Kasowitz, on behalf of Nursing Home Property Investors, Secures Key Win against New York State Attorney General

Kasowitz Benson Torres, on behalf of Lifestar Family Holdings and its investors, has prevailed on multiple causes of action following a five-day bench hearing in an enforcement proceeding filed by the Attorney General.  The Attorney General alleged that the respondents, including Lifestar and its investors, engaged in fraudulent conduct through a scheme of “up-front profit taking” by diverting funds from Cold Spring Hills Center for Nursing & Rehabilitation, a Long Island nursing home located on property owned by Cold Spring Realty Acquisition, in which Lifestar is a former investor, for personal profit. 

New York State Supreme Court Justice Lisa Cairo found that the Attorney General had not met its burden on multiple counts of Executive Law § 63(12) and refused to order relief under Executive Law § 63-c (also known as the “Tweed Law”) or common law unjust enrichment.  The Court held that the Attorney General failed to establish its claim for conversion of Medicaid and Medicare Funds, failed to establish that the Lease Agreement was a product of fraud, and failed to establish that the parties engaged in unapproved equity withdrawals in violation of the Public Health Law.  The Court denied the Attorney General’s claims against Lifestar for permanent injunctive relief, $22.6 million in disgorgement, $21.9 million in damages and civil penalties and costs, limiting relief to the repayment of approximately $500,000 in interest received pursuant to a promissory note.

The Kasowitz team representing Lifestar Family Holdings and its investors is led by partner Nicholas A. Rendino and includes associates Joshua E. Roberts and Jillian R. Roffer.