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Chappy's Golden Shores in Hill City, Minn. courtesy / WDIO

10 charged in connection with $2 million scheme at assisted living facility

ST. PAUL — Minnesota Attorney General Keith Ellison on Monday, Sept. 23 charged 10 people in connection with an alleged scheme to swindle more than $2 million from the state Department of Human Services and Medica through a Hill City assisted living facility.

The 10 former owners, managers and employees of Chappy's Golden Shores face a combined 76 counts of manslaughter, assault, neglect, racketeering, theft, operating a comprehensive home-care facility without a license, concealing the proceeds of these crimes, perjury and obstructing the state’s criminal investigation.

A state Medicaid Fraud Control Unit review of millions of pages of evidence, as well as dozens of interviews with former residents, employees, medical professionals, social workers and guardians, revealed that several residents at the now-closed facility were subject to neglect after employees failed to provide proper health care, supervision, food or housing.

One resident, a 72-year-old Marine Corps veteran, died of septic shock stemming from an untreated urinary tract infection, dysphasia and pneumonia: complications spurred by improper medical care and neglect.

Former owner Theresa Lee Olson, 43, faces 25 charges related to the alleged swindling scheme and improper treatment of residents at the assisted living facility. The state's criminal complaint alleges that Olson fleeced the state's Medicaid program out of $2.17 million between 2017 and 2019 by billing for health care services at the facility that weren't delivered or that aren't covered by Medicaid.

The charges include one count of second-degree manslaughter in connection to the death of the resident who died of septic shock and 16 counts of neglect of a vulnerable adult, stemming from the alleged mistreatment of several residents. Olson and others opted not to call an ambulance after a resident fell and broke a hip or when another resident displayed symptoms of a stroke.

The charging documents also allege that Olson along with others at the facility didn't adequately supervise a resident with chronic alcoholism and failed to lock up bottles of alcoholic beverages. They also failed to have a registered nurse at the facility to file intake reports for seven residents and to check on the residents, in violation of state law.

Jason Steck, an Edina attorney representing Chappy's, said he'd just received the complaints and wanted to represent his clients in their bail hearings before commenting in detail.

“I will say that everybody involved with Chappy’s continues to maintain their innocence,” Steck said. Steck and Chappy's employees have denied the charges against them.

When Chappy's lost its license in 2018, following reports of abuse and neglect, Olson sold the facility to her daughter Monika Olson, 22, for $1. Monika Olson then renamed the facility and attempted to regain licensure while her mother continued to be involved in the operation, the documents say.

The day after state inspectors came to investigate the facility in 2018, which led to the temporary suspension of Chappy's license, Keith Olson, who is married to Theresa Olson, took out two cashier's checks from the Chappy's business account totaling more than $1.7 million.

Meanwhile, residents received care from unlicensed individuals who likely wouldn't have been approved for state licenses to work in the assisted living facility due to criminal convictions in their backgrounds.

The Attorney General's office took up the investigation into Chappy's Golden Shores earlier this year after receiving a tip from the Aitkin County Attorney’s Office. The facility had been the subject of several disciplinary and administrative actions by the Minnesota Department of Health and the Minnesota Department of Human Services.

Ellison said his office would make the case in prosecuting the cases that the former employees were involved in "systematic, intolerable abuse and neglect" of Chappy's residents.

“Every Minnesotan deserves to live with dignity and respect," Ellison said in a news release. "This does not exclude the sick and the vulnerable — it includes everyone. This means that every Minnesotan who needs care deserves care, not abuse."

Reporter John Lundy contributed to this report.