Private Equity Is Killing Kids for Profit

Investigation reveals $1.7 billion in abuse verdicts, 86 deaths, and a systematic pattern of extraction over child safety

Project Milk Carton has uncovered a disturbing pattern. Private equity firms are buying up foster care agencies and residential treatment facilities across America. Once they take over, children start dying at rates far above the national average.

The numbers tell a brutal story. In 2024 alone, courts awarded $1.7 billion in damages against private equity-owned child welfare companies. Eighty-six children died under the care of just one company over a 10-year period. That death rate is 43% higher than the national foster care average.

This isn't negligence. It's a business model.

The Playbook: Acquire, Extract, Rebrand

Private equity firms follow the same pattern every time. They buy a foster care company using borrowed money. Then they immediately start cutting costs. Staff gets fired. Training programs disappear. Facilities pack in more kids than they can safely handle.

Within months, the owners pay themselves massive dividends. Centerbridge Partners and Vistria Group bought The Mentor Network in 2019 for $1.4 billion. Six months later, they paid themselves $100 million. Two years after that, they extracted another $375 million while children in their facilities were dying at rates 42-43% higher than normal.

The Senate Finance Committee investigated and found the company only reviewed 13 of those 86 deaths. The company told investigators the death rates were normal. They lied.

When scandals break, these companies don't reform. They rebrand. The Mentor Network became Sevita. Sequel Youth & Family Services became Vivant Behavioral Healthcare. AdvoServ became Bellwether Behavioral Health. New name, same deadly practices.

The Body Count

Cornelius Frederick was 16 when staff at a Sequel facility in Michigan restrained him for 12 minutes because he threw a sandwich. He died of cardiac arrest. A medical examiner ruled it a homicide. His family filed a $100 million lawsuit.

Sequel's owner, Altamont Capital Partners, had already pulled $94 million out of the company through debt transactions. After Cornelius died, Michigan banned all state business with Sequel. The company's response? Founder Jay Ripley sold 13 facilities to his new company Vivant and kept operating.

Paige Lunsford was 14, autistic, and nonverbal when she died at an AdvoServ facility in 2013. Staff had bound her to a bed. She vomited for days. They ignored her. She died of dehydration. ProPublica found children at AdvoServ facilities were routinely kicked in the head, choked, and dragged across floors. Some had teeth knocked out during "behavior interventions."

At Universal Health Services facilities, the abuse went even further. A 13-year-old girl was raped by another patient at Pavilion Behavioral Health in Illinois. At Cumberland Hospital for Children in Virginia, a medical director sexually abused children. At Hartgrove Hospital in Chicago, more than 100 children alleged they were forced to perform sexual acts on other minors. Some were as young as 8 years old.

UHS racked up $895 million in abuse verdicts in 2024 alone. The company is publicly traded on the New York Stock Exchange.

Taxpayers Fund the Abuse

Every dollar these companies extract comes from Medicaid or state foster care contracts. Facilities charge $275 to $800 per day, per child. Some residential programs bill up to $350,000 per year, per resident. Taxpayers foot the bill while private equity owners pocket dividends.

Between 2017 and 2021, private equity firms extracted at least $569 million in tracked dividends from just three child welfare companies. The actual number is likely much higher. Dividend recapitalizations don't require public disclosure for private companies.

The Senate investigation found these facilities "regularly fail to hire adequate numbers of qualified staff" while billing full therapeutic rates. Children sit in "warehouses of neglect" while executives claim operational improvements.

Why Nothing Changes

No federal agency comprehensively regulates residential treatment facilities for children. Each state sets its own standards. Many states exempt religious boarding schools from licensing entirely. There's no federal requirement to report child deaths in these facilities.

When a state finally shuts down a facility, the company just opens a new one across state lines. Corporate structures shield parent companies from liability. Shell companies registered in Delaware and Virginia make it nearly impossible to trace beneficial ownership.

Michigan bans Sequel. California prohibits out-of-state placements. Oregon shuts down Mount Bachelor Academy. But 47 other states keep sending children and cutting checks. The companies rebrand and the cycle continues.

What This Means

An estimated 120,000 to 200,000 youth live in residential treatment facilities nationwide. If the patterns documented by the Senate hold across the industry, thousands of children are being abused right now in the name of profit.

The Senate Finance Committee released a 136-page report in June 2024 titled "Warehouses of Neglect." They found abuse is "inherent to a model that incentivizes maximizing profits" and that "risk of harm to children is endemic to the operating model."

They recommended raising federal standards, investing in community-based alternatives, and strengthening oversight. They asked the Department of Justice to investigate Medicaid fraud and civil rights violations.

Six months later, private equity firms are still extracting dividends. Children are still dying. And states are still writing checks.

Project Milk Carton will continue monitoring this investigation. We've identified several companies preparing to rebrand in 2026, including a new domain registered for Vivant Behavioral Healthcare just three days ago.

Methodology: This investigation analyzed Senate Finance Committee reports, court records, investigative journalism from ProPublica and APM Reports, and open-source intelligence gathering including domain registration analysis and corporate structure mapping. Investigation conducted by OPUS using publicly available sources over approximately 45 minutes in January 2026.