HUD, Rabbi Zvi Feiner, Lack of Nursing Home Oversight, Who Really Pays for This, Taxpayers.

While HUD is Left Holding the Bag for Approximately $146M in Failed Loans Underwritten for Rabbi Zvi Feiner’s Ponzi Scheme, Some HUD Underwritten Loans Make Nursing Home Owners Supremely Wealthy. 

Taxpayers on the Federal and Local Level Pay for HUD, A Program Intended to Help the Poor and Vulnerable.

WHERE IS THE OVERSIGHT? Social Programs, Government Institutions Need Better Oversight. 

Skilled nursing chain’s collapse leaves HUD holding the bag on $146M

When a nursing home chain collapsed last year, its default on $146 million in loans became the biggest loss in the 60-year-history of a HUD loan-guarantee program, according to a new investigative report.

The New York Times reported Friday on Rosewood Care Centers’ backing by a Department of Housing and Urban Development that insures some 15% of U.S. nursing homes.

While HUD officials told the newspaper the Chicago company’s demise was an “outlier,” the Times outlined a lack of record keeping and oversight around HUD’s nursing home loan insurance program. It has left some worried about its future.

The program helps senior care facilities secure lower-cost loans, promising to cover them if the owners balk. The program now guarantees $20 billion in mortgages for more than 2,300 nursing homes, the Times said.

At Rosewood, owners never filed required financial statements with HUD. Investor Rabbi Zvi Feiner purchased Rosewood and its 13 nursing and assisted living facilities in late 2013.

He has since been sued in connection with Rosewood and other investments, with vendor plaintiffs going after debts and investors claiming misappropriation.

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THE HUD SETTLEMENT AS FOLLOWS:

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Rabbi Zvi Feiner Settles with SEC But, “he won’t be able to satisfy it because…” Where is the Outrage?

People Should Be Outraged, Rabbi Feiner Settles Suit with the SEC; but it is Hard to Imagine any Sense of Remorse Given Comments by his Attorney to Crains

Crain’s Chicago Business reported the below information about the SEC settlement with Rabbi Zvi Feiner and the associates who swindled fellow Jews out of millions. But just to throw salt in the wound, the attorney representing Feiner and FNR, Mr. Ariel Weissberg a respected Chicago attorney, in his comments stated that his client doesn’t have the financial means to pay the SEC fines (or presumably to repay his victims). We wonder how much his attorney is getting paid to have thrown that salt in wounds of Feiner’s victims. This is not intended to in any way malign an attorney who did well by his client.

Should there not be a sense of outrage?

There is something very, very wrong with the statements made by Feiner’s attorney throughout the entire article, but perhaps the last paragraph speaks volumes about the righteous indignant response of the defendant.  The last paragraph in the article reads as follows:

Feiner settled two civil suits, even though one ended in a judgment in his favor, Weissberg said. “It was the right thing to do,” he explained. “In the Jewish Orthodox community, that’s what we aim for. . . .There’s a higher authority that needs to be answered.”

Really? In the Jewish world we should not be committing these crimes at all. There is nothing about this entire incident, lasting years, that reflects “the right thing to do.”

A Rabbi, someone who had the respectability of his community,  should be held to an almost unachievable standard of decency. Rabbi Feiner used the respect of those around him to lure them in and then he financially harmed his investors.

A braggadocios statement saying that the SEC fines will not be met because the Rabbi doesn’t have the financial means (as he apparently spent or repatriated that money to another country) should be leaving everyone with a really sour taste.

It is time that the Orthodox community remove the Hasmachut (Rabbinical Ordination) of those who commit crimes against the Jewish community. If, indeed, we are all looking to the same “higher power.”

Rabbi accused of defrauding Holocaust survivor, other investors settles Ponzi scheme charges

A Chicago rabbi and a business associate settled charges they operated a Ponzi scheme that triggered a $146 million default, the biggest ever for a federally insured loan program for nursing homes. Still at issue is how much the rabbi, Zvi Feiner, will pay.

Feiner, Erez Baver and their Skokie firm, FNR Healthcare, were accused by the Securities & Exchange Commission of defrauding an elderly Holocaust survivor and other members of Chicago’s Orthodox Jewish community. They siphoned off at least $11.5 million raised from 62 or more investors to buy nursing homes and assisted-living facilities throughout the Midwest, according to a complaint filed Sept. 19 in federal court here.

Feiner, 49, is an ordained Orthodox rabbi and sole owner of FNR. Without telling investors in limited liability companies, according to the complaint, he sold facilities owned by other LLCs and used at least $9 million in proceeds to pay other investors and lenders. Baver, 39, is FNR’s executive vice president. He and his company, Cedarbrook Management, received more than $2.5 million for personal use, the filing said.

While Baver and Cedarbrook have agreed to pay back about $2.25 million and a civil penalty to be determined, Feiner and his attorney are negotiating a figure. “It’s going to be a big number,” said Ariel Weissberg, a Chicago attorney representing Feiner and FNR. Whatever it is, Weissberg added, “he won’t be able to satisfy it because he doesn’t have the financial resources.”

Baver’s attorney, Stephen Rosenfeld of McDonald Hopkins’ Chicago office, said he would check with his client before commenting.

Starting in 2010, Feiner solicited funding for 20 LLCs including four cited in the SEC complaint. One of those four, Rosewood Care Centers, operator of a dozen nursing homes and an assisted-living facility in Illinois and St. Louis, was seized last year by the U.S. Department of Housing & Urban Development after defaulting on HUD’s $146 million loan.

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Esformes, Sentenced to 20 Years, Refused Offer of 4-Year Reduction in Exchange for Admission of Guilt and Plans Appeal

In 2016, then-U.S. Attorney Wifredo Ferrer announced a $1 billion Medicare fraud case against Miami Beach healthcare executive Philip Esformes and others at a news conference.

Miami healthcare exec Esformes sentenced to 20 years in biggest Medicare fraud case

Philip Esformes, who once reigned over a healthcare kingdom that made him a super-rich man, was sentenced to 20 years in prison Thursday for paying bribes and receiving kickbacks in a massive $1 billion Medicare fraud case touted by federal prosecutors as the biggest in the nation.

U.S. District Judge Robert Scola said Esformes’ scheme to generate thousands of Medicare patients for his chain of assisted-living and nursing-home facilities in Miami-Dade was “unmatched in our community, if not our country.”

The judge said the taxpayer-funded Medicare program for the elderly and indigent was built on an honor system, and that “Mr. Esformes violated that trust in epic proportions.”

Before Scola issued his punishment, the wealthy Miami Beach business executive sobbed as he apologized to the judge. “I lost everything I loved,” Esformes, 50, said, admitting he was a “broken” man who was “disgusted” by his criminal activity. “I destroyed my marriage. I scarred my three children. There is no one to blame but myself. I accept responsibility for what I have done and regret it.”

Convicted at trial in April of 20 healthcare-related bribery, kickback and money-laundering charges, Esformes gave an emotional 16-minute speech that generally acknowledged his criminal life but also aimed for mercy. He has been held in the Miami federal detention center since his arrest three years ago.

“Your honor, I don’t want this [crime] to be the only legacy I leave behind,” said Esformes, whose lawyers and supporters in the courtroom spoke of his personal and financial charity, especially in the Jewish, medical and academic communities.

Justice Department prosecutor Allan Medina said Esformes not only exploited patients to line his pockets at his chain of 16 assisted-living and skilled-nursing facilities, but “corrupted” the whole Medicare system in his zeal to fill patient beds without providing actual care.

“He corrupted the entire system — the Medicare and Medicaid system,” Medina said. “Philip Esformes had every opportunity. He had wealth, [making] $78 million in 2017. … He has no excuse for what he did. He has no respect for the law. He has no remorse whatsoever.

“He was the boss,” Medina said. “He bullied people to get what he wanted.”

Justice Department prosecutors Medina, Elizabeth Young and James Hayes argued that Esformes had billed $1 billion to the federal health insurance program for questionable services that patients largely didn’t need or even receive between 2006 and 2016. For his sentencing, they estimated the government’s loss at more than $550 million and urged the judge to give Esformes 30 years in prison.

However, one of Esformes’ defense attorneys, Howard Srebnick, argued that the government’s estimated loss to Medicare was grossly inflated. He said the loss was as low as $690,000 and argued for a 10-year sentence.

Scola then cut Esformes a break, saying the loss was between $4.9 million and $8.3 million, which helped reduce the defendant’s potential sentence significantly. Scola called his estimate “highly conservative.”

At a critical juncture before he imposed Esformes’ punishment, the judge seemed willing to lower his final sentence by four years if the defendant agreed to elaborate on his “acceptance of responsibility” in his original statement to Scola. The judge said he would only acknowledge Esformes’ acceptance if he specifically admitted he paid bribes and committed other crimes. But, after Srebnick consulted with counsels Roy Black and Jackie Perczek, Esformes’ legal team chose not to go that route because it would have precluded their appeal of his trial convictions.

“There’s not much more Mr. Esformes will say today about his feelings and remorse,” Srebnick told the judge, arguing he has suffered greatly in federal detention, endured unending shame, and is no longer the arrogant man he was before his arrest.

After the sentencing hearing, Srebnick said Esformes plans to raise critical pre-trial allegations on appeal that had attacked how federal authorities obtained documents and recordings that led to the defendant’s indictment.

“For three years, the government alleged a $1 billion fraud, but today the district judge rejected that grossly exaggerated characterization,” Srebnick told the Miami Herald. “We are optimistic that the [federal] court of appeals will reinstate the magistrate judge’s findings of deplorable prosecutorial misconduct and will vacate the convictions and sentence.”

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Nursing Facilities and Long-Term Hospitals, Dangerously Weak Link in Healthcare – WHERE IS OVERSIGHT?

Drug-resistant germs, including Candida auris, prey on severely ill patients in skilled nursing facilities, a problem sometimes amplified by poor care and low staffing.

Maria Davila lay mute in a nursing home bed, an anguished expression fixed to her face, as her husband stroked her withered hand. Ms. Davila, 65, suffers from a long list of ailments — respiratory failure, kidney disease, high blood pressure, an irregular heartbeat — and is kept alive by a gently beeping ventilator and a feeding tube.

Doctors recently added another diagnosis to her medical chart: Candida auris, a highly contagious, drug-resistant fungus that has infected nearly 800 people since it arrived in the United States four years ago, with half of patients dying within 90 days.

At least 38 other patients at Ms. Davila’s nursing home, Palm Gardens Center for Nursing and Rehabilitation in Brooklyn, have been infected with or carry C. auris, a germ so virulent and hard to eradicate that some facilities will not accept patients with it. Now, as they struggle to contain the pathogen, public health officials from cities, states and the federal government say that skilled nursing facilities like Palm Gardens are fueling its spread.

“They are the dark underbelly of drug-resistant infection,” said Dr. Tom Chiller, who heads the fungal division at the Centers for Disease Control and Prevention, speaking about skilled nursing facilities, particularly those with ventilated patients, but not Palm Gardens specifically.

Such nursing homes are playing a key role in the spread in New York, where 396 people are known to be infected and another 496 are carrying the germ without showing symptoms, according to public health officials. In Chicago, half of patients living on dedicated ventilator floors in the city’s skilled nursing homes are infected with or harboring C. auris on their bodies, said Dr. Allison Arwady, the acting commissioner of the city’s Department of Public Health.

Much of the blame for the rise of drug-resistant infections like C. auris, as well as efforts to combat them, has focused on the overuse of antibiotics in humans and livestock, and on hospital-acquired infections. But public health experts say that nursing facilities, and long-term hospitals, are a dangerously weak link in the health care system, often understaffed and ill-equipped to enforce rigorous infection control, yet continuously cycling infected patients, or those who carry the germ, into hospitals and back again.

They are caldrons that are constantly seeding and reseeding hospitals with increasingly dangerous bacteria,” said Betsy McCaughey, a former lieutenant governor of New York who leads the nonprofit Committee to Reduce Infection Deaths. “You’ll never protect hospital patients until the nursing homes are forced to clean up.”

[Read our other stories in our series on drug resistance, Deadly Germs, Lost Cures.]

The story is far bigger than one nursing home or one germ. Drug-resistant germs of all types thrive in such settings where severely ill and ventilated patients like Ms. Davila are prone to infection and often take multiple antibiotics, which can spur drug resistance. Resistant germs can then move from bed to bed, or from patient to family or staff, and then to hospitals and the public because of lax hygiene and poor staffing.

These issues have also vexed long-term, acute-care hospitals, where patients typically stay for a month or less before going to a skilled nursing home or a different facility.

A recent inquiry by the New York State Department of Health found that some long-term hospitals grappling with C. auris were failing to take basic measures, such as using disposable gowns and latex gloves, or to post warning signs outside the rooms of infected patients. At one unnamed facility, it said, “hand sanitizers were completely absent.”

Officials at the 240-bed Palm Gardens did not respond to repeated requests for comment. Over the past year, the number of patients who were infected with or were carrying C. auris there grew to 38 from six, according to a nurse there and public health officials. The tally has now fallen into the high 20s after some patients died or moved elsewhere.

The New York health department issued a statement in response to queries from The New York Times: “The Department of Health has made controlling the spread of C. auris a high priority and has conducted extensive training and education on infection control policies and procedures for Palm Gardens and other nursing home providers throughout this region. The health and well being of nursing home residents is our primary concern and we take complaints regarding quality of care very seriously.”

Scientific research on nursing homes and drug resistance is sparse, but some recent studies offer evidence of the problem. A study published in June in the Journal of Clinical Infectious Diseases found that patients and residents in long-term care settings have alarmingly high rates of drug-resistant colonization, which means they carry the germs on their skin or in their bodies, usually without knowing it, and can pass them invisibly to staff members, relatives or other patients. Elderly or severely ill people with weakened immune systems who carry the germ are at high risk of becoming infected. (Health officials in New York state said 14 percent of those now infected started out carrying it and then developed symptoms).

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The Nursing Home Business, Harming the Elderly and Most Vulnerable – Absolut and 1 Star, Oversight Needs Improvement

A resident makes his way back to his room at Absolut at Aurora Park nursing home in East Aurora in 2018.  (Robert Kirkham/News file photo)

Orchard Park nursing home closing as owner files for bankruptcy protection

An Absolut nursing home in Orchard Park will close as its owner, Absolut Facilities Management, seeks Chapter 11 bankruptcy petition while it reorganizes, the company announced Wednesday.

Absolut did not announce a date for the closing of its Absolut Center for Nursing and Rehabilitation at Orchard Park, a 202-bed facility with about 185 residents.

The state Health Department on Wednesday approved a closure plan for the Absolut nursing home, said Jeffrey Hammond, a spokesman for the agency.

“The Department of Health will work to ensure that all residents have been placed in other facilities providing the appropriate levels of care, as required by the closure plan,” Hammond said.

The Health Department would not provide The Buffalo News on Wednesday with a copy of the closure plan it approved. Generally, the Health Department requires nursing homes that plan to close to continue operations until the last resident is relocated.

The Orchard Park nursing home is one of the lowest-rated nursing homes in Western New York. It has an overall rating of one star, or much below average, from the federal government. The nursing home has been cited by the Health Department for numerous deficiencies in recent years, but it has not been fined in the past three years.

Absolut, which operates a chain of nursing homes in New York State, and some of its subsidiaries filed for bankruptcy protection Tuesday in New York City, the company announced.

“These actions were taken in an effort to help the company financially reorganize itself and better position itself for the future,” the company said in a news release. “Similar to many other companies that have successfully utilized the Chapter 11 process to restructure their finances, the company expects to emerge from bankruptcy stronger than before.”

Absolut will keep open the company’s other nursing homes – in East Aurora, Gasport, Allegany, Painted Post and Westfield – as well as an assisted living facility in Orchard Park, the company announced.

Absolut’s seven facilities employs 975 people and generate revenues of $83 million, according to its bankruptcy filing. The Orchard Park facility that is scheduled to close has about 234 employees and recorded revenues of $18.1 million in 2018, down from $18.6 million the year before, according to the filing.

Absolut purchased the Orchard Park nursing home, along with other nursing homes in the Buffalo region, in 2007, beginning a wave of local nursing home purchases by investors from the New York City area.

In 2018, Absolut sold four other nursing homes in New York to Personal Healthcare, a downstate chain. Personal Healthcare was operating the former Absolut homes in Dunkirk, Eden, Houghton and Salamanca as it sought Health Department approval.

“As we have seen in recent days with the announcement of the closing of Newfane Hospital, health care generally, and specifically long-term care, faces significant challenges,” said Israel Sherman, CEO of Absolut Care. “We are very confident that we will emerge a much stronger company after these legal proceedings are concluded. It is our expectation that during this process that patient care, our employees and our commitment to excellence will remain our top priority.”

 

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