New York Attorney General Letitia James is suing Brooklyn and Queens real estate investor Darryl Hagler, accusing him of participating in a nursing home fraud scheme that caused neglect, suffering and even death of residents.
James alleges that Hagler and his business partner Kenneth Rosenberg, co-owner of Centers Health Care, spent more than $83 million in Medicaid and Medicare funds to enrich themselves. Meanwhile, residents of four nursing homes were forced to sit for hours in their own urine and faeces, suffering severe dehydration, malnutrition and an increased risk of death.
The suit also alleges that owners of nursing homes in Queens, the Bronx, White Plains and Buffalo entered into deals that left the homes in debt and forced them to pay inflated rents to companies owned by Hagler.
For example, the Buffalo Center reported to the Department of Health that the annual rent for its facility in 2015 was $600,000. But a few months later, when the Buffalo Center closed its purchase of its facility, Rosenberg signed a new lease with Hagler as the landlord, obliging the facility to pay $2 million in annual rent, compared to the The Ministry of Health reported rents that were 233% higher.
“Rosenberg and Hagler took control of nursing homes through a cooperative model that turned nursing homes into money-making machines,” the attorney general’s office said in a press release announcing the lawsuit on Wednesday.
Hagler could not be reached for comment.
A spokesman for Central Healthcare denied the allegations “wholeheartedly” and said it was “attempting to resolve the matter outside of court”.
“We will counter these false claims with the facts from our side. Beyond that, Center Healthcare does not comment on ongoing litigation,” Center Healthcare Jeffrey Jacobowitz told The real deal.
James is seeking to bar nursing homes from admitting new residents until staffing is increased to appropriate standards. She also seeks to enforce financial and health care monitoring and to have nursing homes reimburse improperly obtained government funds.
Hagler, who lives in Rockland County and is on the board of EL AL, is emerging as an outside dealmaker.
Last year, he purchased a former cigar factory in Astoria for $26.4 million. That same year, he bought the Staybridge Suites 38-59 11th Street in Long Island City for $63 million.
He’s teamed up with Brooklyn developer Isaac Hager on several deals.
At one point, Hagler tried to be a white knight at the Highgate Tilary Hotel in downtown Brooklyn. Hagler is seeking $96.8 million to fund bankruptcy plans for Hagler to keep the hotel. As proof of funds, Hagler showed the court that he had a $39.9 million Charles Schwab account and a $39.6 million Public Bank account. Hagler said he also has $60 million in other business entities he controls. Hager ultimately lost the hotel when it sold it in bankruptcy to Ohana Real Estate in late 2022.
Most recently, Hagler and Hager paid $43 million for a site in Crown Heights, where Bruce Eichner’s Continuum is seeking to build a 1,500-unit residential development. Without rezoning, the developer was able to build a six-story, 293-unit building.
This is familiar stuff for James, who has sued a number of nursing home operators for fraud and negligence.
Notably, she filed a lawsuit against the operators of the 588-bed Cold Spring Hills nursing home in Oyster Bay, Long Island, including Avi Philipson and his father Bent Philipson. Avi Philipson-led group recently completed the acquisition of more than 100 Brooklyn assets from All Year Holdings.
