The Department of Justice indicted a selfish and greedy nursing home operator for “equity skimming”. Mark Yampol, according to the indictment, managed and controlled the Rosewood portfolio of nursing facilities in Illinois and Missouri. Yampol faces up to five years in prison if convicted, according to the DOJ.
All but one of those facilities had a mortgage loan insured by the Department of Housing and Urban Development (HUD). Those loans have favorable terms and rates. He went into default on those HUD-backed loans. The government then discovered Yampol used $1.1 million in funds associated with the HUD-insured properties to cover mortgage and operational costs on the non-HUD facility in the portfolio.
The Rosewood portfolio got national media attention last year. The New York Times reported that its owners had defaulted on $146 million in HUD-backed mortgages. This is a record loss for the government’s Section 232 lending program for nursing homes. This will make it harder for nursing homes to get HUD loans in the future.
“The alleged diversion of funds is not only significant in its own right but played a significant role in one of the largest insured claims involving HUD’s Section 232 mortgage insurance program for elderly and disabled residents,” HUD inspector general Rae Oliver Davis said in a statement. “This office remains steadfastly committed to ensuring the integrity of HUD programs and particularly those designed to assist vulnerable populations.”
HUD was forced to take over those facilities earlier this year. The SEC penalized portfolio owner Zvi Feiner with a $1 million fine. It is unclear if they will allow him to continue owning and operating nursing homes. As a nursing home attorney, it sickens me to think that greedy operators are gaming the system. More greedy operators deserve to be indicted.