A lawsuit filed in a New York federal court on Wednesday alleges that “fraudulently and illegally” obtained money that was siphoned off from poorly run nursing homes where residents were forced to sit for hours in their own urine and faeces was then used to buy Israeli national flag carrier El Al Airlines.
New York Attorney General Letitia James accuses the owners of the four nursing homes of “repeated and persistent fraud”, including the illegal misuse of more than $83 million in taxpayer money by pocketing Medicaid and Medicare payments.
The nursing homes are operated by Centers for Care, which is co-owned by Kenneth Rozenberg and Daryl Hagler. Rozenberg helped his son Eli buy a controlling stake in El Al Airlines in September 2020 at a cost of $107 million.
The lawsuit alleges that Hagler loaned Rozenberg $103 million to make the El Al purchase from a bank account that had been used for “profits obtained fraudulently and illegally” from the nursing home business.
Rozenberg was loaned the cash at no interest and with no repayment terms or loan documentation, the lawsuit alleges.
Meanwhile, residents at the Rozenberg-owned nursing homes “suffered from severe dehydration, malnutrition, and increased risk of death, developed infections and sepsis from untreated bed sores and inconsistent wound care, sustained life-changing injuries from falls, and died,” Attorney General James alleges.
An investigation led by the Medicaid Fraud Control Unit concluded that Rozenberg and Hagler ‘enriched’ themselves with more than $83 million in Medicaid payments that were meant to be spent on care for the home’s residents.
Attorney General James claims Rozenberg and Hagler used the homes to “extract millions of dollars for their personal use, leading to elderly residents and those with disabilities suffering unconscionable pain, neglect, degradation, and even death.”
“Rather than honor their legal duty to residents to provide the highest possible quality of life, Centers leadership and their associates seized every opportunity to put personal profit over resident care,” AG James continued.
A spokesperson for Centers Health Care said the company “wholeheartedly” denies the allegations and promised to “fight these spurious claims with the facts on our side”.
Eli Rozenberg mounted a bid to take control of El Al in 2020 after the carrier fell into severe financial difficulty because of pandemic travel restrictions. The Rozenbergs won a controlling stake in the airline in September 2020, and the following May, Eli handed control of El Al to his father. Six days later, Hagler also joined El Al’s board of directors.
The lawsuit accuses Rozenberg and Hagler of using a number of schemes to divert $83 million in government funds, including dodgy real estate deals, exorbitant loans, phoney fees and inflated salaries.
James has listed a number of horrifying incidents of resident abuse and neglect at the four homes, including an incident in which an elderly female resident who normally used a colostomy bag had instead been wrapped in a towel filled which was filled with feces.
When the woman’s daughter unwrapped the towel, “she saw her mother’s exposed intestines and the surrounding area covered in feces”, James alleges. Even after staff had finished cleaning up the mess, the woman’s daughter says there was still feces smeared around the wound.
During the pandemic, the lawsuit alleges that the homes failed to ensure proper infection control and 400 residents died in 2020 alone.
Mateusz Maszczynski honed his skills as an international flight attendant at the most prominent airline in the Middle East and has been flying throughout the COVID-19 pandemic for a well-known European airline. Matt is passionate about the aviation industry and has become an expert in passenger experience and human-centric stories. Always keeping an ear close to the ground, Matt's industry insights, analysis and news coverage is frequently relied upon by some of the biggest names in journalism.