What a Tangled Web They Weave
Nursing home partners in the ownership and operation of hundreds of nursing homes are fighting and suing each other for the fraud they have perpetuated for the last decade. New York real estate investor and nursing home owner/operator Rubin Schron is suing his partners (in fraud) Troutman Sanders, Leonard Grunstein, and Murray Forman. See Complaint here.
Schron accuses Troutman, Grunstein, and Murray Forman of breaching their fiduciary duties to benefit themselves at Schron's expense, according to this report by Bloomberg. The Am Law Daily reported on federal charges against Schron, Grunstein, and Forman over their involvement in a $50 million kickback scheme with nursing homes and pharmaceutical providers. In February all three reached a $14 million civil settlement with federal prosecutors in Boston.
"This case is about the systemic exploitation by self-interested attorneys and bankers of clients who entrusted them to devise and implement the terms of complex business deals that these defendants arranged and advocated for their clients," states Schron in his 97-page complaint. Grunstein served as principal outside legal adviser to the real estate investor and his companies from the 1980s until late last year. The suit accuses Grunstein of causing "hundreds of millions in dollars of damages" to Schron. Also named as defendants are Grunstein's brother and business associate, Harry Grunstein, and Troutman M&A and project finance partner Lawrence Levinson.
"Grunstein facilitated his tortious conduct by his association with these firms," states Schron's complaint. "Grunstein frequently used their letterhead for his schemes, and he was assisted by the active complicity of several partners, including defendant Levinson. In reward for facilitating Grunstein's misdeeds, these law firms received tens of millions of dollars in legal fees from Schron and the Schron Entities."
The complaint further claims that Grunstein and Forman brought investment opportunities to Schron that they themselves took stakes in without contributing cash or assuming risk. Schron claims that he alone bore the risk from these transactions, with Grunstein and Forman later becoming involved in a series of deals in the nursing home business that drew the attention of federal prosecutors.
The trio have been caught up in a tangle of litigation. Grunstein and Forman filed suit against Schron in March, claiming he misappropriated funds from entities created by the two business partners and failed to keep and maintain audited financial statements. "Underlying all of the claims in this action is Schron's pattern of betraying the trust placed in him," state Grunstein and Forman in their 38-page complaint,. Grunstein and Forman are seeking $100 million in damages from Schron, several of his relatives, and their affiliated holding companies.
