The state of New York is suing Israeli-American businessman Kenneth Rozenberg, a controlling owner of Israeli airline El-Al, for the alleged misappropriation of $83 million received by their nursing homes - Centers Health Care. With him the State also charged the airline's Deputy Chairman of the Board, Daryl Hagle.
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Rozenberg and Hagler are accused of enriching themselves and their close associates by diverting public funds, including those intended for the welfare of nursing home residents, to purchase assets, including El-Al, while the residents most of whom rely on the government funds, suffered neglect and abuse.
The 316-page lawsuit details how a shortage of staff in the nursing homes contributed to the neglect of residents, including, some suffering from malnutrition or left sitting in their own waste. The filing also claims residents weren’t fed, had their belongings stolen, and their calls went unanswered. One elderly man, who suffered from acute bedsores, contracted an infection, was hospitalized, and subsequently died.
Another elderly woman was denied access to her colostomy bag. Others suffered from dehydration. During the COVID-19 pandemic, the virus spread in the nursing home, resulting in the deaths of over 400 residents. “Residents were left on their own, often unaided and unsupervised, leading to dangerous falls and broken bones. They lived in squalor, surrounded by neglected food trays, vermin and the smell of human waste,” New York’s Attorney General Letitia James said.
“Nursing homes are meant to be safe spaces where the most vulnerable members of our community receive the care and dignity they deserve,” she said. “Instead, the owners of Centers Health Care allegedly used these four nursing homes — and the vulnerable New Yorkers who lived there — to extract millions of dollars for their personal use, leading to elder residents and those with disabilities suffering unconscionable pain, neglect, degradation, and even death.”
According to the charges, in 2020, Hagler transferred $103 million to Rozenberg from a bank account holding funds fraudulently obtained, in order to finance his acquisition of El-Al: “This $103 million loan came, at least in part, from Hagler’s fraudulently and illegally obtained profits from Medicaid-funded nursing homes,” The New York attorney's office said in its filing. “Rozenberg’s investment in El-Al, which ultimately allowed him to become the controlling shareholder of the airline, made possible by his and Hagler’s longstanding pattern of fraud and illegality.”
In the lawsuit, the state demands the company return the money and prohibit the admission of new residents until additional staffing is complete.
The filing came no surprise to anyone paying attention to Rozenberg or had seen reports in American media about his business practices. According to those reports, he had acquired nursing homes for profit, reducing the level of care given to patients.
The allegations were known before the acquisition of El-Al was complete, and the airline's attorney Avigdor Klagsbald had demanded clarifications regarding the $1.65 million paid by Centers Health Care to the U.S. government and the state of New York in 2018 for fraudulent billing practices.
Centers Health Care denies the allegations, "The company prides itself on its commitment to patient care," a spokesperson for Center Health Care said. "Centers denies the New York attorney general's allegations wholeheartedly and attempted to resolve this matter out of court. We will fight these spurious claims with the facts on our side," The spokesperson said in a statement.