forced into bankruptcy. Trebert was still dogging Ewing and May over money he said they still owed as part of their earlier settlement.

By the summer, a bankruptcy trustee appointed by the court realized the company perpetually ran on fumes.

Not only could the company not pay its payroll taxes, according to bankruptcy court records, but it couldn't make payroll, either.

That was a potential disaster. If administrators, nurses and assistants walked away, nursing home residents could have to fend for themselves.

The trustee called the state. In an emergency action in July 2005, the Texas Department of Aging and Disability Services and the Texas attorney general seized operations from Foremost. They kept 13 homes afloat by allocating up to $1 million from a state trust fund.

News releases were issued. The situation was stabilized. Most of the homes were sold off.

The state now had a solid financial picture of Ewing and May's businesses.

Still, control of one home was returned to Ewing's wife, Teri. And about four months later, the department of aging issued Stephen Ewing a new nursing home license.

Ewing had applied using his own name -- Foremost was listed in the names of his wife and May's mother.

"They are two entirely separate [corporate] entities," said Cecilia Fedorov, a spokeswoman for the department of aging.

That new facility in Temple housed the elderly and about two dozen children.

In its latest inspection, it was cited for eight deficiencies, some of which posed potential risk to residents.

Ewing, reduced to operating two homes in Texas, says his priority has always been the residents.

Now there's only uncertainty, the same he felt when he told federal investigators about Trebert. "My life is a living hell," Ewing said, standing in the doorway in the back of his darkened office. "I don't know what's going to happen. I may be indicted tomorrow. I don't know."

Nothing is going to happen to Trebert, said Renfro, who until recently represented him.

She said in September that Ron Eddins, the assistant U.S. prosecutor, has made the mistake of buying into Ewing's wild story. There are discrepancies, she said, between what witnesses told investigators and what they said in later depositions.

Renfro said she believes that Eddins has coached witnesses and allowed Ewing's employees to go through documents seized from Trebert during the 2004 raid.

Eddins declined to comment, except to say that there is an ongoing investigation.

It isn't clear whether May, who could not be reached for comment, is still involved in the nursing home business.

Trebert also couldn't be reached. His attorneys have been busy subpoenaing witnesses -- some of the same people federal agents interviewed -- for a lawsuit against Ewing, May and others. The witnesses have been asked what documents they've given to investigators, what questions were asked and who did the asking.

Trebert's troubles continued.

He hadn't filed his personal or corporate income taxes from 1999 to 2002, according to a federal search warrant affidavit.

In late 2005, two of his companies were hit with $2.4 million in tax liens.

G. Lee Finley, an attorney who has handled cases for Trebert, said some of Trebert's nursing home companies didn't pay taxes on time beginning in 2004. Since then, the company has nearly caught up, he said. Trebert has also filed all of his income taxes, Finley said.

And last year, a Richland Hills nursing home under Trebert's control was sued by the Texas attorney general's office in a case involving a woman who died from a urinary tract infection. Officials at the home have said they did nothing wrong.

State records show that Trebert's companies still control at least three nursing homes in Texas.

News researchers Marcia Melton and Cathy Belcher contributed to this report.

ABOUT THIS PROJECT

This article is based on hundreds of pages of federal and state court documents, nursing home records in several states and other federal, state and county government records, as well as numerous interviews.