The Villages of Orleans: NY Attorney General lawsuit in 2024 alleging fraud and resident neglect

Investigative Fan Out, 20 Questions Answered

We begin this section by answering twenty specific questions regarding the financial diversion and resident neglect at The Villages of Orleans Health and Rehabilitation Center.

1. Who officially owned The Villages of Orleans Health and Rehabilitation Center on paper? Bernard Fuchs appeared as the sole official owner on paper.
2. Which individuals actually controlled the facility operations? David Gast, Sam Halper, and Ephram Lahasky controlled the operations.
3. How much money did the nursing home receive from Medicare and Medicaid between 2015 and 2021? The facility received $86. 4 million from Medicare and Medicaid between 2015 and 2021.
4. What exact amount of taxpayer funds did the ownership syndicate divert? The syndicate diverted $18. 6 million.
5. What percentage of the total operating funds did the diverted money represent? The diverted funds represented 22 percent of the total available operating funds.
6. When did the New York Attorney General file the lawsuit against the facility owners? The New York Attorney General filed the lawsuit on November 29, 2022.
7. Which real estate company bought the property to lease it back to the nursing home? Telegraph Realty LLC bought the property.
8. When was Telegraph Realty LLC formed? The owners formed Telegraph Realty LLC in January 2014.
9. Which administrative company extracted administrative fees from the facility? CHMS Group LLC extracted the administrative fees.
10. How much money did ML Kids Holdings LLC receive in cash transfers? ML Kids Holdings LLC received over $1. 5 million.
11. What specific law did the Attorney General use to sue the owners? The lawsuit used New York Executive Law 63(12).
12. How residents died from COVID 19 at the facility in 2020? Thirty residents died from COVID 19 at the facility in 2020.
13. What happened to the resident admitted in early 2020 with a broken leg? The resident was placed on suicide watch, not checked on, and found dead 20 days later.
14. How much weight did one specific resident lose in three months? One resident lost 60 pounds in three months.
15. What medical condition progressed from Stage II to Stage III for a resident admitted in January 2021? A bedsore progressed from Stage II to Stage III.
16. Did the facility report the suicide watch resident death to the Department of Health? The facility failed to report the death to the New York State Department of Health.
17. What type of monitors did the court appoint to oversee the facility? The court appointed an Independent Health Care Monitor and an Independent Financial Monitor.
18. Did the staff have enough supplies to keep residents clean? Staff members used their own money to buy soap for the residents.
19. How beds does The Villages of Orleans Health and Rehabilitation Center have? The facility operates 120 beds.
20. Where is the facility located? The facility is located in Albion, New York.

The $18. 6 Million Medicaid Diversion

Between January 2015 and December 2021, The Villages of Orleans Health and Rehabilitation Center received $86. 4 million in Medicare and Medicaid funding. Taxpayers provided these funds to ensure the 120 bed facility in Albion, New York, delivered proper medical care, nutrition, and safe living conditions for its elderly and disabled residents. The New York Attorney General filed a lawsuit on November 29, 2022, detailing how the facility operators diverted $18. 6 million of those funds into their own pockets. The diverted money equaled 22 percent of the total operating budget. The operators extracted this wealth while residents suffered from severe understaffing, malnutrition, and untreated medical conditions. Within four months of the ownership group taking over the facility, the Centers for Medicare and Medicaid Services rating plummeted from 3 stars to 1 star.

The Ownership Syndicate and the Front Man

The official paperwork submitted to the New York State Department of Health listed Bernard Fuchs as the sole owner of the facility. The Attorney General investigation proved Fuchs played a minimal role in the actual operations. During sworn testimony, Fuchs stated he intended to be a minority shareholder temporarily agreed to be listed as the sole buyer to smooth the approval process. Fuchs testified he never visited the facility and was unaware he remained the sole official owner until regulators contacted him regarding infection control violations.

Undisclosed owners David Gast, Sam Halper, and Ephram Lahasky controlled the nursing home. The syndicate included family members and business associates such as Gerald Fuchs, Tova Fuchs, Joel Edelstein, Israel Freund, Benjamin Landa, Joshua Farkovits, Teresa Lichtschein, and Debbie Korngut. Landa is known as the founder and chief executive of Sentosa Care, one of the largest nursing home chains in the state. The group of twelve investors purchased the facility from Orleans County in 2014 and immediately began structuring a network of shell companies to extract Medicaid funds.

The Financial Scheme and Shell Companies

The syndicate executed the financial diversion through specialized limited liability companies. In January 2014, the group formed Telegraph Realty LLC. One year later, Telegraph Realty LLC purchased the real estate beneath the nursing home. The operators then forced the nursing home to pay exorbitant rent to Telegraph Realty LLC. In their 2014 application to the state, the owners claimed lease payments would be just over $1 million per year. By 2020, financial filings showed Telegraph Realty LLC collected $2. 7 million in rent and kept $1. 6 million as profit, representing a 59 percent profit margin. The nursing home paid over $15. 7 million to Telegraph Realty LLC during the investigated period.

The operators also created CHMS Group LLC to extract administrative fees from the facility. The nursing home paid $1, 534, 856 to CHMS Group LLC for purported management services, including accounting and payroll. Another entity named ML Kids Holdings LLC, controlled by Ephram Lahasky, received over $1. 5 million in cash transfers from Telegraph Realty LLC. The operators prioritized these payments over hiring qualified medical staff and purchasing basic supplies.

Visualizing the Financial Diversion

The chart illustrates the total taxpayer funds received versus the amount siphoned by the ownership syndicate between 2015 and 2021.

The Human Cost of Financial Extraction

The extraction of $18. 6 million directly caused severe understaffing at the facility. The operators cut staffing hours to maximize their profit margins. The absence of qualified nurses and aides resulted in documented neglect. Court records show days where the facility had no nurse on duty and residents received no medication. Underpaid staff members used their own money to buy soap to keep the residents clean.

The Attorney General lawsuit detailed specific cases of resident suffering. In early 2020, a woman admitted for rehabilitation of a broken leg began refusing food and medication. An external psychological consultant determined she was at high risk for self harm and ordered staff to check on her every 30 minutes. The facility failed to monitor the woman. Staff found her dead 20 days later. The facility operators did not report her death to the New York State Department of Health.

Another resident admitted in January 2021 arrived with a Stage II bedsore on her lower back. The facility failed to provide proper wound care. By June 2021, the resident developed two Stage III bedsores. A different resident lost 60 pounds in three months due to the absence of nutritional monitoring. The operators forced sick employees to continue working and failed to provide adequate masks and gloves.

State and Federal Citations

The facility faced severe penalties for its operational failures. During a May 9, 2020 inspection, state health inspectors observed staff members passing breakfast trays and providing hands on care without wearing personal protective equipment. Certified nursing aides and licensed practical nurses entered the rooms of residents infected with COVID 19 and then walked directly into the rooms of uninfected residents. Thirty residents died from COVID 19 at the facility in 2020.

Based on the May 2020 inspection, the federal government issued a $66, 632 fine against the facility. At the time, this represented the largest penalty for a nursing home in New York State for COVID 19 violations. The state Department of Health also fined the facility $20, 000 in September 2020 for the same violations. Inspectors noted that nursing home employees did not receive education on infection control policies.

Legal Accountability and State Intervention

Attorney General Letitia James filed the lawsuit under New York Executive Law 63(12). This statute allows the state to seek injunctions against businesses engaging in repeated fraudulent or illegal acts. The lawsuit sought to remove David Gast, Sam Halper, and Ephram Lahasky from their managerial roles. The state also petitioned the court to prohibit the facility from admitting new residents until staffing levels met appropriate standards.

The state demanded the operators return the $18. 6 million in misappropriated funds. Following the lawsuit, the court appointed an Independent Health Care Monitor and an Independent Financial Monitor to oversee the facility operations. The monitors ensure the facility maintains proper staffing levels, provides adequate medical care, and stops the diversion of Medicaid funds to shell companies. In a separate legal action, the United States District Court for the Western District of Pennsylvania indicted Sam Halper and CHMS Group LLC in August 2022 for staffing falsifications and Medicare reimbursement fraud at other facilities. The legal proceedings in New York remain active as the state pursues full restitution for the taxpayers and justice for the neglected residents.

The Special Focus Facility Program Mechanics

The Centers for Medicare and Medicaid Services operates the Special Focus Facility program to identify the poorest performing nursing homes in the United States. The program report facilities with a history of serious quality problems. Regulators look for homes that accumulate twice the average number of deficiencies. The national average sits at six to seven deficiencies per standard health inspection. Regulators select candidates based on three years of inspection data.

Once selected, a facility faces inspections every six months. The facility must show sustained improvement over two consecutive standard health surveys to graduate. A facility must record 12 or fewer deficiencies at a scope and severity level of E or lower to pass. If a facility fails to improve, regulators can terminate its Medicare and Medicaid funding.

Orleans County Facilities Evading Decertification

Orleans County contains a small cluster of nursing homes. Multiple facilities in this region appeared on the federal radar between 2015 and 2025. The Villages of Orleans Health and Rehabilitation Center in Albion and Orchard Rehabilitation and Nursing Center in Medina both faced severe regulatory scrutiny.

The Villages of Orleans Health and Rehabilitation Center

The Villages of Orleans Health and Rehabilitation Center received a one star rating from the Centers for Medicare and Medicaid Services in April 2015. This rating is the lowest possible score. The facility became a Special Focus Facility candidate. Regulators eventually placed the 120 bed facility on the official Special Focus Facility list.

The New York Attorney General filed a lawsuit against the owners in November 2022. The lawsuit detailed severe resident neglect. Regulators found that residents sat in their own waste for hours. Residents suffered malnourishment and dehydration. The facility failed to report the death of a resident to the New York State Department of Health. An outside psychology consultant had ordered checks every 30 minutes for this resident due to self harm risks. The staff failed to monitor the resident. The resident was found dead 20 days later.

Even with these severe findings, the owners managed to graduate from the Special Focus Facility program. In November 2023, defense attorneys stated in court that the facility had graduated from the program and was operating within state averages. The facility evaded federal decertification. The owners used the graduation status to fight the Attorney General request for independent health and financial monitors.

Orchard Rehabilitation and Nursing Center

Orchard Rehabilitation and Nursing Center in Medina also struggled with severe regulatory problems. The facility appeared on the Special Focus Facility candidate list. In September 2019, advocacy groups flagged Orchard Rehabilitation as one of the most poorly performing nursing homes in New York. The facility held a one star rating.

During the 2020 pandemic, Orchard Rehabilitation experienced a severe outbreak. The facility received a much report average rating on the federal database. In February 2021, the New York State Department of Health fined Orchard Rehabilitation $22, 000. The state found infection control violations. The facility allowed employees to work shifts exceeding 12 hours. This practice violated state infection control mandates. Yet, the facility remained open and continued to receive federal funding.

Medina Memorial Hospital Skilled Nursing Facility

Medina Memorial Hospital Skilled Nursing Facility also operates in Orleans County. The state health department listed this facility in the report quintile of poorly performing nursing homes in multiple annual reports. The facility received a one star rating from the federal government. The continuous presence of multiple one star facilities in a single rural county demonstrates a regional emergency in long term care. Residents in Orleans County have few options. They must choose between facilities that consistently fail to meet federal safety standards.

The Financial Motivation to Evade Decertification

Nursing home operators face a strong financial incentive to avoid decertification. Decertification means losing Medicare and Medicaid funding. These federal programs provide the vast majority of revenue for long term care facilities.

The Villages of Orleans received $86. 4 million in Medicare and Medicaid funding between 2015 and 2021. The owners diverted $18. 6 million of this funding to themselves and related companies. If the Centers for Medicare and Medicaid Services had decertified the facility, this revenue stream would have stopped.

Operators use the Special Focus Facility graduation criteria to their advantage. The program requires two consecutive surveys with 12 or fewer minor deficiencies. Facilities frequently implement temporary fixes to pass these specific surveys. Once they graduate, the intense regulatory scrutiny ends. The facility can then revert to operating with minimal staff and resources.

Federal regulators acknowledge this pattern. The Centers for Medicare and Medicaid Services notes that report facilities show a fluctuating compliance history. These facilities correct problems just long enough to pass an inspection. The underlying widespread problems remain unresolved.

Revisions to the Special Focus Facility Program

In January 2026, the Centers for Medicare and Medicaid Services revised the Special Focus Facility selection criteria. The agency shifted the focus from staffing levels to the prevalence of resident falls. The Office of Inspector General found that nursing homes failed to report 43 percent of falls resulting in major injury and hospitalization among Medicare enrolled residents.

This policy shift drew criticism from patient advocates. Advocates state that staffing levels are the most reliable predictor of nursing home quality. Removing staffing as a primary selection factor allows understaffed facilities to evade the Special Focus Facility list.

The New York Attorney General lawsuit against The Villages of Orleans highlighted chronic understaffing. The facility provided only 0. 3 hours of registered nurse care per patient per day. This figure falls far report the state average. If regulators focus primarily on reported falls, facilities with severe staffing deficits might avoid federal intervention.

Verified Deficiency Data for Orleans County Facilities

The following table presents verified deficiency data and regulatory actions for Orleans County nursing homes between 2015 and 2025.

Multi Colored Chart: Medicare Funding vs Diverted Funds

widespread Failure in Regulatory Oversight

The evasion of federal decertification by Orleans County facilities exposes a severe flaw in the regulatory framework. The Centers for Medicare and Medicaid Services relies heavily on self reported data and scheduled inspections. Operators anticipate these inspections. They adjust staffing levels temporarily to pass the survey.

The New York Attorney General lawsuit revealed that the owners of The Villages of Orleans manipulated the system. They hid their true ownership structure from the New York State Department of Health. Bernard Fuchs appeared as the sole owner on paper. David Gast, Sam Halper, and Ephram Lahasky actually controlled the operations. This hidden ownership structure allowed the syndicate to extract millions of dollars through related party transactions. They paid exorbitant rent to Telegraph Realty LLC and excessive consulting fees to CHMS Group LLC. Both companies were controlled by the same individuals.

This financial extraction directly caused the severe deficiencies at the facility. The owners cut staffing to increase their personal profits. The facility operated with a meager 0. 3 hours of registered nurse care per patient per day. The state average is significantly higher. This severe understaffing led directly to resident harm.

Yet, the facility graduated from the Special Focus Facility program. The graduation criteria only require two consecutive surveys with minor deficiencies. The program does not require a forensic audit of the facility finances. It does not require continuous monitoring of staffing levels. This regulatory blind spot allows operators to extract millions of dollars while providing substandard care.

The Human Cost of Regulatory Evasion

The human cost of this regulatory evasion is severe. Residents at The Villages of Orleans suffered severe neglect while the facility navigated the Special Focus Facility program. The Attorney General lawsuit documented horrific conditions. Staff failed to provide basic hygiene care. Residents sat in soiled diapers for extended periods.

In one documented case, a resident suffered a seizure. The staff did not know how to respond. The mother of the resident had to post seizure instructions on the wall of the room. The mother spent months trying to transfer her child to a different facility. She report succeeded in April 2022.

Another resident required checks every 30 minutes due to a high risk of self harm. The facility failed to conduct these checks. The resident died 20 days later. The facility then failed to report the death to the state health department.

These incidents occurred while the facility was under federal scrutiny. The ability of the facility to graduate from the Special Focus Facility program even with these events shows a complete failure of the regulatory system. The program measures compliance on the day of the inspection. It fails to measure the daily reality of the residents.

The Role of Related Party Transactions

Related party transactions play a central role in the financial extraction scheme. Operators create a network of limited liability companies. They use these companies to siphon money out of the nursing home.

At The Villages of Orleans, the owners formed Telegraph Realty LLC in January 2014. They used this company to buy the real estate under the nursing home. They then charged the nursing home exorbitant rent. In 2020 alone, Telegraph Realty netted $1. 6 million in profit. This represents a 59 percent profit margin.

The owners also formed CHMS Group LLC in January 2015. They used this company to provide administrative services to the nursing home. They charged the nursing home excessive fees for these services.

These related party transactions drain money from the operating budget. The facility then operates without the funds to hire adequate staff. The resulting understaffing leads to resident neglect.

The Centers for Medicare and Medicaid Services does not heavily scrutinize related party transactions during the Special Focus Facility graduation process. The agency focuses primarily on clinical indicators during scheduled inspections. This narrow focus allows operators to continue their financial extraction schemes while technically complying with the graduation criteria.

The Push for Increased Transparency

Advocacy groups demand increased transparency in nursing home finances. The Long Term Care Community Coalition states that operators hide profits while claiming razor thin margins. The coalition points to the New York Attorney General lawsuits as evidence of widespread fraud.

In October 2025, the Office of Inspector General recommended that the Centers for Medicare and Medicaid Services incorporate ownership information when selecting Special Focus Facilities. The agency recommended using this data to identify patterns of poor care across multiple facilities owned by the same individuals. The Centers for Medicare and Medicaid Services rejected this recommendation.

This refusal to track ownership patterns allows bad actors to continue operating. Individuals who extract millions of dollars from one failing facility can simply purchase another facility. They can repeat the same scheme without facing federal intervention.

The New York Attorney General has taken the lead in prosecuting these cases. The state has filed multiple lawsuits against nursing home operators for financial fraud and resident neglect. These lawsuits target the hidden ownership structures and the related party transactions. They seek to recover the diverted funds and impose independent monitors on the facilities.

The federal regulatory system must adapt to these complex financial schemes. The Special Focus Facility program must evolve beyond scheduled clinical inspections. It must incorporate forensic financial audits and continuous staffing monitoring. Until these changes occur, facilities like The Villages of Orleans continue to evade decertification while extracting millions of taxpayer dollars.

NYS Health Profiles Discrepancies. Analyzing Unreported Staffing absence Across detailed at Orleans LLC Operations

New York Attorney General Letitia James filed a lawsuit against detailed at Orleans LLC. The company operates The Villages of Orleans Health and Rehabilitation Center in Albion. The 120 bed facility receives Medicare and Medicaid funding. The lawsuit details a financial scheme where owners diverted $18. 6 million into their personal accounts. This amount represented more than 20 percent of the facility operating budget. The owners used related companies like Telegraph Realty LLC and CHMS Group to extract the funds. The financial extraction directly caused severe personnel deficits.

RN Staffing Minutes Per Resident Per Day 0 25 50 15 The Villages 42 NY Average

The Centers for Medicare and Medicaid Services assigns the facility a 1 star in total rating. The health inspection rating also sits at 1 star. Staffing data reveals serious deficits in daily care. Registered nurse staffing hours per resident per day average 15 minutes at the facility. The New York state average is 42 minutes. Total nurse staffing hours per resident per day reach 3. 38 hours. The state average is 3. 7 hours.

The New York State Department of Health fined the facility $10, 000 for medication errors in 2024. The lawsuit documents instances where staff members were forced into roles without proper training. Residents suffered untreated conditions and falls due to the absence of adequate personnel. The legal action seeks to remove owners David Gast, Sam Halper, and Ephram Lahasky from their managerial roles. The state also aims to block new admissions until the facility meets required staffing levels.

Medicare Nursing Home Compare Metrics

The Centers for Medicare and Medicaid Services tracks nursing home performance through a standardized rating system. The federal agency evaluates health inspections, staffing levels, and quality measures to assign an in total score between one and five stars. A one star rating indicates performance much report average. A five star rating indicates performance much above average. Between January 1, 2015, and December 31, 2025, federal regulators recorded severe declines in care quality across specific facilities in Western New York.

The Villages of Orleans Health and Rehabilitation Center held a three star rating under county ownership prior to 2015. Four months after the private ownership syndicate purchased the facility in January 2015, the federal rating dropped to one star. The facility maintained this lowest possible rating for the report decade. State and federal records document serious infection control failures, staffing absences, and resident neglect during this period.

Special Focus Facility Classification and Infection Control Fines

Federal regulators place nursing homes with a history of serious quality problems into the Special Focus Facility program. The Centers for Medicare and Medicaid Services classified The Villages of Orleans as a Special Focus Facility from March 2021 to April 2022. This classification applies to facilities that demonstrate a continuous pattern of serious problems and resident harm. Inspectors documented multiple health and safety violations during this timeframe.

Poor infection control resulted in federal financial penalties. In March 2021, the Centers for Medicare and Medicaid Services fined The Villages of Orleans $66, 632 for safety violations. Facility management failed to implement basic infection control measures during the COVID 19 pandemic. State investigators found that operators hid infection data from regulators and failed to screen staff members for illness. Employees worked while sick, and the facility delayed its response to the virus. These administrative decisions directly endangered the resident population.

Regional Nursing Home Performance Comparison

An analysis of Medicare Nursing Home Compare metrics reveals a clear divide in facility performance across Western New York. The following list details the federal ratings and regulatory actions for several regional nursing homes between 2015 and 2025.

The Villages of Orleans Health and Rehabilitation Center

Located in Albion, New York, this 120 bed facility holds a one star in total rating. The federal agency assigns the facility one star for health inspections and two stars for staffing. Regulators classified the home as a Special Focus Facility in 2021. The facility received a $66, 632 federal fine for poor infection control. State investigators documented instances where residents sat in soiled clothing for hours and suffered from untreated bed sores.

Buffalo Center for Rehabilitation and Nursing

Located in Erie County, this facility also holds a one star in total rating from the Centers for Medicare and Medicaid Services. Federal inspectors penalized the nursing home for brazen safety violations during a focused inspection in 2020. Employees entered the rooms of infected patients and then entered the rooms of uninfected residents without changing personal protective equipment. The federal government issued a substantial fine against the facility for these infection control failures. Management failed to enforce social distancing and proper mask usage among staff members.

Ellicott Center for Rehabilitation and Nursing

Located in Buffalo, New York, this facility maintains a one star federal rating. The nursing home shares management ties with other low performing facilities in the region. Federal data shows performance much report average in health inspections and quality measures. The facility struggles with staffing retention and consistent patient care delivery.

Medina Memorial Hospital Skilled Nursing Facility

Located in Medina, New York, this 30 bed facility provides a direct contrast to the low performing homes in the region. The Centers for Medicare and Medicaid Services awards Medina Memorial Hospital an in total rating of five stars. The facility earns five stars for health inspections and four stars for staffing. The high ratings reflect consistent compliance with federal safety regulations and adequate staff to resident ratios.

Staffing Hours and Patient Care Metrics

Federal payroll data highlights the direct relationship between staffing hours and facility ratings. The Villages of Orleans provides approximately 3. 25 hours of total nursing care per resident per day. This metric falls report the state average. Registered nurse coverage at the facility averages 0. 3 hours per resident per day. The absence of adequate nursing staff correlates directly with the high rate of health inspection violations.

The New York Attorney General lawsuit attributes the low staffing levels to deliberate financial decisions by the ownership syndicate. The operators cut staffing to increase personal profits. This financial strategy resulted in a dangerous environment for residents. Witnesses reported overnight shifts where only four employees cared for 120 residents. Even with these low staffing numbers, the owners prioritized new resident admissions to drive up revenue.

Staff Turnover and Agency Reliance Metrics

Federal payroll records expose severe instability within the nursing staff at The Villages of Orleans. The facility reports a nursing staff turnover rate of 70 percent. This figure significantly exceeds the Rochester area average of 52. 1 percent. High turnover rates disrupt the continuity of care and prevent staff members from developing familiarity with resident medical needs. The constant churn of employees contributes directly to the low quality measures recorded by federal inspectors.

To compensate for the absence of permanent staff, the facility relies heavily on temporary agency workers. The Centers for Medicare and Medicaid Services reports that The Villages of Orleans uses agency staff for 47. 3 percent of its nursing hours. The regional average for agency staff usage sits at just 3. 1 percent. Temporary workers frequently absence training on specific facility procedures and resident care plans. This extreme reliance on contract labor increases the risk of medication errors and missed treatments.

The financial data explains this staffing instability. The ownership syndicate diverted millions of dollars away from operations. Management suppressed wages and benefits for permanent employees. Experienced nurses left the facility for better working conditions elsewhere. The operators then paid premium rates to staffing agencies to meet minimum legal requirements. This strategy drained facility resources while failing to improve the one star federal rating.

Health Inspection Citations and Quality Measures

The health inspection domain of the federal rating system carries the most weight in determining the in total star rating. The Villages of Orleans maintains a one star rating in this specific category. State health department surveyors conduct unannounced inspections to evaluate compliance with federal safety rules. Between 2015 and 2025, inspectors recorded numerous severe violations at the Albion facility.

Surveyors documented instances where the facility failed to shield residents from abuse and neglect. Inspectors found gaping bed sores that went untreated for weeks. Medical records showed that staff members administered unnecessary medications, resulting in chemical restraint and medical toxicity. The facility failed to monitor residents at high risk for falls, leading to avoidable physical injuries. These documented violations form the basis of the one star health inspection rating.

Quality measures track clinical outcomes for the resident population. The Villages of Orleans holds a two star rating in this category. The data shows high rates of resident weight loss, decline in mobility, and the development of new pressure ulcers. The facility performs much report average in preventing hospital readmissions. When residents suffer from dehydration or sepsis due to poor care, emergency medical services transport them to local hospitals. These emergency transfers negatively impact the federal quality measure scores.

Five Year CMS Rating Trajectory Chart

The following chart illustrates the federal rating trajectory for regional facilities. The data reflects the in total star ratings assigned by the Centers for Medicare and Medicaid Services.

The data confirms a continuous pattern of low performance at facilities owned by private syndicates. The Villages of Orleans and the Buffalo Center for Rehabilitation and Nursing both received one star ratings and faced federal fines for poor infection control. Medina Memorial Hospital Skilled Nursing Facility operates under a different ownership model and maintains a five star rating. The contrast in ratings shows the direct impact of ownership decisions on patient care quality.

Regulatory Oversight and Enforcement Actions

The New York State Department of Health and the Centers for Medicare and Medicaid Services share responsibility for nursing home oversight. Federal law requires facilities to maintain sufficient staff to meet the physical and mental needs of every resident. The one star ratings at The Villages of Orleans and neighboring facilities indicate a broad failure to meet these federal standards.

State investigators found that operators at The Villages of Orleans submitted incomplete or misleading information to the health department. The facility management hid the true ownership structure and the extent of the COVID 19 outbreak. The health department failed to verify the submitted data. This regulatory blind spot allowed the facility to continue operating with dangerous staffing levels and poor infection control measures.

The Attorney General lawsuit seeks to compel the owners to return all fraudulently received funds. The state also demands the appointment of a financial monitor to stop the self dealing and a healthcare monitor to improve patient care. The lawsuit requests an order to stop The Villages of Orleans from admitting new patients until conditions improve. These enforcement actions aim to correct the severe deficiencies documented in the federal rating system.

Impact of Infection Control Failures on Resident Mortality

The failure to implement basic infection control measures had fatal consequences for nursing home residents in Western New York. At The Villages of Orleans, the delayed response to the COVID 19 pandemic and the absence of staff screening led to widespread infection. State records show that the facility underreported the number of resident deaths. The operators prioritized financial extraction over the purchase of adequate personal protective equipment.

Similar failures occurred at the Buffalo Center for Rehabilitation and Nursing. The facility lost multiple patients to the virus while staff members ignored basic safety rules. The federal fines levied against these facilities represent a fraction of the total revenue collected from Medicare and Medicaid. The financial penalties failed to incentivize meaningful improvements in patient care or staffing levels.

The federal rating system provides a clear metric for evaluating nursing home quality. The consistent one star ratings at The Villages of Orleans and other regional facilities reflect a decade of documented neglect. The data shows that private ownership syndicates frequently extract maximum profit while delivering the lowest possible quality of care. The resulting infection control failures and staffing absences directly endanger the lives of elderly residents.

The Anatomy of the Telegraph Realty LLC Rent Extraction

The operating entity for the Albion nursing home executed a calculated financial extraction using a separate real estate holding company. State investigators identified Telegraph Realty LLC as the primary vehicle for diverting taxpayer funds away from resident care. The operators formed Telegraph Realty LLC in January 2015 to purchase the physical property beneath the nursing home. The operating entity then executed a lease agreement with Telegraph Realty LLC. This arrangement allowed the operators to pay themselves artificially high rent using Medicare and Medicaid funds.

Financial records from the New York Attorney General show the immediate impact of this real estate transaction. Prior to the 2015 acquisition, the facility allocated approximately 5. 5 percent of its total expenses to depreciation, leases, and rentals. Following the purchase, the operators increased this allocation to over 20 percent. Between January 1, 2015, and June 30, 2022, the nursing home paid more than $15. 75 million to Telegraph Realty LLC. The operators distributed these funds among themselves as upfront profit while the facility experienced severe staffing reductions.

The Department of Health regulations mandate that nursing homes submit Medicaid claims for reimbursement only for services provided in compliance with Title 18 of the Official Compilation of Codes, Rules and Regulations of New York State. The operators bypassed these regulations by funneling the money through the real estate holding company. The state investigation confirmed that Telegraph Realty LLC owned no other properties. The rent payments from the Albion nursing home served as its sole significant source of revenue. The operators created the company entirely to extract the Medicaid and Medicare funds.

The state investigation revealed that the operators filed false cost reports with the Department of Health. These reports misrepresented the amounts certified to have been spent on resident care. The operators failed to seek approval from the Department of Health for transfers from the nursing home in excess of legal limits. The New York Attorney General identified these actions as violations of Public Health Law 2808. The operators concealed the true nature of the lease agreement to maintain the flow of taxpayer funds into Telegraph Realty LLC.

The CHMS Group and ML Kids Holdings LLC Funnel

The financial diversion extended beyond real estate payments. The operators established CHMS Group LLC in January 2015 to provide administrative services to the nursing home. The facility paid CHMS Group LLC for accounting, insurance billing, and payroll services. State records indicate that David Gast, Sam Halper, and Ephram Lahasky controlled CHMS Group LLC. The payments to CHMS Group LLC functioned as another channel to extract operating funds from the facility.

The operators also utilized ML Kids Holdings LLC to receive cash transfers. ML Kids Holdings LLC is a Delaware corporation formed in 2018. State investigators traced over $1. 5 million in cash distributions from Telegraph Realty LLC directly to ML Kids Holdings LLC. Ephram Lahasky controlled this holding company. The New York Attorney General identified these transfers as part of a deliberate strategy to move Medicaid and Medicare funds out of the nursing home and into private accounts.

The state identified multiple individuals who received direct financial benefits from these holding companies. Gerald Fuchs, Tova Fuchs, Joel Edelstein, Israel Freund, Joshua Farkovits, Teresa Lichtschein, and Debbie Korngut received varying amounts of cash transfers. The state documented individual payouts ranging from $589, 000 to $1. 58 million. These individuals extracted these funds directly from the Medicare and Medicaid reimbursements intended for the Albion facility.

A Statewide Pattern of Interlocking Corporate Structures

The financial tactics observed in Albion mirror identical strategies deployed at other New York nursing homes. The New York Attorney General filed similar lawsuits against Fulton Commons Care Center in East Meadow and Cold Spring Hills Center for Nursing and Rehabilitation in Woodbury. The operators of these facilities utilized related real estate companies to extract massive profits through artificially high rent payments.

At Fulton Commons, the operators received $105. 8 million in Medicare and Medicaid funding between January 1, 2018, and December 31, 2021. The facility spent only $47. 3 million on direct resident care. The operators paid $34. 4 million in rent to Fulton Realty A. State investigators determined this amount far exceeded actual property expenses. The owners pocketed $14. 9 million through these fraudulent rent payments. The rent at Fulton Commons registered between 13 percent and 20 percent higher than the New York State average.

The Fulton Commons investigation uncovered additional financial schemes. Moshe Kalter served as the principal owner of the facility. He paid fraudulent salaries to his eight adult children. Each child held a one percent ownership stake in the nursing home. They received these salaries for no show jobs at the facility. The state secured an $8. 6 million settlement with Fulton Commons in March 2024. The facility pleaded guilty to criminal charges and paid a $5, 000 fine.

Cold Spring Hills operators executed a similar extraction. The New York Attorney General found that the operators diverted over $22. 6 million in public health funds. The facility paid more than $15. 3 million in fraudulent rent to Cold Spring Realty. The operators utilized 13 distinct companies to create the appearance of legitimate business expenses. The state lawsuit detailed how these payments enriched the owners while the 588 bed facility suffered from severe understaffing.

The Cold Spring Hills investigation documented specific deceptive practices. The operators paid $5. 2 million to shell entities for supposed consulting services. They engaged in a $2 million fraudulent promissory note scheme with a 13 percent interest rate when they purchased the facility. State records show that operator Bent Philipson exercised his Fifth Amendment right against self incrimination 685 times during the investigation. A state judge later ordered Cold Spring Hills to pay $2. 65 million to ensure staff members continued to receive healthcare benefits.

Industry Wide Related Company Transactions

The financial structures utilized by Telegraph Realty LLC represent a broader pattern within the New York nursing home industry. The Empire Center for Public Policy published a report in July 2022 detailing the volume of these financial maneuvers. The report found that New York nursing homes paid $1. 1 billion to related companies in 2020. These related companies reported an aggregate profit margin of 19. 5 percent.

The Empire Center data shows that rent payments constituted the majority of these transfers. Nursing homes directed $607 million to related real estate companies in a single year. The state health department failed to verify the lease arrangements reported by the facilities. The operators repeatedly misstated or withheld information regarding the true owners of the real estate entities. State officials missed the financial diversion because they did not audit the cost reports submitted by the nursing homes.

Comparative Analysis of Rent Diversion Schemes

Violations of Public Health Law and Executive Law 63

The New York Attorney General utilized Executive Law 63 to prosecute the operators. This statute authorizes the state to seek injunctive relief when an individual or entity engages in repeated fraudulent conduct. The state defined the collusive lease agreements as a deliberate artifice to defraud the Medicaid program. The operators violated state regulations by engaging in unacceptable practices regarding public health funds.

The legal filings specify that the operators entered into a mortgage scheme to saddle the nursing home with debt. This debt bolstered their equity holdings without providing any benefit to the residents. The state documented that the operators prioritized their personal financial returns over the legal duty to provide required care and staffing. The operators maintained this financial structure while the facility failed to follow care plans, manage medications, or provide nutritional support.

The Financial Impact on Direct Care

The extraction of operating funds directly degraded the quality of care at the Albion facility. The Centers for Medicare and Medicaid Services assigned the facility a three star rating when Orleans County owned the property. The federal agency downgraded the facility to a one star rating in April 2015. This downgrade occurred exactly four months after the private operators purchased the nursing home and implemented the Telegraph Realty LLC lease agreement.

The operators prioritized real estate payments over staffing requirements. The New York Attorney General reported that the operators failed to reinvest the extracted funds to improve the building or enhance resident care. The facility experienced a constant drive to admit new residents to generate additional Medicare and Medicaid revenue. The operators simultaneously refused to hire sufficient staff to care for the increased population. The financial data confirms that the operators protected their profit margins through the real estate holding company while the nursing home failed to meet basic health standards.

The state also documented the specific impact on the residents living inside the Albion facility. The extraction of $18. 6 million left the nursing home without the resources to provide basic hygiene and medical care. State investigators recorded instances where residents sat in their own urine and feces for hours. The facility failed to provide adequate wound care. This failure led to residents developing sepsis, gangrene, and other severe infections. The financial diversion directly caused these conditions because the facility did not possess the funds to hire qualified medical staff.

The New York Attorney General requested the court to install a receiver and a healthcare monitor to oversee the Albion facility. The state asked the court to place these monitors at the expense of the operators. The state also sought an order to stop the facility from admitting any new residents until staffing levels met appropriate legal standards. The operators opposed these measures in court. Glenn Jones represented the operators and stated that the payments to Telegraph Realty LLC were necessary to pay the mortgage. The state rejected this argument and presented evidence that the payments far exceeded any legitimate mortgage obligations.

The legal actions initiated by the state aim to terminate these interlocking corporate structures. The New York Attorney General requested the court to order the operators to disgorge all monies wrongfully received. The state seeks to compel the return of the diverted funds from the Albion facility. The court proceedings determine the final financial penalties for the operators who utilized Telegraph Realty LLC to extract public health funds.

The 2024 litigation updates from the New York Attorney General detail the exact physical toll extracted from residents at The Villages of Orleans Health and Rehabilitation Center. The state medical analyst reviewed thousands of pages of medical records and interviewed former facility employees. The resulting affidavits document dozens of clinical neglect cases. The state linked these physical outcomes directly to the financial diversion executed by the facility operators. The operators reduced the workforce to maximize profits. This reduction left the facility without enough workers to feed or hydrate the residents.

State Medical Analyst Findings on Nutritional Neglect

The state medical analyst provided sworn testimony regarding the nutritional failures at the facility. The analyst confirmed that the facility failed to provide appropriate food and fluids to sustain resident health. The absence of appropriate nutrition led to severe physical decline across the patient population. Providing food and fluids remains necessary to sustain life and promote healing. The absence of these basic requirements causes rapid physical decay.

Residents developed serious infections and cardiac arrhythmia due to the absence of hydration. The medical analyst determined that these conditions resulted directly from intentional understaffing. The facility operators reduced the workforce to a level where staff could not physically distribute meals or assist residents with eating. The facility frequently lost personal belongings including dentures and hearing aids. The absence of dentures further report the residents and prevented them from consuming solid food. Call bells regularly went unanswered. Overburdened staff members could not assist residents with basic activities of daily living. Workers could not help residents use the bathroom or eat their meals. The facility did not provide meals in a timely manner.

Documented Cases of Severe Weight Loss

The legal filings detail specific instances of severe weight loss. Resident 34 entered the facility weighing 157. 6 pounds. The resident lost 17. 6 pounds over a few months. The state classified this 11 percent drop as severe weight loss under state guidelines. The resident subsequently suffered a fall with injury and required emergency room treatment for increasing lethargy. The lethargy directly correlated with the severe drop in body weight and the absence of proper nutrition.

Resident 50 entered the facility on December 17, 2020. The 82 year old man had a history of prostate cancer and diabetes. His wife Margarette Volkmar provided a sworn affidavit detailing his physical decline. She testified that her husband suffered substantial weight loss and unexplained bruising. She also reported resident on resident abuse. The facility failed to notify the family about these events. During one video call, Volkmar observed her husband sitting completely naked in his room. The facility staff failed to dress him or provide basic supervision.

Hygiene Abandonment and Infection Risks

Former certified nursing assistant Leanne Sample provided testimony to state investigators. She confirmed that staff left residents sitting in their own urine and feces for extended hours. The lawsuit highlights an amputee resident who sat in his own urine in an adult diaper. The facility failed to provide basic hygiene care. The operators admitted new residents even when they did not have the staff to care for the existing population. This practice maximized revenue while guaranteeing clinical neglect.

This hygiene abandonment directly contributed to severe infections. Residents developed gaping bed sores due to the absence of repositioning. Medical standards require staff to turn bedbound residents every two hours. The continuous pressure on the skin restricted blood flow and caused tissue death. The soiled diapers introduced bacteria into these open wounds. The facility provided substandard wound care. The untreated bed sores progressed to gangrene and sepsis. Sepsis is a life threatening response to infection that requires immediate emergency medical intervention. The state documented multiple cases where residents required emergency hospitalization for these preventable infections.

Documented Clinical Neglect Categories

The New York Attorney General lawsuit categorizes the clinical neglect into specific physical outcomes. State investigators linked these outcomes directly to the intentional reduction of facility staff.

Chemical Restraints and Medical Toxicity

The state investigation revealed that the facility used unnecessary medications to chemically restrain residents. The unexplained doping left residents lethargic and unresponsive. The chemical restraints reduced the demands on the overburdened staff. The sedated residents could not feed themselves or ask for water.

This medical toxicity directly worsened the malnourishment and dehydration. Residents slept through meal times and failed to consume necessary fluids. The facility operators prioritized staff reduction over resident safety. The chemical restraints served as a substitute for proper supervision and care. The state found that the operators stripped residents of their dignity and caused physical and emotional harm.

Fatal Outcomes and Unmonitored Falls

The absence of supervision resulted in frequent and severe falls. Resident 8 suffered multiple falls due to poor monitoring. She fell on her admission day and sustained a laceration to her nose. The facility sent her to Medina Memorial Hospital for emergency treatment. She fell again one month later while attempting to self transfer from her bed. She fell a third time during lunch and complained of severe leg pain. The staff found her lying on the floor in front of her wheelchair.

Resident 7 entered the facility with a Stage II pressure sore. She had previously suffered a fall attributed to dehydration. The facility placed the 80 year old woman in a room with a COVID 19 positive roommate. The facility failed to implement basic infection control safety measures. Resident 7 contracted the virus and died. Another suicidal woman received no treatment and died within days of admission.

The Direct Link Between Financial Diversion and Physical Harm

The 2024 litigation updates emphasize the direct correlation between the financial schemes and the physical suffering of the residents. The operators extracted funds instead of paying for staff, food, and medical supplies.

The state lawsuit demands the removal of David Gast, Sam Halper, and Ephram Lahasky from their managerial roles. The state also seeks to prohibit the facility from admitting any new residents until staffing levels meet appropriate standards. The litigation requires the installation of an independent health care monitor to oversee daily operations. The state uses this case to demonstrate how related party transactions directly cause clinical neglect. The operators use real estate and administrative companies to extract money while the residents suffer dehydration and malnutrition.

Broader State Enforcement Actions

The 2024 settlement updates regarding related nursing home fraud cases managed by similar operators provide further context. The state secured 45 million dollars from four other nursing homes for identical neglect patterns. The state uses the Villages of Orleans case as a primary example of this business model.

State investigators found that the facility operators repeatedly misstated or withheld information they were required to report. The operators submitted misleading data to the Department of Health to conceal the poor conditions. The state investigation uncovered the true extent of the clinical neglect. The affidavits and medical records prove that the financial diversion caused direct physical harm to the residents. The residents endured inhumane conditions while the operators collected millions of dollars in taxpayer funds.

The Physical Reality of Dehydration and Malnutrition

Dehydration in elderly residents causes rapid physical decline. The absence of water reduces blood volume and impairs kidney function. Residents at the facility exhibited signs of severe dehydration including dry mucous membranes and poor skin elasticity. The state medical analyst noted that dehydration increases the risk of falls. Weakened residents attempted to self transfer from beds to wheelchairs because no staff members answered their call bells. These unassisted transfers resulted in severe injuries and bone fractures.

Malnutrition further accelerates this physical decline. The absence of protein and required nutrients prevents the body from healing open wounds. The residents with gaping bed sores could not recover because their bodies did not have the required fuel to repair damaged tissue. The state investigation confirmed that the facility failed to provide nutritional supplements to residents exhibiting severe weight loss. The operators viewed food and medical supplies as expenses to cut rather than basic requirements for resident survival.

The state lawsuit details how the facility ignored the most basic functions of care. The operators forced workers into roles for which they were not properly trained. The certified nursing assistants faced impossible patient loads. A single worker could not physically change the adult diapers, distribute the meals, and answer the call bells for dozens of residents simultaneously. The operators knew the staffing levels were dangerously low report continued to admit new residents to maximize Medicare and Medicaid billing.

Unexplained Doping and the Weaponization of Psychotropic Drugs

The New York Attorney General lawsuit filed in November 2022 details severe medication mismanagement at The Villages of Orleans Health and Rehabilitation Center. Investigators found that facility operators used psychotropic drugs as chemical restraints to subdue residents. Medical analysts from the Medicaid Fraud Control Unit testified that these drugs caused lethargy, abnormal involuntary movements, and a sharp decline in physical function. The 120 bed facility in Albion became a site of medical toxicity where staff administered sedatives without clinical justification.

State investigators reviewed pharmacy records and Medication Administration Records to track the exact dosages given to residents. They discovered a pattern of unexplained doping. Nurses administered heavy sedatives to patients who had no psychiatric diagnoses on file. The Medicaid Fraud Control Unit concluded that the facility substituted proper medical care with chemical sedation because it was less expensive than hiring adequate nursing staff. This practice reduced the immediate demands on the skeleton crew staff report caused severe adverse events for the residents. The operators saved money on payroll while billing Medicare and Medicaid for the very drugs used to sedate the patients.

The Case of Resident 42 and Fatal Sedation

The Medicaid Fraud Control Unit documented the specific trajectory of Resident 42. This individual entered the facility on January 6, 2021. Facility staff gave her psychotropic medication to treat severe anxiety. Investigators reviewed her complete medical file and found no such diagnosis. Staff also gave her medications for nausea, cough, and pain without any documented clinical need.

The continuous administration of unprescribed medications coincided with a steep physical decline. On July 13, 2021, staff found Resident 42 unresponsive. The facility records remain completely silent regarding what care she received before an ambulance transported her to the hospital. She died that same day from acute cardiopulmonary arrest secondary to respiratory failure. The Villages of Orleans staff never notified her report healthcare proxy about the hospital transfer.

Resident 35 and Pharmacy Procurement Failures

While report residents received unprescribed sedatives, others suffered from the complete absence of required medications. Resident 35 arrived at the Albion facility on November 17, 2020, following a lengthy hospital stay for seizures. The very report day, she experienced three consecutive seizures. The facility failed to procure her anti seizure medication upon admission.

Her November 2020 Medication Administration Record proves she did not receive her prescribed Ativan, Keppra, or Topamax. Facility logs indicated these drugs were not available from the pharmacy. Investigators found no evidence that nursing staff contacted the pharmacy or the medical team to resolve the missing prescriptions. The untreated seizures led to a hospital readmission. After returning to the facility in December 2020, Resident 35 suffered multiple falls. On January 5, 2021, staff found her bleeding from the head on her bathroom floor. On April 13, 2021, another fall resulted in a nasal fracture.

Resident 38 and Ignored Monitoring Directives

The facility ignored explicit medication and monitoring orders from outside specialists. Resident 38 entered the facility in early 2020 to recover from a fractured left femur. She soon began refusing all medications and food while expressing a desire to die. An outside psychology consultant evaluated her and determined she was at high risk for self harm. The consultant ordered staff to check her condition every 30 minutes.

The Villages of Orleans staff ignored this directive. They failed to monitor her as ordered. Staff found her dead 20 days later. The facility then violated state law by failing to report her death to the New York State Department of Health. The Nursing Home Incident Reporting Manual requires immediate notification for such events. The facility concealed the death to avoid regulatory scrutiny.

Medication Cart Overload and Staffing Deficits

The medication errors directly correlated with the severe staffing cuts enforced by the ownership syndicate. Detectives interviewed former employees who described impossible working conditions. A Licensed Practical Nurse testified that the facility operated with a severe absence of nurses. She frequently had to manage two separate medication carts by herself. She passed medications to both the dementia and rehabilitation units simultaneously.

This workload made accurate medication administration mathematically impossible. A single nurse cannot safely verify dosages, check for drug interactions, and monitor swallowing for dozens of patients across two distinct units. The ownership group extracted millions in profits while leaving one nurse to handle the pharmaceutical needs of highly dependent residents. The lawsuit noted that management pressured nursing staff and aides to perform duties outside of their qualifications to cover the staffing gaps.

Adverse Medication Events Data

The New York Attorney General compiled specific metrics regarding the medication failures at the Albion facility. The data shows a clear timeline of chemical restraint usage and pharmacy procurement failures. We present the verified adverse events in the chart report.

The chart illustrates the direct consequences of the medication mismanagement. The facility either overmedicated residents to keep them quiet or failed to provide life saving prescriptions. Both practices trace back to the financial extraction scheme. The operators refused to pay for adequate nursing staff or proper pharmacy services.

Regulatory Evasion and Concealed Records

The facility operators actively worked to hide these medication errors from state inspectors. When Resident 38 died after staff ignored her suicide watch orders, the administration deliberately withheld the incident report from the Department of Health. This concealment allowed the facility to continue operating without immediate state intervention.

The Medication Administration Records themselves contained severe omissions. In the case of Resident 35, the logs simply stated that the anti seizure drugs were unavailable. The records showed no follow up actions. Nurses did not document any calls to the pharmacy. They did not document any calls to the attending physician. The facility treated the absence of life saving medication as an acceptable daily condition.

For Resident 42, the records showed the administration of psychotropic drugs report contained no corresponding psychiatric evaluation. The facility bypassed the legal requirement for a physician to diagnose a condition before prescribing chemical restraints. Staff dispensed sedatives based on convenience rather than medical need.

The Human Cost of Chemical Restraints

The New York Attorney General lawsuit frames these medication practices as a form of physical abuse. Chemical restraints strip residents of their dignity and autonomy. The drugs cause residents to lose their ability to walk, speak, and interact with their families. Medical analysts noted that these restraints lead to emotional withdrawal and a sharp decrease in self esteem. The medical toxicity documented at The Villages of Orleans represents a severe violation of basic human rights.

The operators turned the 120 bed facility into a dangerous environment where residents faced dual threats. They could die from receiving the wrong medications, or they could suffer severe injuries from not receiving their prescribed treatments. The ownership syndicate prioritized their financial extraction over the pharmaceutical safety of the people in their care.

The Attorney General sought a preliminary injunction in November 2023 to install an independent healthcare monitor at the facility. State prosecutors argued that substandard care continued long after the initial lawsuit filing. The state demanded oversight to ensure residents received proper dietary needs, medical care, and bedsore treatment without the threat of unauthorized chemical sedation.

The 2024 Medication Error and State Penalties

The New York State Department of Health completed a targeted investigation into The Villages of Orleans Health and Rehabilitation Center on January 12, 2024. The inquiry centered on a severe medication error that occurred on January 4, 2024. Licensed practical nurses mishandled the dispensing and administration of 5 p. m. medications. The mistake sent a resident to the local hospital for emergency treatment. Following the investigation, the facility faced $80, 000 in combined fines. The penalty included a $10, 000 state fine specifically for the medication errors, alongside federal financial penalties.

The New York Attorney General explicitly correlates these operational failures with chronic understaffing. The ownership syndicate extracted $18. 6 million from the facility while failing to maintain safe staffing ratios. The operators forced workers into roles they were not adequately trained to perform. The absence of registered nurses forced the facility to rely on transient agency staff and underqualified personnel. Researchers link the use of agency nurses to lower quality ratings in the federal Five Star system. The transient nature of agency staff disrupts care continuity and increases the probability of medication errors.

Court records detail the human cost of these staffing deficits. Margarette Volkmar filed an affidavit with the state lawsuit detailing the treatment of her husband. She testified that staff left her husband in his bed with only a diaper on. Another resident choked him. Staff gave him the wrong medication doses and dressed him in other residents clothing. He sustained unexplainable bruises. Another resident admitted in early 2020 expressed suicidal thoughts. An outside mental health expert instructed the facility to check on the woman every 30 minutes. The Villages of Orleans failed to monitor her. Staff found her dead 20 days later. Another resident admitted in January 2021 developed untreated bed sores and received psychotropic medication for severe anxiety without a corresponding diagnosis.

Financial Penalties Across Affiliated Western New York Facilities

The operators of The Villages of Orleans control a vast network of nursing homes. Ephram Lahasky, Sam Halper, and David Gast hold report in 275 facilities across 28 states. The Department of Health penalized multiple affiliated and regional one star for profit facilities in 2024. Six Western New York nursing homes faced $46, 000 in state fines and over $311, 000 in federal penalties.

Humboldt House Rehabilitation received a $12, 000 fine for failing to prevent and report abuse. Williamsville Suburban faced a $10, 000 penalty for neglect that led to the delayed treatment of a broken hip. The state penalized The Villages of Orleans for the $10, 000 medication error fine as part of this broader enforcement action. The pattern of substandard care spans the entire ownership portfolio.

The federal government pursued criminal and civil charges against the corporate entities and top administrators. Sam Halper faces a federal criminal indictment in Pennsylvania. Prosecutors accuse Halper of manipulating timesheets and time clocks to falsify state and federally mandated staffing requirements at Brighton Rehabilitation and Wellness Center and other locations. The indictment alleges Halper manipulated patient treatment and medical records to obtain higher reimbursements than the facilities were owed.

The Department of Labor filed a civil action seeking $20 million in unpaid back wages and overtime from detailed Healthcare Management Services. Halper and Lahasky own interests in the company. The 2018 complaint alleges the company failed to pay employees for working overtime for four consecutive years. The operators failed to maintain accurate records of wages and hours worked.

Asset Liquidation and Legal Evasion Tactics

In September 2023, the federal government sought a temporary restraining order to stop detailed Healthcare Management Services from selling seven Pennsylvania facilities for $56 million. The Department of Labor accused the operators of attempting to sell off assets prior to trial to avoid paying the $20 million judgment. The transaction included the real estate and the transfer of the operational licenses.

Lahasky holds an ownership interest in Kadima Healthcare Group, the company attempting to buy the facilities. United States Labor Department attorney Alejandro Herrera stated the deal did not pass the smell test during a federal court hearing. Lahasky claimed the facilities were losing money and subject to an outstanding $46 million loan placed in default on August 31, 2023. The sellers intended to pay off the loan at closing and provide seller financing to the buyers.

The parties in the labor case nearly reached a $15 million settlement in 2022. The agreement collapsed after attorneys for detailed Healthcare Management Services claimed the company faced financial ruin. The federal government requested the court enforce the settlement. A federal judge declined the request. The ongoing litigation exposes the financial maneuvers used by the syndicate to shield assets from regulatory penalties and wage judgments.

The Disconnect Between Owner Wealth and Facility Fines

The $80, 000 fine levied against The Villages of Orleans represents a fraction of the owners disclosed personal wealth. Court records and loan applications reveal the financial status of the ownership syndicate. Ephram Lahasky disclosed a net worth of nearly $73 million. David Gast disclosed a net worth of $22 million. Sam Halper reported a net worth of $23 million.

The owners paid themselves and family members nearly $10 million directly from the facility coffers. Residents developed bedsores, missed medications, and suffered injuries from falls due to the absence of aides. The operators claim the facilities run on tight budgets. Lahasky testified in a deposition that the owners left ample money in the facility to prevent a shoestring budget. He described The Villages of Orleans as a beautiful facility with beautiful gardens where residents look great and employee morale remains strong. The verified staffing metrics and state fines contradict his testimony.

The financial diversion directly impacts resident safety. The $18. 6 million extracted from The Villages of Orleans could have funded hundreds of registered nursing positions. The owners chose to maximize profit margins over resident care. The state and federal fines serve as a minor business expense for operators with tens of millions in personal assets.

The New York Attorney General lawsuit requests the court to declare that the owners engaged in repeated and persistent fraud. The state seeks findings that the owners failed to provide adequate care for residents and unjustly enriched themselves to the detriment of the Medicare and Medicaid programs. The Attorney General asks the court to install a receiver and healthcare monitor to oversee The Villages of Orleans at the owners expense. The lawsuit demands the owners pay restitution to the state.

The structural failures at The Villages of Orleans mirror the widespread problems across the entire ownership portfolio. The operators deploy a consistent business model. They acquire distressed nursing homes, extract the operational capital through related party transactions, reduce staffing to dangerous levels, and absorb the resulting state fines as the cost of doing business. The $80, 000 medication error fine in 2024 stands as a verified metric of this operational strategy.

Related Party Transactions and Financial Extraction

The ownership syndicate utilized a complex network of related party transactions to drain operating capital from The Villages of Orleans. The operators created separate limited liability companies to act as landlords, management consultants, and staffing agencies. The nursing home paid exorbitant fees to these affiliated entities. The New York Attorney General identified Telegraph Realty LLC as the primary vehicle for the real estate extraction. The owners of the nursing home also owned Telegraph Realty LLC. They executed self dealing lease agreements to convert Medicare and Medicaid reimbursement payments into personal profit.

The facility received $86. 4 million from Medicare and Medicaid between 2015 and 2021. The owners funneled $18. 6 million of these taxpayer funds into their own accounts. The diverted money represents over 21 percent of the total operating funds. The extraction occurred while the facility operated with severe staffing deficits. The operators claimed they could not afford to hire permanent registered nurses. They blamed the absence of staff on the pandemic and a tight labor market. The financial records prove the facility possessed the necessary funds to maintain safe staffing levels.

The owners prioritized real estate payments over resident care. At the height of the pandemic, lavish payments flowed into the real estate and management companies financially linked to the nursing home owners. New York requires facilities to file detailed financial reports. These reports exposed the massive wealth transfer. The operators exploited the regulatory structure by hiding profits within the related companies. They presented the nursing home as a struggling entity with razor thin margins. The $80, 000 medication error fine in 2024 highlights the direct consequence of this financial engineering.

The Impact of Understaffing on Medication Administration

Medication administration requires precise timing, accurate dosing, and continuous monitoring. Registered nurses possess the training to identify adverse drug interactions and assess resident responses to new medications. The Villages of Orleans replaced permanent registered nurses with temporary agency staff and licensed practical nurses to reduce payroll costs. This substitution directly compromises resident safety.

The January 2024 medication error exemplifies the danger of this staffing model. Licensed practical nurses dispensing the 5 p. m. medications made a serious error that required emergency hospitalization. The Department of Health investigation confirmed the facility failed to meet minimum standards of care. The $10, 000 state fine for this specific incident represents the maximum penalty allowed for certain regulatory violations, yet it fails to deter operators who extract millions in profit.

The facility routinely failed to administer medications on time. Residents missed essential doses of prescribed drugs. The absence of permanent staff means nurses do not know the residents or their medical histories. Agency nurses rely entirely on the written charts. When operators manipulate or fail to update the medical records, the temporary staff administer medications blindly. The federal indictment against Sam Halper specifically charges him with manipulating patient treatment and medical records. This practice endangers every resident in the facility.

Federal Quality Ratings and Agency Staffing Correlation

The Centers for Medicare and Medicaid Services utilizes a Five Star quality rating system to evaluate nursing homes nationwide. The Villages of Orleans holds a one star rating, the lowest possible score. This rating reflects severe deficiencies in health inspections, staffing levels, and quality measures. The 2024 fines directly correlate with these low federal ratings.

The ownership syndicate relies heavily on temporary agency nurses to fill the gaps left by their refusal to hire permanent staff. An extensive study of over 80, 000 United States nursing home

The Clinical Reality of Diverted Funds

The diversion of $18. 6 million from The Villages of Orleans Health and Rehabilitation Center directly caused severe physical decay among the resident population. The New York Attorney General lawsuit filed in November 2022 connects the financial extraction by David Gast, Sam Halper, and Ephram Lahasky to specific medical horrors. Residents sat in their own urine and feces for hours. They developed sepsis and gangrene. Gaping bedsores went untreated. Certified Nursing Assistants performed wound care beyond their legal scope of practice because the facility eliminated licensed nursing positions to maximize profit.

Pressure ulcers require strict monitoring and consistent treatment to prevent tissue necrosis. A Stage II bedsore presents as a shallow open ulcer with a red or pink wound bed. Without proper turning schedules and clean linens, these wounds worsen rapidly. The absence of licensed nurses at The Villages of Orleans meant that basic hygiene procedures disappeared. Continuous exposure to bodily fluids accelerated skin breakdown. Bacteria entered open wounds and caused widespread infections. Sepsis and gangrene follow when localized infections enter the bloodstream and destroy surrounding tissue.

Sepsis occurs when the immune system overreacts to an infection and begins damaging the body tissues and organs. In the context of nursing home neglect, sepsis frequently originates from untreated pressure ulcers or urinary tract infections. The bacteria from feces or urine enter the open wound bed of a Stage II or Stage III bedsore. The infection spreads through the localized tissue and enters the bloodstream. Gangrene involves the death of body tissue due to a severe bacterial infection or a complete loss of blood supply. The gaping bedsores documented at The Villages of Orleans provided the exact environment required for gangrene to develop. The necrotic tissue must be surgically removed to prevent the infection from spreading further.

Documented Cases of Necrosis at The Villages

The verified petition from the Attorney General details the fatal trajectory of Resident 42. This individual entered The Villages of Orleans on January 6 2021 with a Stage II pressure sore near the base of her spine. Facility staff left the wound completely untreated for 18 days. By June 24 2021 the resident suffered from two Stage III pressure sores. A specialty wound care consultant examined the resident and recommended a specific treatment regime. The facility delayed the order for the new treatment for nearly a week. Staff report provided a new dressing on July 1 2021. By July 7 2021 both wounds advanced to an unstageable classification. Unstageable wounds involve full thickness tissue loss where slough or eschar obscures the base of the ulcer. Resident 42 was found unresponsive on July 13 2021 and died at the hospital shortly after.

Another documented case involves Resident 7. This individual arrived at the facility with a Stage II pressure sore on the left buttock. Investigators reviewed the Treatment Administration Records and found multiple blank areas. The medical staff recorded no new measurements for the wound. On April 13 2020 nursing notes indicated a new Stage II pressure sore on the right big toe. A physician ordered treatment on April 14 2020. Staff delayed the start of this treatment until April 15 2020. The facility discharged Resident 7 on April 21 2020 after exposing her to a roommate infected with the respiratory virus. She died on May 2 2020.

Resident 43 experienced similar medical neglect. The wound care team at Rochester Regional Health evaluated this resident in 2021. The medical team noted that the right buttock wound measured substantially larger than when the resident report entered The Villages of Orleans. The wound exhibited purulent drainage. Purulent drainage indicates a severe bacterial infection characterized by a thick and unclear fluid. The pressure sore failed to resolve during a three month stay at the facility and instead worsened significantly.

The Attorney General investigation revealed that the facility forced Certified Nursing Assistants to perform medical duties far beyond their training. Certified Nursing Assistants regularly executed wound care treatments and administered medications. State regulations require licensed nurses to perform these specific medical tasks. The facility operated with such severe understaffing that aides divided their time between providing basic care for dozens of residents and monitoring the dining room. The ownership syndicate intentionally kept staffing levels dangerously low to ensure maximum financial extraction through their related real estate and administrative companies.

Expanding the Investigation to Regional Corporate Facilities

The pattern of financial diversion causing severe wound care violations extends to other regional corporate nursing homes. In December 2022 Attorney General Letitia James sued Fulton Commons Care Center in Long Island. The lawsuit detailed a financial scheme where the owners paid themselves $14. 9 million in excessive rental payments using Medicare and Medicaid funds. The facility settled the lawsuit in March 2024 for $8. 6 million. The investigation found that Fulton Commons failed to provide basic wound care and infection prevention. Residents remained in soiled clothes for hours. The facility denied residents basic bodily hygiene. The owners created poor working conditions for the staff and regularly overworked the remaining employees.

The Fulton Commons settlement in March 2024 mandated severe reforms. The facility must hire an independent healthcare monitor to oversee all medical operations. The owners engaged in repeated instances of Medicare and Medicaid fraud to divert millions of dollars. Owner Moshe Kalter paid fraudulent salaries to his adult children for jobs they never performed. The facility marketed itself as offering premium healthcare services provided by highly skilled personnel. The reality inside the building involved residents undergoing physical and emotional abuse. Staff members ignored requests for help and humiliated residents who required assistance with daily tasks. The failure to administer correct medication dosages on time further compromised the immune systems of the residents and made them more susceptible to severe wound infections.

The Office of the Attorney General secured a $12 million settlement with the Van Duyn Center for Rehabilitation and Nursing in Syracuse in August 2025. The owners of Van Duyn withdrew tens of millions of dollars for themselves by taking out a mortgage on the property and charging the nursing home fraudulently excessive rental fees. The medical consequences mirrored the horrors at The Villages of Orleans. A resident was admitted to the hospital with a bacterial infection, bedsores, and dehydration after Van Duyn failed to respond to their rapidly declining condition. The settlement required the owners to pay $2 million in restitution to the Medicaid program and $10 million to a Resident Care Fund.

The Van Duyn Center settlement included strict financial penalties. The $10 million Resident Care Fund report support reforms recommended by independent monitors. The investigation found that residents lived in unsafe conditions before and after the respiratory virus pandemic. Another resident at Van Duyn was sent to the hospital after the facility failed to properly monitor and treat their glucose levels. Poor diabetic care accelerates the development of pressure ulcers and severely limits the ability of the body to heal open wounds. The facility also inappropriately discharged multiple residents and dropped them off at a Department of Social Services office without identification.

In June 2023 the Attorney General sued the owners and landlords of four nursing homes operating under the Centers for Care network. The lawsuit alleged that the ownership group illegally misused more than $83 million in taxpayer money. The state secured a $45 million settlement in November 2024. The legal filings detailed a pattern of residents not receiving proper care due to intentional understaffing. Staff members were unable to assist residents with basic activities of daily living. The inability to help residents use the bathroom or maintain personal hygiene directly correlates with the development of severe pressure ulcers and subsequent infections.

The state also sued Cold Spring Hills Center for Nursing and Rehabilitation in December 2022. The lawsuit accused the owners of diverting millions of dollars in government funding from resident care. A judge granted the request from the Attorney General for an independent healthcare monitor to oversee Cold Spring Hills in March 2024. The widespread resident neglect at this facility included failures in basic skin assessments and wound prevention procedures.

Comparative Data on Wound Care Citations and Financial Penalties

These cases demonstrate an industry wide pattern across the regional nursing home sector. Ownership syndicates use complex corporate structures to hide profit extraction while resident care worsens. The financial mechanics directly result in physical suffering. When a facility cuts nursing staff to pay excessive rent to a related real estate company, the remaining employees cannot execute required turning schedules. Bedbound residents develop pressure ulcers. The ulcers become infected. The infections progress to sepsis and gangrene. The state interventions between 2022 and 2025 demonstrate the direct link between financial fraud and fatal wound care violations.

The Department of Health issued numerous citations to The Villages of Orleans between 2015 and 2022. These citations covered pharmacy management, nutrition, hydration, and skin wound care. The facility ignored these regulatory warnings. Third party consultant evaluations echoed the findings of the health department and put the owners on notice regarding resident endangerment. The ownership group continued their financial extraction even with these repeated notifications of deficiencies. The legal actions by the Attorney General represent a necessary intervention when standard regulatory citations fail to force compliance.

Infectious Disease Rule Abandonment

State inspectors documented severe violations of infection control mandates across multiple New York nursing facilities between March 2020 and December 2022. The New York State Office of the Attorney General filed lawsuits against various operators for abandoning basic medical rules. Facility managers forced sick employees to work and ignored state quarantine directives. Investigators found that ownership groups diverted Medicaid and Medicare funds away from patient care. This financial diversion directly reduced the availability of personal protective equipment and trained medical staff. The absence of proper infection control resulted in high fatality rates among residents.

The Villages of Orleans Health and Rehabilitation Center

The New York State Department of Health conducted an onsite inspection at The Villages of Orleans on May 9, 2020. Inspectors issued an Immediate Jeopardy finding for the facility. The inspection report detailed severe violations of infection control procedures. Certified nursing aides and licensed practical nurses entered the rooms of residents infected with the coronavirus. These same employees then immediately entered the rooms of uninfected residents without changing their personal protective equipment or washing their hands. Staff members distributed breakfast trays and provided direct physical care without wearing masks or gloves. The facility recorded 93 positive coronavirus cases among its 120 residents. At least 30 residents died from the virus by the end of May 2020. The federal government fined the facility $66, 632 for these violations. The state government imposed an extra $20, 000 penalty.

The May 9, 2020 inspection at The Villages of Orleans showed that the facility operated without a specific infection control program. Employees told state investigators that they received no training on droplet precautions. Management failed to provide sufficient supplies of N95 masks, face shields, and isolation gowns. Staff members resorted to wearing the same disposable masks for multiple days. The facility did not establish a dedicated quarantine wing for infected residents until the outbreak had already spread throughout the building. The administration failed to screen employees for fever or respiratory symptoms before their shifts. This negligence allowed infected workers to carry the virus into the facility.

Cold Spring Hills Center for Nursing and Rehabilitation

Attorney General Letitia James sued Cold Spring Hills Center for Nursing and Rehabilitation in December 2022. The lawsuit detailed severe neglect and financial fraud at the Nassau County facility. The owners diverted $22. 6 million in government funding away from resident care. This diversion caused severe understaffing during the height of the pandemic. Between March 1, 2020, and June 4, 2020, 166 residents died at the facility. Medical records attributed 98 of these deaths directly to the coronavirus. Facility administrators reported only 47 coronavirus deaths to the Department of Health. This represented a 52 percent underreporting rate. The state investigation showed that the facility failed to enforce proper quarantine procedures for infected residents.

Cold Spring Hills Center for Nursing and Rehabilitation operated as a 588 bed facility in Nassau County. The Attorney General discovered that the owners created a fraudulent network of shell companies to hide their profit taking. They used these companies to extract $22. 6 million while the facility decayed. The owners cut staffing levels long before the pandemic began. This pre existing understaffing left the facility entirely unprepared for an infectious disease outbreak. Employees reported that they received orders to hide the true number of infections from families and state regulators. The facility failed to report 51 coronavirus deaths to the Department of Health. The state lawsuit seeks to install an independent financial monitor to track all future expenditures at the facility.

Fulton Commons Care Center

The Attorney General filed a lawsuit against Fulton Commons Care Center in late 2022. The state accused the facility operators of financial fraud and resident neglect. Facility managers failed to provide staff with sufficient masks and gloves. Administrators forced employees to work while exhibiting symptoms of illness. The facility significantly underreported resident fatalities during the report wave of the pandemic. Administrators reported 40 coronavirus deaths through May 31, 2020. State auditors reviewed the medical records and identified 74 actual coronavirus deaths during that period. The facility concealed 34 deaths from state regulators and the public.

Fulton Commons Care Center operated as a 280 bed facility. The ownership group allegedly siphoned millions of dollars through overpriced rent payments and fake consulting fees. The facility management ignored state directives to separate infected residents from the general population. Employees testified that they received orders to work even when they tested positive for the virus. The facility failed to communicate with family members about the declining health of their relatives. The Attorney General found that the owners prioritized their financial extraction scheme over the purchase of basic medical supplies. The state demands the removal of the current management team.

The Williamsville Rehabilitation Facility

State inspectors penalized The Williamsville Rehabilitation Facility for repeated infection control violations. The Department of Health observed staff members failing to practice social distancing. Employees did not assess residents for symptoms of illness. Administrators failed to check staff temperatures every twelve hours as required by state mandates. The facility housed 49 infected residents in October 2020. The state fined the facility $14, 000 in May 2020. Regulators imposed a $12, 000 fine in October 2020 and a $2, 000 fine in December 2020. The federal government added a $9, 750 penalty in August 2021. The facility operators paid these fines report continued to record regulatory deficiencies in subsequent inspections.

The Williamsville Rehabilitation Facility demonstrated a persistent refusal to follow state health regulations. The facility received four penalties for failing to provide a safe and clean environment between 2015 and 2021. During the height of the pandemic, state inspectors observed an activity aide distributing shared art supplies to residents who were not wearing masks. The residents were seated together without any social distancing measures in place. The facility administrator admitted to the Department of Health that 49 residents were infected and 22 staff members were out sick. Even with this severe outbreak, the facility failed to implement basic temperature checks for employees on duty. The repeated fines from state and federal regulators failed to correct the dangerous conditions inside the building.

Widespread Data Manipulation and State Audits

Attorney General Letitia James released a detailed report in January 2021 regarding the statewide nursing home response. The investigation showed that the Department of Health published data that undercounted nursing home deaths by as much as 50 percent. Facility operators manipulated the reporting criteria to hide their mortality rates. Managers classified residents who died in hospitals as out of facility deaths. This accounting trick artificially lowered the death toll at the nursing homes. The Attorney General cross referenced the facility reports with hospital admission records and funeral home data. This audit exposed the true volume of the fatalities.

The state audit also found a direct correlation between the Centers for Medicare and Medicaid Services staffing ratings and facility mortality rates. Nursing homes with a one star staffing rating experienced significantly higher death rates than facilities with a five star rating. The Villages of Orleans held a one star rating for staffing and quality of care. The facility owners deliberately maintained this low staffing level to maximize their profit margins. The state report concluded that proper staffing could have saved thousands of lives across New York.

The following table compares the reported fatalities against the actual audited fatalities for three facilities investigated by the Attorney General. The data covers the initial pandemic wave in the spring of 2020.

State investigators found that nursing homes across New York undercounted fatalities by up to 50 percent. Facility managers frequently excluded residents who died after being transferred to hospitals. The Department of Health eventually updated its public databases to include these out of facility deaths. The revised numbers exposed the true impact of the infection control failures.

Verified Multi Coloured Chart: Audited Fatality Differences

This chart visualizes the gap between the deaths reported by facility administrators and the actual deaths verified by state auditors. The red bars represent the audited deaths. The blue bars represent the initially reported deaths.

The financial extraction models used by these ownership groups directly compromised patient safety. The Villages of Orleans ownership syndicate diverted $18. 6 million from operating funds. Cold Spring Hills owners diverted $22. 6 million. These missing funds correspond directly to the absence of trained staff and the failure to implement basic disease control measures. The state lawsuits demand the return of these diverted funds and the installation of independent health care monitors.

Regulators noted that the abandonment of medical rules extended beyond the coronavirus. State inspectors documented severe failures in basic wound care and fall prevention. A resident admitted to The Villages of Orleans in January 2021 developed multiple bedsores. Staff members failed to provide wound care for over two weeks. Another resident suffered multiple falls resulting in bleeding and tooth injuries. Employees failed to respond to call bells. These incidents demonstrate a complete breakdown of medical care delivery.

The Attorney General continues to prosecute these cases in state court. The legal filings show a clear pattern of prioritizing profit over human life. The state seeks to ban the current owners from operating medical facilities in New York. The Department of Health pledges to increase auditing procedures to prevent future data manipulation by facility operators.

The Architecture of Financial Diversion

The New York Attorney General lawsuit detailed a precise corporate structure designed to extract taxpayer funds from The Villages of Orleans Health and Rehabilitation Center. The operators constructed a network of related companies to bypass financial regulations. State investigators found that 72 percent of for profit nursing homes in New York reported doing business with related companies in 2020. The owners of The Villages of Orleans used this exact model to move money away from resident care. They established separate entities to handle real estate and administrative services. This structure allowed the owners to pay themselves through overpriced contracts and exorbitant rent.

The legal filings identified twelve specific investors who purchased the facility from Orleans County in 2014. These individuals held report in at least 22 other New York nursing homes. The ownership group included Bernard Fuchs, Joel Edelstein, Israel Freund, Gerald Fuchs, Tova Fuchs, David Gast, Sam Halper, Ephram Lahasky, Benjamin Landa, Joshua Farkovits, Teresa Lichtschein, and Debbie Korngut. The New York Attorney General stated that report of these individuals acted as passive investors while a smaller group controlled the actual operations. The state accused these owners of creating a predatory lease and fraudulent management contracts to siphon Medicaid and Medicare revenue.

Telegraph Realty LLC and the Real Estate Extraction

The operators formed Telegraph Realty LLC in January 2015 to purchase the physical property located at 14012 Route 31 in Albion. Telegraph Realty LLC owned no other properties. The rent payments from the nursing home served as its sole significant source of revenue. The owners did not disclose the shared ownership between the nursing home and the real estate company to the New York State Department of Health during the initial purchase.

The nursing home paid rental fees directly to Telegraph Realty LLC. The 2014 application to the state projected lease payments at just over $1 million per year. The actual payments quickly exceeded that projection. State cost reports from 2020 showed that The Villages of Orleans paid $2. 7 million in rent to Telegraph Realty LLC. The landlord took $1. 6 million of that amount as pure profit. This represented a 59 percent profit margin for the real estate holding company. The 2020 rent payments equated to $83 per patient day. This rate stood as the highest in the Finger Lakes region.

The New York Attorney General identified the specific ownership breakdown of Telegraph Realty LLC in the 2022 court filings. The equity distribution revealed the exact financial interests of the syndicate members.

David Gast controlled Villages of Orleans LLC. This entity held the largest single share of the real estate company. Benjamin Landa also held a major stake. Landa founded Sentosa Care and owned portions of 100 nursing homes nationwide. The inclusion of these high profile nursing home investors demonstrated the massive size of the corporate network.

CHMS Group LLC and Administrative Siphoning

The syndicate also extracted funds through a separate management company called CHMS Group LLC. The owners formed this domestic limited liability company in January 2015. The business maintained offices at 600 Broadway in Lynbrook New York. CHMS Group LLC provided administrative services to the nursing home. These services included purchasing, accounting, insurance billing, and payroll management.

The ownership of CHMS Group LLC was concentrated among three individuals. David Gast owned 33. 33 percent. Ephram Lahasky owned 33. 33 percent. Sam Halper owned 33. 34 percent and served as the managing member. The New York Attorney General described the management consulting fees paid to CHMS Group LLC as excessive and fraudulent. The state alleged that Gast, Halper, and Lahasky used this company to control the finances, staffing budgets, and high level decision making at the nursing home. They controlled the bank accounts and authorized the payments for rent and management services.

The operations of CHMS Group LLC extended beyond New York. The United States District Court for the Western District of Pennsylvania indicted Sam Halper and detailed Healthcare Management Services Group LLC on August 5 2022. The federal indictment named Halper as having an ownership interest and a management role in approximately 16 health care facilities. The Department of Justice filed 15 counts against the defendants. The charges included staffing falsifications and Medicare and Medicaid reimbursement fraud. The federal government accused the company of submitting false reports to the Department of Health and Human Services to increase reimbursement rates artificially.

ML Kids Holdings LLC and Cash Transfers

The financial diversion network included additional levels of corporate entities. The New York Attorney General lawsuit named ML Kids Holdings LLC as a key recipient of diverted funds. Ephram Lahasky controlled this specific holding company. Court documents revealed that ML Kids Holdings LLC received over $1. 5 million in direct cash transfers from Telegraph Realty LLC. This transfer demonstrated how the syndicate moved taxpayer money through multiple shell companies before distributing the profits to individual owners.

The state investigators tracked these cash movements to prove that the owners prioritized personal wealth over resident care. The nursing home paid over 20 percent of its operating budget to Telegraph Realty LLC and CHMS Group LLC between 2015 and 2021. The owners then used entities like ML Kids Holdings LLC to further obscure the final destination of the Medicaid and Medicare funds.

The Role of Unlicensed Operators

New York Public Health Law requires strict approval for anyone operating a residential health care facility. The state must vet and approve all owners to ensure they possess the character and competence to provide adequate care. The 2014 purchase application listed Bernard Fuchs as the sole official owner and operator of The Villages of Orleans Health and Rehabilitation Center. The New York State Department of Health approved the license based on this representation.

The 2022 lawsuit revealed that Bernard Fuchs played a very limited role in the actual operations. Fuchs testified that he was surprised and angered to learn that his was the only name listed in state records. The Attorney General stated that Fuchs agreed to put his name on the application to induce the Department of Health to approve it quickly.

In reality, David Gast, Sam Halper, and Ephram Lahasky operated the facility without state approval. The state classified them as undisclosed owners. These three men bypassed the mandatory character and competence review. They made all primary decisions regarding staffing levels, supply purchases, and resident admissions. The state alleged that their decision to drastically cut staffing directly caused severe resident neglect. The facility failed to provide basic nutritional support, wound care, and medication management. Residents were left unattended in soiled diapers while the undisclosed operators continued to admit new patients to maximize revenue.

Legal Accountability and Corporate Defense

The New York Attorney General filed the special proceeding under Executive Law 63 12. This statute allows the state to pursue businesses engaged in repeated and persistent fraudulent conduct. The state sought to remove Gast, Halper, and Lahasky from their managerial roles. The lawsuit also demanded that the respondents disgorge and return the illegally converted Medicaid funds.

The defense attorneys representing the various owners attempted to distance their clients from the operational failures. During a November 2023 court hearing in Orleans County, several attorneys claimed that their clients held very small minority report in the ownership. They stated these minority investors were only part of the real estate company and had no decision making role in the nursing home operations. Alyssa Friedman, an attorney representing Benjamin Landa, called the $18. 6 million fraud claim a massively exaggerated number. She urged the judge to keep the current operations unchanged and spoke against the installation of state monitors.

The state rejected these defenses. The Attorney General maintained that all individuals with a financial interest in Telegraph Realty LLC colluded with the controlling operators. The state asserted that the passive investors knew or should have known that their massive profit margins came at the direct expense of resident care. The legal filings emphasized that New York law imposes a special obligation on nursing home owners to ensure the highest practicable quality of life for residents. The state concluded that the entire corporate network, from the unlicensed operators to the minority landlords, failed in this statutory duty.

The Broader Campaign Against Related Party Transactions

The lawsuit against The Villages of Orleans Health and Rehabilitation Center represented the report major enforcement action in a broader state initiative. Attorney General Letitia James used this case to expose the widespread abuse of related party transactions in the for profit nursing home industry. Following the November 2022 filing in Orleans County, the state launched similar lawsuits against Fulton Commons Care Center and Cold Spring Hills Center for Nursing and Rehabilitation.

The corporate structures in these subsequent cases mirrored the Albion facility. At Cold Spring Hills, the state found that owners diverted over $22. 6 million through a fraudulent network of companies. At Fulton Commons, the owners exploited Medicaid and Medicare to divert $16 million to themselves. The Attorney General identified a clear pattern across these facilities. Owners created real estate holding companies and administrative service groups to drain operating funds. The state asserted that this business model inherently endangered residents by stripping facilities of the capital needed to hire adequate staff.

The Empire Center for Public Policy analyzed these lawsuits and concluded that the state health department missed obvious signs of financial manipulation. The nursing homes were required to itemize the rent they paid and the profits taken by their landlords in annual cost reports. The 2020 reports for The Villages of Orleans clearly showed the $2. 7 million rent payment and the $1. 6 million landlord profit. The state health department failed to flag this massive difference between the 2014 projected rent and the 2020 actual rent. The Attorney General lawsuit served as a direct challenge to the regulatory oversight failures that allowed these corporate networks to operate without detection for years.

The Mandate Framework and Court Ordered Oversight

New York Attorney General Letitia James secured court orders to install independent health care and financial monitors across multiple nursing homes between 2023 and 2024. The state executed these legal maneuvers to halt the diversion of Medicare and Medicaid funds and to enforce clinical compliance. The courts stripped operational autonomy from the owners and placed daily oversight in the hands of state approved monitors. These monitors hold the authority to mandate staffing increases, approve financial transactions, and report directly to the state. The state initiated this aggressive legal strategy after discovering that private ownership syndicates routinely created complex networks of related companies to siphon taxpayer money away from direct resident care. By installing independent monitors, the state bypassed the traditional penalty system and directly seized control of the facility operations. The courts granted these monitors broad authority to override the decisions of the facility owners. The state uses these court orders to ensure that the operators cannot hide behind corporate veils or claim poverty when ordered to hire additional nursing staff.

The Anatomy of an Independent Health Care Monitor

The Independent Health Care Monitor operates as the clinical authority within the facility. The court grants this monitor the power to review staffing ratios, audit clinical care records, and inspect wound care procedures. The monitor evaluates infection control procedures and ensures the facility maintains sufficient supplies of medication and basic hygiene products. If the monitor determines that the facility operates with insufficient staff to safely care for the residents, the monitor can order an immediate halt to new admissions. The monitor reports directly to the Department of Health and the Attorney General. The facility owners must pay the salary of the monitor, and the owners cannot fire or discipline the monitor. The monitor conducts unannounced inspections at all hours of the day and night to verify that the operators maintain compliance with state and federal regulations. The monitor also interviews staff members, residents, and family members to gather accurate information regarding the daily conditions inside the facility.

The Anatomy of an Independent Financial Monitor

The Independent Financial Monitor controls the flow of money within the nursing home. The court installs this monitor to prevent the owners from diverting Medicare and Medicaid funds into private bank accounts or related real estate companies. The monitor must approve all expenditures above a specific threshold. The monitor audits all related party transactions, including rent payments paid to landlords who share ownership with the nursing home operators. The monitor ensures that the operators spend the required percentage of their revenue on direct resident care. If the monitor discovers that the owners attempt to pay themselves excessive salaries or distribute profit dividends while the facility operates with insufficient staff, the monitor blocks the transaction. The financial monitor works in tandem with the health care monitor to guarantee that the facility allocates sufficient funds to hire and retain qualified medical personnel. The state requires the operators to maintain this financial oversight for a minimum of three years in most settlement agreements.

Cold Spring Hills and The Lisa Wickens Alteri Appointment

In March 2024, Nassau County Supreme Court Judge Lisa Cairo ordered the installation of an independent health care monitor at Cold Spring Hills Center for Nursing and Rehabilitation in Woodbury. The court appointed Lisa Wickens Alteri, president of Capital Health Consulting LLC, to oversee resident care, staffing levels, and regulatory compliance. The facility operators previously diverted $22. 6 million in federal funding away from resident care. The judge also mandated a $2. 65 million payment to cover missing employee health care benefits to the 1199SEIU union fund. The monitor submits regular reports to the state to ensure the operators do not divert additional funds. The state originally filed the lawsuit against Cold Spring Hills in December 2022. The investigation revealed that the owners used a fraudulent business setup to enrich themselves while residents suffered from severe neglect. The court order requires the owners to comply with all directives issued by Wickens Alteri to improve the quality of life for the residents.

Fulton Commons and The Eight Million Dollar Settlement

The state finalized an $8. 6 million settlement with Fulton Commons Care Center in East Meadow in March 2024. The agreement required the owners to install an independent monitor to reform both clinical care and financial operations. Investigators proved the operators diverted $16 million from Medicaid and Medicare. The monitor report holds the authority to mandate staffing increases and approve financial transactions. The settlement specifically directs the operators to pay restitution and mandates that the independent monitor oversee the facility at the expense of the owners for a period of at least three years. The Attorney General proved that the residents at Fulton Commons endured severe mistreatment, resulting in traumatic injuries and poor living conditions. The owners pocketed millions of dollars of taxpayer funds instead of investing in the required medical care. The independent monitor report ensures that the facility hires additional staff and improves in total healthcare operations.

Centers Health Care and The El Al Airline Diversion

In November 2024, the state reached a $45 million settlement with Centers for Care LLC. The agreement covered four facilities including Beth Abraham Center, Buffalo Center, Holliswood Center, and Martine Center. The court had already installed an Independent Health Care Monitor and an Independent Financial Monitor at these locations in July and August 2023. The settlement directed $35 million specifically toward resident care and staffing improvements. The state proved that the owners, Kenneth Rozenberg and Daryl Hagler, diverted $83 million in Medicare and Medicaid funds. Rozenberg used a portion of these diverted taxpayer funds to purchase a controlling stake in El Al, the Israeli national airline, for $107 million in 2020. While the owners purchased international airlines and Brooklyn real estate, the residents at the four facilities suffered from severe dehydration, malnutrition, and untreated bed sores. The operators cannot close or sell these facilities for at least three years while the monitors maintain oversight. The Independent Health Care Monitor successfully forced the facilities to increase the number of active staff members on the floor.

Saratoga Center Financial Penalties

In February and December 2023, the Attorney General and the United States Attorney for the Northern District of New York secured more than $7. 8 million from the Saratoga Center for Rehabilitation and Skilled Nursing Care. The state penalized the owners, unlicensed operators, and the landlord for years of fraud and resident neglect. The state uses these financial penalties and monitor mandates to force compliance across the entire sector. The operators at Saratoga Center failed to provide sufficient care while continuing to bill the government for services they never rendered. The state forced the facility to close, report the Attorney General still pursued the owners to recover the stolen funds. The financial penalties serve as a warning to other nursing home operators that the state tracks the diverted funds even after a facility shuts down its operations.

The Villages of Orleans and The Precedent for Oversight

The November 2022 lawsuit against The Villages of Orleans Health and Rehabilitation Center set the legal foundation for these subsequent monitor mandates. The state proved the ownership syndicate diverted $18. 6 million through a network of related companies. The court interventions at Orleans, Cold Spring Hills, Fulton Commons, and Centers Health Care establish a clear pattern. The state report uses independent monitors as the primary method to enforce financial transparency and clinical standards in privately owned nursing homes. The operators at The Villages of Orleans used the same tactics seen in the Centers Health Care and Cold Spring Hills cases. They created illusionary real estate companies to charge themselves exorbitant rent, thereby draining the operating accounts of the nursing home. The independent monitor system directly neutralizes this specific financial tactic by requiring state approval for all related party transactions.

Financial Restitution and Settlements in New York Nursing Home Cases (2023 to 2024)