Don’t you love it when multi-millionaires argue about which one screwed the other worse?  Nursing home owner and operator Murray Forman continues his battle with his partners and investors.  Courthouse News Service reported the Complaint between the shareholders and the manager of two property holding companies about which one stole $100 million.

Defendants in Delaware Chancery Court are Rubin Schron, of Brooklyn, N.Y., SMV Property Holdings and SWC Property Holdings, both LLCs.  Schron has been sole manager of SMV since 2004 and of SWC since 2003, according to the complaint. Also sued is Cam-elm Company LLC, the majority member of the other LLCs, which Schron also allegedly controls as its sole manager.
Plaintiffs include Mich II, which owns 2.5 percent of SMV; SEEVA II, 12.5 percent owner of SMV; MICH, which owns 2.5 percent of SWC; and SEEVA, which owns 5.5 percent of SWC.
According to the 40-page complaint, SMV and SWC are real estate holding companies that collect revenue from properties leased by nursing and health care facilities. Both entities were formed in business deals that Leonard Grunstein and Murray Forman originated.

The businessmen, owners of plaintiffs MICH II Holdings LLC and SEEVA II Holdings LLC, asked Schron to act as a sole manager for SMV and SWC after completion of the two transactions in 2003 and 2004.  

The complaint states. "Schron has misappropriated more than $100 million from SMV and SWC, kept false and inaccurate books and records, and refused to provide members with audited financials for SMV and SWC as required by the SMV and SWC Operating Agreements. As part of Schron’s effort to cover up his misconduct and squeeze the minority members out of SMV and SWC, he is now refusing to recognize the membership interests of the MICH and SEEVA Companies."
The shareholders say Schron’s actions are "the culmination of a history of misconduct" which includes siphoning millions of dollars from the companies to cover a failed interest rate swap with Citibank.
According to the complaint: "(I)n 2008 and 2009, Schron took millions of dollars from SMV and SWC to cover his losses on a personal investment with Citibank. The Citibank investment was an interest rate swap investment dated September 25, 2008, between Schron individually and Citibank. As explained in greater detail below, an interest rate swap generates profits or losses depending on how interest rates change. The investment went bad for Schron almost at once. Because of the change of interest rates in the fall of 2008, Schron immediately became personally liable to Citibank for tens of millions of dollars on his interest rate swap agreement. Schron and Citibank had taken a particular care to make sure the interest rate swap agreement was with Schron personally, not with SMV or SWC or in the name of SWC. But when the margin calls and ultimately the losses on the investment came, Schron simply took the cash he needed from SMV and SWC as if it was his own. In this 2008 and 2009 period, Schron misappropriated over $65 million from SMV and SWC to cover his personal losses on his interest rate swap agreement."
The plaintiffs claim Schron also pilfered $11 million to settle litigation and pay his legal fees in defending a personal liability action in Boston. Schron was named as a defendant in that lawsuit, but SMV and SWC were not, according to the Delaware complaint.
"He also misappropriated an additional $40 million by improperly transferring at least that amount to himself or to defendant CAM-Elm, which is indirectly owned by Schron’s family and which is a 77.35 percent owner of SMV," the complaint states.
The shareholders say that Schron cooked the books at both SMV and SWC to prevent proper distributions and "enrich him or his family. His improper records include records concerning a falsely alleged capital contribution or undocumented loan of $75 million to SMV," according to the complaint.The plaintiffs say that CAM-Elm, a majority member of SWC and shareholder of SMV, "is an inseparable part of Schron’s schemes."
"CAM-Elm is the majority member of SMV and SWC and has the authority under the SMV and SWC operating agreements to remove any manager of SMV and SWC. CAM-Elm well knows what Schron is doing. But CAM-Elm has no interest in removing Schron as manager or in correcting any of Schron’s misconduct. CAM-Elm, which is beneficially owned by Schron’s family and controlled by Schron, has benefited from Schron’s misappropriations and other misconduct," the complaint states.
It continues: "On March 23, 2010, the MICH and SEEVA companies, Grunstein and Foreman, and others sued Schron and his affiliates in New York’s Supreme Court, New York County, in an action captioned MICH II Holdings LLC, et al. v. Schron, et al., No 600736/10. The MICH II lawsuit asserted derivative claims against Schron for the benefit of SMV and SWC, and also direct claims against Schron. After the suit was filed, Schron pretended to discuss settlement, but then abruptly started his own separate counter-suit. Schron moved to dismiss the suit against him claiming that it could only be brought in Delaware because of the forum selection clause in the SMV and SWC operating agreements."
The plaintiffs say the New York Supreme Court agreed and dismissed the complaint. That prompted this complaint in Delaware. The plaintiffs seek Schron’s removal from the two companies and more than $117 million in damages for breach of the operating agreements and breach of fiduciary duty.
"Schron has profited immensely from the opportunity that Grunstein and Forman brought to him," the complaint states. "But Schron is not satisfied with the half-billion dollars or more that he made from the transactions that Grunstein and Forman arranged. Schron has betrayed the plaintiffs and their owners (Grunstein and Forman) at every turn. Grunstein and Forman and the MICH and SEEVA companies relied on Schron to manage SWC and SMV properly and to deal honestly with them in all matters. But Schron and his family have other plans. Schron has resorted to theft, improper accounting manipulation, and more against those who trusted and relied on him."
The plaintiffs are represented by John Reed with DLA Piper

Several media outlets have reported the labor and health issues at a Sava Senior Care facility in Baltimore.  Nursing and other staff at Summit Park Health and Rehab Center were objecting to unsafe working conditions.  SAVA has failed to negotiate a working wage and share information about asbestos in the building.  They were recently notified of dangerous asbestos in the building.  According to the Centers for Disease Control, asbestos, which can often be found in insulation and fireproofing materials, may lead to life-threatening diseases, including lung cancer, to those exposed to it.   Sava knew about the asbestos. Asbestos is now finally being removed.

At the same time, Employees have been working without a raise for the last year and that the company has understaffed causing serious health consequences.  "You shouldn’t have to put a price on resident care," said Randallstown resident Donta Marshall, a nurse’s aide at the facility. "At the end of the day the residents suffer."

It’s all about the proftis.

Sally Hill, a Catonsville resident who has worked the at the company for 38 years, said the company is losing good staff because the pay is not competitive. "It used to be family owned," she said. "It’s not the same anymore."

It’s all about the profits.

Rose Ludwig has worked at the center on for seven years. “The cost of gas and electric has gone up. We’ve gone over a year without a raise.”

It’s all about the profits.

 

 

Another lawsuit involving nursing home owners and operators Murray Forman, Leonard Grunstein, and Rubin Schron.  Forman and Grunstein are accusing Schron of  treating their company as "his personal piggy bank" and looted it for more than $100 million.   Rubin Schron first fattened his piggy bank in 2006, with $40 million that he claimed was repayment of a capital contribution from CAM-Elm Co., his family-owned business that’s majority owner of plaintiff SMV Property Holdings.

Schron took $66 million more in 2008 and 2009 to recoup money he lost in personal investments, including rate swaps with Citibank, shareholders say in New York County Court.  Schron’s eight children were majority owners of CAM-Elm, giving them the right to remove their father from his position, but since they did not, the plaintiffs say, they are suing them too.

"Schron is not content with the substantial economic returns that he, his family, and his companies have "legitimately" earned. Instead, Schron has resorted to theft, improper accounting manipulation, and more, against those who trusted him and relied on him," the complaint states.

Schron has also accused Leonard Grunstein and Murray Forman of "stealing from the company," so they added a defamation charge to the claims of misappropriation.   Of course, truth is the ultimate defense to defamation.

The plaintiffs seek an accounting and $105 million in damages and want Schron booted from his position and new managers appointed.  See full Complaint here.

Yahoo had Omega’s Form 8-K/A filed with the SEC on Jan. 15, 2010.  The form discusses the acquisition of dozens of nursing homes from CapitalSource. 

On December 22, 2009 Omega Healthcare Investors, Inc. ("Omega") acquired certain subsidiaries of CapitalSource Inc. ("CapitalSource") owning 40 long term care facilities (the "Acquired Facilities"), and an option to purchase other CapitalSource subsidiaries owning 63 additional facilities for an aggregate purchase price of approximately $294 million, consisting of: (i) $184 million in cash; (ii) 2,714,959 shares of common stock of Omega, valued at $51 million under the Purchase Agreement; and (iii) assumption of $59 million of mortgage debt.

The Acquired Facilities consist of the following:

1. Airamid Health Management with 998 beds and 9 facilities
2. Community Eldercare Services with 120 beds and 1 facility
3. Conifer Care Communities, Inc. with 120 beds and 1 facility
4. Elite Senior Living with 105 beds and 1 facility
5. Gulf Coast with 815 beds and 6 facilities
6. HMS Holdings with 123 beds and 1 facility
7. Prestige Care with 90 beds and 1 facility
8. Sava Senior Care with 640 beds and 4 facilities
9. Southwest LTC with 260 beds and 2 facilities
10. TenInOne / Delanco Healthcare with 1,516 beds and 10 facilities
11. Trans Healthcare, Inc. with 381 beds and 3 facilities
12. The Waters with 96 beds and 1 facility
 

 

 

 

The Star-Telegram had a story about nursing home employees who stole and embezzled money from the residents at a nursing home.  This is outrageous and it happens quite often.  Taxpayers are the ones who end up paying for these thefts.  The nursing homes should pay more attention to their finances and laws need to be passed that provide for transparency in nursing home financial transactions.

Terry Dean West and Elizandro Valdez Arana pleaded guilty this week to federal felony charges related to their embezzlement of about $42,000 from Medicaid, insurance carriers and a corporation that operated 10 Texas nursing homes including one in Fort Worth.  They pled to making false statements related to health care matters and aiding and abetting in the embezzlement scheme.   There is no reason mentioned why they weren’t charged with embezzlement.

West was working as a financial analyst for the Georgia-based Sava Senior Care Corp. in 2006 when he devised a scheme to embezzle money from Medicaid, private insurance carriers and Sava, which operated 10 Texas nursing homes and dozens of others nationwide.

West’s duties including overseeing the business managers of the Pampa Nursing Center in Pampa and the Arlington Heights Health and Rehabilitation Center in Fort Worth. In that capacity, he was required to refund excess payments to Medicaid, insurance carriers or residents of the centers.  West hired Arana to provide his name and that of an alias to use to cash funds containing the embezzled funds.

West admitted altering patient records to show non-existent credit balances and to create false names and addresses of the parties to whom the refunds should be mailed. He then issued refund checks to those newly created parties and mailed them to a post office box the pair had rented. They cashed the checks for their own use.

The scheme involved altering patient records to show non-existent credit balances and to create false names and addresses where refunds were mailed.

 

Nate Taylor wrote an article for The Coloradoan about a recent verdict for a family against nursing home involving a resident who fell because the nursing home refused to respond to the resident’s call light.   The fall led to her untimely death.  This happens all the time in nursing homes and is a result of understaffing.  The nursing home does not want to pay for adequate and competent staff because it will hurt their profit margins.  The staff becomes overworked and fails to respond to call lights.

While the family says her 87-year-old mother Doris Wolfe’s November 2007 death was the hardest thing she’s had to live through, a close second was the lawsuit her family endured suing Spring Creek Healthcare Center.  "We’re just a little tiny family of four against this huge corporation of nursing homes," Johnson said, referring to Spring Creek Healthcare Center’s parent company, Sava Senior Care. "You would never, ever, ever go through (a lawsuit) for any reason other than somebody had been harmed and you felt like you had to fight that fight. It was brutal."

Sava Senior Care owns at least 185 nursing homes across the country, including Spring Creek and Fort Collins Health Care Center.  They are represented by Lori Proctor.  We had a case against them last November when a resident fell three times in a 24 hour period.  The jury awarded us $200,000 in actual damages and $600,000 in punitive damages. 

Johnson said her mother stayed at Spring Creek for 17 days to rehabilitate following back surgery at Poudre Valley Hospital. Wolfe broke her ankle the day she was supposed to be sent home.

According to an investigation by the Colorado Department of Public Health and Environment, Wolfe may have turned on her call light to request help to go to the bathroom. When Wolfe thought an "extended amount of time passed" and no one answered her request, she opted to try to walk toward her walker on her own and fell and broke her ankle.  Jay Reinan, a Denver lawyer who represented the Wolfe family, said Doris Wolfe did push the button.

"As a result of staffing deficiencies, Mrs. Wolfe was left to decide between soiling herself or attempting to go to the bathroom on her own, and that eventually led to her death," Reinan said. "With a lot of older folks, dignity is important, and that’s what happened to Mrs. Wolfe."

The health department investigation also indicated that Spring Creek X-rayed Wolfe’s ankle and found no fracture, but a family physician looked at the X-ray results and determined it was fractured in two places.

Johnson said she hopes the jury’s decision will lead to changes at the nursing home. "As scary and intimidating as it was, that’s why we did this – for change," Johnson said.