STAFF REPORTS
BUFFALO, N.Y. — U.S. Attorney James P. Kennedy, Jr. announced today that Marc I. Korn, 62, of East Amherst, NY, pleaded guilty to bank theft and willful failure to pay tax before Senior U.S. District Judge William S. Skretny. Together, the charges each carry a maximum penalty of two years in prison and a $200,000 fine. Pursuant to his agreement with the government, defendant also agreed to pay over $2.5 million in restitution to three different private entities along with approximately $850,000 to the Internal Revenue Service.
Assistant U.S. Attorney Elizabeth R. Moellering, who is handling the case, stated that Korn, who during today’s plea proceeding himself claimed to be in ill-health, was the former owner of the Batavia Nursing Home in Batavia, NY, and the Fairchild Manor Nursing Home in Lewiston, NY. By his plea, Korn admitted to committing bank theft in connection with his actions concerning a credit card and loan from Fifth Third Bank. He also admitted willfully to failing to pay over employment taxes related to his nursing homes over three quarters in 2009.
In 2008, the defendant sought a loan to refinance the Batavia Nursing Home from Fifth Third Bank. In June 2008, Fifth Third Bank provided $3,900,000 to refinance the nursing home and provided Korn with a credit card. As part of the application for the loan, the defendant submitted a personal financial statement and guaranty on which the bank relied when underwriting the loan. The statement contained numerous falsehoods, including the overvaluation of his primary residence. Korn stated that the property was valued at $1,465,000 when, at the same time, he was contesting its value with the Town of Amherst for purposes of property taxes, alleging it was worth between $500,000 and $550,000. Additionally, the defendant provided the bank with statements of bank accounts that he claimed to own. However these statements also contained falsehoods – including one statement for which Korn claimed ownership of an account containing $50,000 in February 2008, when the account actually contained $1.00 and belonged to someone else. The loan and payments on the credit card went into default and Fifth Third Bank lost more than $2,400,000.
Prior to March 2009, for both Batavia Nursing Home and Fairchild Manor Nursing Home, Korn used a service to collect and pay over employment taxes owed. However, beginning in March 2009, the defendant ceased using the service and subsequently intentionally failed to pay to the IRS employment taxes owed for the second, third and fourth quarters of 2009. Instead of paying the taxes owed to the IRS, Korn spent the funds on personal expenses including restaurants, hockey tickets, jewelry, and to pay his children’s college tuition.
Today’s plea is the result of an investigation by the Federal Bureau of Investigation, under the direction of Special Agent-in-Charge Gary Loeffert, and the Internal Revenue Service, Criminal Investigations Division, under the direction of James D. Robnett, Special Agent-in-Charge.
Sentencing is scheduled for March 13, 2019, at 10:00 a.m. before Judge Skretny.
