By:
Dave Kingsley
Avocado Post-Acute Care in San Diego is a facility owned by a limited partnership – Eldorado Care Center LP. This facility came to the attention of the media because of a large number of COVID deaths, and a rating of 1 on the CMS Nursing Home Compare website. I was contacted by a reporter for a local PBS station. She was attempting to trace ownership of the facility.
The “indirect ownership interest” (100%) is listed by CMS as the Jacob Graff Living Trust. Living trusts are set up by wealthy individuals for managing and protecting their assets – usually a family’s wealth. I won’t get into the weeds on trusts in this post. Suffice it to say that trusts are financial vehicles for keeping wealth away from the IRS – especially from collection of inheritance taxes. This is a problem because these types of financial machinations are fueling wealth maldistribution. This is the reason I have been advising advocacy organizations to add attorneys and financiers who understand corporate ownership structuring and finance to their boards.
I checked the San Diego County property database and discovered that the building was owned by an LLC. Property records won’t reveal the owner of an LLC – neither will secretary of state business search databases. However, addresses on the documents and Jacob Graff’s signatures revealed that his real estate business is the owner. The market value of the property was assessed at $11 million. Indeed, the long-term care business is far more about real estate than it is long-term care. This property LLC most certainly has a “triple net lease” with Eldorado Care Center LP. Under a triple net lease, the leasees pay taxes, maintenance, and insurance.
Continued searching of records regarding Jacob Graff revealed that he owned four other long-term care facilities in California – all of which were under the umbrella of a real estate property management firm in Beverly Hills, California. Furthermore, on February 14, 2013, McKnight’s reported this: “A federal jury recently assessed penalties of 28.1 million against the former owner of an Illinois nursing home on charges that include Medicare & Medicaid fraud.”
According to the article, the defendant was Jacob Graff. Apparently, this case arose from two nurses who “blew the whistle” for substandard care and fraudulent billing. The nurses were fired to “silence their complaints.”
The facility, Momence Meadows Nursing Center (MMNC) in Kankakee, IL was fined more than $19 million for “filing more than 1,700 false or fraudulent claims to state and federal agencies. “Additional fines were levied because the “worthless services” provided by the nursing home resulted in the government losing more than $3 million.”
How many owners like Jacob Graff can we find among owners of the 15,500 long-term care facilities in the U.S.? That is still unknown. We need to determine that. I keep discovering them as I search through murky ownership structures in the nursing home business.