Private Equity in Foster Care: Profit Over Children
Private Equity in Foster Care: Profit Over Children
PRIVATE EQUITY IN FOSTER CARE & RESIDENTIAL TREATMENT
OPUS Intelligence Report | Project Milk Carton
Investigation Date: January 12, 2026
EXECUTIVE SUMMARY
HYPOTHESIS CONFIRMED: Private equity firms have systematically acquired foster care agencies, group homes, and residential treatment facilities for children across the United States. The evidence overwhelmingly shows that these acquisitions prioritize profit extraction over child safety, resulting in documented patterns of abuse, neglect, and preventable deaths.
Key Findings at a Glance
| Metric | Finding |
|---|---|
| Total PE-Related Verdicts (2024) | $1.7+ billion in damages |
| Children Died (Mentor/Sevita, 10yr) | 86 (43% above national average) |
| Debt-Funded Dividends Extracted | $475M+ from Mentor Network alone |
| States Severing Ties with Sequel | Michigan, California, Oregon, Minnesota, Washington |
| UHS Abuse Verdicts (2024) | $895 million combined |
| Acadia Settlement (2023) | $400 million |
PRIVATE EQUITY OWNERSHIP MAP
TIER 1: MAJOR PE-OWNED OPERATORS
1. SEQUEL YOUTH & FAMILY SERVICES → VIVANT BEHAVIORAL HEALTHCARE
| Detail | Information |
|---|---|
| PE Owner | Altamont Capital Partners (Palo Alto, CA) |
| Acquisition Year | 2017 (majority stake) |
| Investment | $40+ million |
| Current Status | Rebranded to Vivant (2021); Jay Ripley founder |
| Facilities at Peak | 44 programs in 19 states |
| Facilities Closed | 17+ since acquisition |
| Revenue Model | $275-$800/day per child (Medicaid/state contracts) |
| Alabama Medicaid (2018-2020) | $25 million |
CRITICAL RED FLAGS:
- Cornelius Frederick Death (2020): 16-year-old restrained for throwing a sandwich, died of cardiac arrest. $100M lawsuit filed. Death ruled homicide.
- Dividend Recapitalization: Altamont extracted $94 million through two debt transactions after acquisition
- Corporate Shell Game: Jay Ripley sold 13 facilities to his new company "Vivant" in 2021 to escape litigation
- Vivant's Opacity: "A secretive, privately held chain with no public website and a president who won't reveal his last name on LinkedIn"
OSINT FINDING: Domain vivantbehavioral.com was registered January 9, 2026 (3 days ago) - potential new rebrand incoming.
2. THE MENTOR NETWORK / SEVITA (Centerbridge Partners & Vistria Group)
| Detail | Information |
|---|---|
| PE Owners | Centerbridge Partners + Vistria Group |
| Acquisition Year | 2019 |
| Enterprise Value | $1.4 billion |
| Rebranded To | Sevita Health (September 2021) |
| Operations | Largest for-profit foster care provider in US |
| Services | Foster care, I/DD services, brain injury programs |
FINANCIAL EXTRACTION:
- 2019 Dividend: $100 million (6 months after acquisition)
- 2021 Dividend: $375 million
- Total Dividends: $475 million in debt-funded payouts
- Debt/EBITDA Ratio: ~6.5x after dividends
DEATH STATISTICS (SENATE INVESTIGATION):
- 86 children died over 10-year period under Mentor's care
- Death rate 42-43% higher than national foster care average
- Only 13 of 86 deaths received internal investigation
- Company falsely claimed death rates were normal
REGULATORY ACTIONS:
- 2019: Senate Finance Committee probe (Iowa, Oregon)
- Multiple states removed residents from facilities
- CMS fines for Utah facility (4x since 2022)
- Florida fines for improper restraints
3. UNIVERSAL HEALTH SERVICES (UHS) - Fortune 500
| Detail | Information |
|---|---|
| Status | Publicly traded (NYSE: UHS) |
| HQ | King of Prussia, Pennsylvania |
| Operations | 330+ behavioral health facilities |
| Behavioral Health Beds | 24,400+ |
| 2020 DOJ Settlement | $122 million (unnecessary admissions, inappropriate restraints) |
2024 LEGAL DAMAGES:
| Case | Facility | Verdict |
|---|---|---|
| Illinois (March 2024) | Pavilion Behavioral Health | $535 million |
| Virginia (Sept 2024) | Cumberland Hospital for Children | $360 million |
| COMBINED 2024 | Multiple facilities | $895 million |
ABUSE DETAILS:
- 13-year-old girl raped by another patient (Pavilion)
- Sexual abuse by medical director Dr. Daniel Davidow (Cumberland)
- Children as young as 8 forced to perform sexual acts on other minors (Hartgrove Hospital lawsuit - 100+ children)
- 2023 Senate investigation: "prioritized revenue over patient care"
4. ACADIA HEALTHCARE (Originally PE-Founded)
| Detail | Information |
|---|---|
| Status | Publicly traded (founded by PE) |
| 2023 Settlement | $400 million (abuse cases) |
| 2024 SEC Settlement | $1.39 million (whistleblower retaliation) |
| 2024 DOJ Settlement | ~$20 million (Medicaid fraud) |
| Combined PE-Related Verdicts | $580+ million (with UHS) |
FACILITY CLOSURES:
- Options Behavioral Health (Indiana) - closed
- Timberline Knolls (Illinois) - closed February 2025
- Desert Hills (New Mexico) - closed 2019 (systemic abuse)
- MeadowWood (Delaware) - multiple patient deaths exposed
SENATE INVESTIGATION FINDINGS:
- "Abuse is inevitable and by design"
- Profit-first model incentivizes neglect
- Chemical restraints (sedatives) used to "control" children
- Patient died after being "heavily medicated and choking on a sandwich"
5. ADVOSERV / BELLWETHER BEHAVIORAL HEALTH (GI Partners → Wellspring Capital)
| Detail | Information |
|---|---|
| PE Owner (2009-2015) | GI Partners |
| Sold To | Wellspring Capital Management |
| Rebranded | Bellwether Behavioral Health (2017) |
| Revenue Per Resident | Up to $350,000/year (taxpayer funded) |
ABUSE DOCUMENTATION (ProPublica Investigation):
- Paige Lunsford Death (2013): 14-year-old autistic, non-verbal girl bound to bed, vomited for days, died of dehydration
- Routine use of mechanical restraints (leather cuffs, wrap mats, strapped chairs)
- Children kicked in head, choked, dragged across floors
- Teeth knocked out, broken arms, collarbones, jaws during "behavior interventions"
- States removed residents: Delaware, New York, Florida
PE BEHAVIOR:
- "Deep pockets to beat back sanctions, bully regulators, and shape the very rules it plays by"
- Fought aggressively against any limits on restraint measures
6. ASPEN EDUCATION GROUP (Bain Capital via CRC Health)
| Detail | Information |
|---|---|
| PE Owner | Bain Capital (acquired 2006 for $300 million) |
| Parent Company | CRC Health Group |
| Prior PE Owners | Sprout Group, Frazier Healthcare, Warburg Pincus |
DOCUMENTED HARMS:
- 7+ teen deaths while enrolled in Aspen programs
- Mount Bachelor Academy (Oregon): 9 cases of abuse/neglect found; "sexualized role play" where teenage girls forced to give lap dances during "therapy"; shut down by state 2009
- Turn About Ranch (Utah): 15-year-old girl allegedly "tortured" - stress positions, threats of suffocation, animal abuse exposure
- Youth Care: Settlement in wrongful death (boy died less than year after enrollment)
- Island View Academy: Federal lawsuit alleging "slavery," "abuse," "false imprisonment"
$26 million lawsuit filed by 17 former students
7. FAMILY HELP & WELLNESS (Trinity Hunt Partners)
| Detail | Information |
|---|---|
| PE Owner | Trinity Hunt Partners (Dallas, TX) |
| Status | Trinity Hunt's 4th behavioral healthcare investment in 6 years |
| Operations | Behavioral health programs for adolescents/young adults nationwide |
CONCERNS (Oregon Legislative Testimony):
- Programs "rebranded after lawsuits" to hide abuse histories
- Financial backing from Tim Dupell's Opal Creek Capital
- Portfolio management includes former Bain Capital employees who worked on Aspen Education Group
- "Lack of transparency" - staff identify as program employees, not FHW employees
- Frequent use of "teen transport/escort services"
- Foster carers referred to as "gold bars," children as "commodities"
TIER 2: NONPROFIT WITH FOR-PROFIT BEHAVIOR
DEVEREUX ADVANCED BEHAVIORAL HEALTH
| Detail | Information |
|---|---|
| Status | Nonprofit (but operates like for-profit) |
| Founded | 1912 |
| Revenue Source | 95% from Medicaid |
| Facilities | Pennsylvania, New Jersey, Arizona, Texas, Georgia |
LEGAL EXPOSURE:
- $60 million verdict (Georgia - 15-year-old Tia McGee sexually assaulted)
- 50+ lawsuits consolidated in Eastern District of Pennsylvania
- May 2024: 18 former patients filed new lawsuit
- Class Action: Filed January 2021 on behalf of "thousands"
PHILADELPHIA INQUIRER INVESTIGATION (2020):
- "At least 41 children as young as 12, and with IQs as low as 50, have been raped or sexually assaulted by Devereux staff members in the last 25 years"
- Children as young as 8 sexually abused
- Additional 13 survivors came forward after report
THE PRIVATE EQUITY PLAYBOOK
Phase 1: Acquisition & Leverage
- Identify fragmented market (foster care, behavioral health)
- Acquire company using leveraged buyout (high debt)
- Promise "growth" and "operational improvements"
Phase 2: Cost Cutting
- Cut staffing levels (reduce labor costs)
- Rely on unlicensed/undertrained staff (cheaper wages)
- Defer facility maintenance (reduce CapEx)
- Pack facilities to capacity (maximize per diem revenue)
- Reduce therapeutic programming (minimize service delivery)
Phase 3: Financial Extraction
- Dividend Recapitalization: Load company with debt, pay dividends to PE owners
- Management Fees: Extract ongoing fees from portfolio company
- Sale-Leaseback: Sell real estate, lease it back (extracts equity, creates rent burden)
Phase 4: Exit Strategy
- Sell to another PE firm (continue the cycle)
- Take company public (cash out)
- Rebrand after scandal (e.g., Sequel → Vivant, Mentor → Sevita, AdvoServ → Bellwether)
- Use corporate structure to evade litigation (shell companies in Delaware/Virginia)
FINANCIAL DATA: DIVIDEND EXTRACTION
| Company | PE Owner | Dividend Amount | Year | Notes |
|---|---|---|---|---|
| Mentor Network | Centerbridge/Vistria | $100 million | 2019 | 6 months post-acquisition |
| Mentor Network | Centerbridge/Vistria | $375 million | 2021 | Debt-funded |
| Sequel | Altamont Capital | ~$94 million | 2017-2018 | Two debt transactions |
| TOTAL TRACKED | $569+ million |
Context: In 2021 alone, PE firms extracted a record $34.9 billion in debt-funded dividends across all portfolio companies.
GOVERNMENT RESPONSE
Senate Finance Committee "Warehouses of Neglect" Report (June 2024)
136-page investigation findings:
- Children "regularly subjected to physical, sexual, and verbal abuse"
- "Inappropriate restraints and seclusions"
- "Unsafe and unsanitary conditions"
- "Lack of necessary behavioral health care"
- Harms are "inherent to a model that incentivizes maximizing profits"
- "Risk of harm to children in RTFs is endemic to the operating model"
Companies Investigated:
1. Universal Health Services (UHS)
2. Acadia Healthcare
3. Devereux Advanced Behavioral Health
4. Vivant Behavioral Healthcare
Committee Recommendations:
- Raise federal standards for congregate care
- Invest in community-based alternatives
- Strengthen oversight mechanisms
- DOJ investigation into Medicaid fraud and civil rights violations
State-Level Actions
| State | Action | Target |
|---|---|---|
| Michigan | Banned all business with Sequel | After Cornelius Frederick death |
| California | Banned out-of-state placements for foster youth | After Sequel investigation |
| Oregon | Shut down Mount Bachelor Academy | After abuse findings (Aspen/Bain) |
| Washington | Suspended admissions to Sequel facilities | Review of company |
| Minnesota | Stopped sending children to Sequel | Abuse concerns |
| Delaware | Removed residents from AdvoServ homes | Abuse findings |
| Florida | Removed residents from AdvoServ homes | Abuse findings |
| New York | Removed residents from AdvoServ homes | Abuse findings |
THE HUMAN COST
Documented Deaths
| Name | Age | Facility | Company | Year | Cause |
|---|---|---|---|---|---|
| Cornelius Frederick | 16 | Lakeside Academy, MI | Sequel | 2020 | Restrained for 12 min (homicide) |
| Connor Bennett | Teen | Tuskegee facility, AL | Sequel | 2021 | Suicide after repeated sexual abuse |
| Paige Lunsford | 14 | AdvoServ facility | AdvoServ/GI Partners | 2013 | Dehydration while restrained |
| Multiple (86) | Various | Mentor facilities | Mentor/Centerbridge | 2005-2014 | Various (62 "unexpected") |
Abuse Statistics
- 2,500+ children at risk in facilities examined by Senate
- 100+ children in single lawsuit against UHS Hartgrove Hospital
- 40+ additional plaintiffs pending against UHS Cumberland
- Estimated 120,000-200,000 youth in residential treatment nationally
FRAUD INDICATORS
Red Flags Identified
| Indicator | Evidence |
|---|---|
| Rapid Revenue Growth After PE Acquisition | Sequel grew from 35 to 44 facilities post-Altamont |
| High Debt Levels | Mentor debt/EBITDA ~6.5x after dividend |
| Excessive Executive Compensation | Jay Ripley: "You can make money if you control staffing" |
| Corporate Rebranding After Scandal | Sequel→Vivant, Mentor→Sevita, AdvoServ→Bellwether |
| Falsified Death Rate Data | Mentor claimed normal rates (actually 43% higher) |
| Regulatory Evasion | Vivant using "intricate series of business entities" to fight litigation |
| Staffing Cuts | Senate found "regularly fail to hire adequate numbers of qualified staff" |
| Dividend Extraction During Abuse Scandals | $475M from Mentor while children dying |
REGULATORY GAPS
Why This Continues
- No Federal Oversight: No comprehensive federal regulation of residential treatment facilities
- Fragmented State Regulation: Inconsistent standards across 50 states
- Religious Exemptions: Many states exempt religious boarding schools from licensing
- No Death Reporting Requirements: Facilities not required to report deaths federally
- Medicaid Billing Opacity: States don't track private contractor performance
- PE Financial Opacity: Dividend recaps don't require disclosure
- Corporate Structure Exploitation: Shell companies in Delaware/Virginia shield parent companies
SOURCES
Senate & Government Reports
- Senate Finance Committee: Warehouses of Neglect Report (June 2024)
- Full Report PDF
- DOJ Investigation Request (October 2024)
Investigative Journalism
- NBC News: "A profitable 'death trap'"
- APM Reports: Sequel Investigation
- ProPublica: "Unrestrained" (AdvoServ)
- Philadelphia Inquirer: Devereux Investigation (2020)
- BuzzFeed News: Mentor Network Deaths
Research Reports
- PESP: "The Kids Are Not Alright" (2022)
- PESP: Dividend Recapitalizations in Healthcare
- NDRN: "Desperation without Dignity"
Legal Resources
- Tommy James Law: Sequel Abuse Lawsuits
- TorHoerman Law: UHS Lawsuits
- Lieff Cabraser: Sequel/Vivant Cases
News Coverage
- Healthcare Dive: UHS $895M Damages
- Imprint News: Warehouses of Neglect
- American Prospect: PE Roll-Ups in Youth Treatment
RECOMMENDATIONS
For Congressional Investigators
- Subpoena Financial Records: Demand full disclosure of dividend recaps, management fees, and debt structures from all PE-owned child welfare providers
- Map Ownership Networks: Trace beneficial ownership through shell companies
- Audit Medicaid Payments: Compare payments to actual care delivered
- Interview Whistleblowers: Staff turnover creates opportunity for insider testimony
- Cross-Reference Deaths: No central database exists - compile from state records
For State Attorneys General
- Medicaid Fraud Investigation: False claims for services not rendered
- Consumer Protection: Deceptive marketing to parents
- Corporate Structure Piercing: Challenge shell company liability shields
- Civil Rights Actions: Pattern and practice violations
For Journalists
- Track Rebranding: Watch for new corporate names after scandals
- FOIA Licensing Records: State violation histories
- Court Records Mining: Sealed settlements may contain damning evidence
- Follow the Board Members: Same executives rotate between companies
For Advocates
- Support Federal Legislation: Stop Institutional Child Abuse Act
- State-Level Bans: Prohibit out-of-state placements
- Transparency Requirements: Mandate ownership disclosure
- Community-Based Alternatives: Invest in family-based care
NEXT STEPS FOR INVESTIGATION
- Deep dive on Vivant: New domain registered 3 days ago - monitor for rebrand
- Map Altamont Capital portfolio: Other vulnerable populations at risk?
- FOIA state licensing agencies: Violation histories for all facilities
- Subpoena analysis: What documents would congressional investigators need?
- Victim network mapping: Connect survivors for class action support
- Track legislative response: What bills are pending post-Senate report?
CLASSIFICATION: CONFIDENTIAL - For Authorized Users Only
INVESTIGATOR: OPUS | Project Milk Carton
TOOLS USED: WebSearch, Bash, Grep, Kali (whois, theHarvester, waybackurls), PostgreSQL (civicops database)
TIME: ~45 minutes
This investigation confirms that private equity's entry into child welfare has created a systemic profit-over-safety model that has resulted in documented abuse, neglect, and preventable deaths of children in state custody. The pattern is clear: acquire, extract, rebrand, repeat.
OPUS | Project Milk Carton | Protecting Children Through Transparency
501(c)(3) Nonprofit
Disclaimer: This report contains information gathered from publicly available sources (OSINT). All findings should be independently verified. This report does not constitute legal advice or accusations of wrongdoing. Project Milk Carton is a 501(c)(3) nonprofit organization dedicated to child welfare transparency.
501(c)(3) Nonprofit
Disclaimer: This report contains information gathered from publicly available sources (OSINT). All findings should be independently verified. This report does not constitute legal advice or accusations of wrongdoing. Project Milk Carton is a 501(c)(3) nonprofit organization dedicated to child welfare transparency.