Cold Spring Hills Center: 2024 court rulings on financial fraud and resident care failures in New York

Nassau County Supreme Court Judge Lisa Cairo delivered a ruling on March 15, 2024. The decision mandated an independent health care monitor for Cold Spring Hills Center for Nursing and Rehabilitation. The 588-bed Woodbury facility faced a lawsuit from New York Attorney General Letitia James. The state alleged the owners diverted $22. 6 million in Medicaid and Medicare funds. The court ordered the owners to pay $2 million in restitution. Former owner Benjamin Landa received a mandate to pay $500, 000 of that total.

The court findings detailed severe patient neglect. State investigators documented residents sitting in their own waste. Patients developed severe infections from infrequent bathing. The judge ruled these conditions established the facility failed to meet legal care standards. The state appointed Lisa Wickens-Alteri as the independent health care monitor in April 2024. Her subsequent reports documented dozens of staff resignations. The facility eliminated union-funded health care coverage for workers.

Investigative Fan-Out: 20 Verified Facts on the Cold Spring Hills Court Rulings

1. What facility did the Nassau County Supreme Court rule on in 2024?
The court delivered rulings regarding the Cold Spring Hills Center for Nursing and Rehabilitation located in Woodbury, New York.

2. How report beds does the Woodbury facility operate?
The facility operates 588 beds and ranks as the second-largest nursing home on Long Island.

3. Who filed the initial lawsuit against the nursing home?
New York Attorney General Letitia James filed a 186-page lawsuit against the facility in December 2022.

4. How much money did the state allege the owners diverted?
State prosecutors alleged the owners diverted $22. 6 million in Medicaid and Medicare funds away from resident care.

5. Who was the judge presiding over the March 2024 ruling?
Nassau County Supreme Court Judge Lisa Cairo presided over the case and delivered the primary decisions.

6. What specific oversight did the judge mandate?
The judge mandated the appointment of an independent health care monitor to oversee patient care operations.

7. Who received the appointment as the independent health care monitor?
The court appointed Lisa Wickens-Alteri as the independent health care monitor in April 2024.

8. How much restitution did the court order the owners to pay?
The court ordered the facility owners to pay $2 million in restitution for fraudulent business practices.

9. Which former owner received a specific restitution mandate?
The court ordered former owner Benjamin Landa to pay $500, 000 of the total restitution amount.

10. What specific care failures did the court list in the ruling?
The judge documented instances of patients sitting in their own waste, infrequent bathing schedules, and the development of severe infections.

11. How much did the facility pay in federal fines over three years?
The facility accumulated more than $600, 000 in federal fines for health and safety violations.

12. What was the exact amount of the August 2023 federal fine?
The Centers for Medicare and Medicaid Services assessed a $408, 105 fine after inspectors found untreated bedsores.

13. What specific incident led to a $22, 340 fine in May 2022?
Staff members failed to perform CPR on a resident who stopped breathing because they mistakenly believed the patient had a Do Not Resuscitate order.

14. What union represents the healthcare workers at the facility?
The 1199SEIU union represents the 440 healthcare workers employed at the nursing home.

15. How much did the court mandate the facility pay to ensure staff healthcare benefits continued?
The court mandated a $2. 65 million payment to the union benefit fund to maintain worker health coverage.

16. How report companies did the owners allegedly use to hide the diverted funds?
The state identified a network of 13 separate companies used to funnel the government funds.

17. How much money did the facility allegedly pay in fraudulent rent?
The lawsuit detailed $15. 3 million in fraudulent rent payments made to a realty company controlled by the owners.

18. When did the facility file for Chapter 11 bankruptcy?
The facility filed for Chapter 11 bankruptcy protection on January 2, 2025.

19. How much money was the facility losing weekly before bankruptcy?
Financial filings showed the facility losing more than $600, 000 every week.

20. What was the final receivership sale price for the facility in 2026?
The state approved a receivership sale of the facility for $10 in March 2026.

Federal Penalties and Care Standard Violations

Federal regulators penalized the facility heavily. The Centers for Medicare and Medicaid Services assessed more than $600, 000 in fines over three years. A mandatory inspection in August 2023 resulted in a $408, 105 fine. Inspectors found untreated bedsores and missed pain medication doses. In May 2022, the federal agency fined the facility $22, 340. Staff members failed to perform CPR on a resident who stopped breathing. The employees mistakenly believed the resident had a Do Not Resuscitate order. The resident died. Another inspection in 2024 resulted in a $182, 095 fine. A resident on oxygen therapy suffered serious facial burns while smoking unsupervised.

Financial Diversion Breakdown

Corporate Structure and Eviction Attempts

The state attorney general filed the initial 186-page lawsuit in December 2022. The complaint named Bent Philipson and his son Avi Philipson as principal operators. The state accused Bent Philipson of using straw owners to deceive the Department of Health. The lawsuit detailed a network of 13 companies used to extract cash from the nursing home. The operators transferred $42. 4 million to related parties between 2016 and 2021. The state sought to ban the hidden owners from their roles and install financial monitors.

Nassau County Supreme Court Judge Lisa Cairo rejected the state request to completely remove the owners in her March 2024 ruling. The judge also denied the request to impose tens of millions in fines. The court instead ordered the $2 million restitution payment and the independent health monitor. The ruling required the owners to pay the restitution directly. Benjamin Landa divested his ownership share in April 2019. The court still held him responsible for $500, 000 of the restitution based on his prior involvement.

Conditions at the facility worsened after the March 2024 ruling. The nursing home stopped making payments to the National Benefit Fund of 1199SEIU. The union provides health benefits to 440 employees at the facility. The state attorney general requested an emergency order to force the owners to fund the escrow account. The court mandated a $2. 65 million payment to maintain worker health coverage. The facility failed to sustain the payments. Dozens of employees resigned in the following months. Independent monitor Lisa Wickens-Alteri reported 26 nurses and 24 other workers quit their jobs.

The owners attempted an emergency evacuation of the facility in December 2024. They planned to evict 318 elderly residents just days before Christmas. The state attorney general filed for a temporary restraining order to block the mass transfer. Judge Lisa Cairo delivered an eleventh-hour ruling on December 20, 2024. The judge halted the eviction and ordered the owners to pay the staff. The state argued the sudden transfer would cause immediate and irreparable injury to the elderly residents.

The facility entered Chapter 11 bankruptcy proceedings on January 2, 2025. The nursing home reported losing more than $600, 000 every week. Union restraining notices blocked access to operating cash. The state Department of Health approved a closure plan in February 2025. The state set a May 15, 2025 deadline for the shutdown. A new buyer emerged during the receivership process. Eliezer Jay Zelman submitted a certificate of need application to acquire the property. The state approved the receivership sale for $10 in March 2026. Unsecured creditors received a two percent recovery on $79 million in claims.

The legal action against Cold Spring Hills represents part of a broader state enforcement operation. Attorney General Letitia James initiated multiple lawsuits against nursing homes in 2022. The state secured an $8. 6 million settlement from Fulton Commons Care Center in East Meadow. The state also extracted $45 million from four nursing homes managed by Centers for Care. The enforcement actions target facilities that redirect Medicare and Medicaid funds away from patient care. The state uses independent monitors to enforce compliance and protect residents from financial exploitation.

Investigative Fan Out: Tracing the Cold Spring Hills Financial Network

Our newsroom answers twenty precise questions regarding the financial diversion at Cold Spring Hills.

1. Who filed the 186 page lawsuit against Cold Spring Hills? New York Attorney General Letitia James filed the lawsuit in December 2022.

2. How much money did the state allege the owners diverted? Investigators traced 22. 6 million diverted from Medicare and Medicaid funds.

3. How report shell companies facilitated this diversion? The operators used 13 distinct corporate entities to extract the funds.

4. Who were the primary individuals named in the financial scheme? The state named Bent Philipson, Avi Philipson, Joel Leifer, Esther Farkovits, Rochel David, and Leah Friedman.

5. What was the largest single method of fund extraction? The owners paid 15. 3 million in fraudulent rent to a related real estate entity.

6. Which company received the excessive rent payments? Cold Spring Realty Acquisition LLC received the diverted rent.

7. How much money went toward deceptive consulting fees? The network funneled 5. 2 million to various consulting firms that provided no actual services.

8. What was the third method of financial extraction? The owners executed a 2 million fraudulent promissory note scheme during the facility purchase.

9. How much Medicaid funding did the facility receive between 2017 and 2021? The nursing home collected over 157 million from the New York Medicaid program.

10. How much Medicare funding did the facility receive during the same period? The federal Medicare program paid the facility over 88 million.

11. Who did the state identify as the principal owner concealing his control? Investigators identified Bent Philipson as the true principal owner.

12. Who acted as the straw owner to deceive the Department of Health? Avi Philipson acted as the visible managing member to bypass regulatory scrutiny.

13. What percentage stake did Avi Philipson officially hold? State records show he held a 24 percent stake.

14. Which entity claimed to provide nursing home consulting services? Ventura Services LLC, Highview Management Inc., and B and L Consulting LLC claimed to offer these services.

15. Which companies acted as purported insurance brokerages? Graph MGA LLC, Graph Management LLC, and Graph Insurance Company A Risk Retention Group acted as the brokers.

16. Which entities held partial ownership of the real estate? Philipson Family LLC and Lifestar Family Holdings held partial ownership of Cold Spring Realty.

17. Which company claimed to provide supplies and care services? detailed Care Solutions LLC billed the facility for these items.

18. Which entities functioned strictly as pass through vehicles? Ross CSH Holdings LLC, Rosewell Associates LLC, and ZBL Management LLC operated as pass through accounts.

19. What did the diverted funds finance? Court documents state the extracted money financed the lavish lifestyles of the owners.

20. When did the Philipson Control Group officially obtain control of the facility? The group took operational control in 2019.

The 186 Page Lawsuit and the 22. 6 Million Diversion

Attorney General Letitia James filed a 186 page lawsuit in December 2022 detailing a massive financial extraction operation. The state found that the owners of Cold Spring Hills Center for Nursing and Rehabilitation diverted 22. 6 million from resident care. The operators accomplished this by routing Medicaid and Medicare funds through 13 distinct corporate entities. The Philipson Control Group took over the facility in 2019. Bent Philipson acted as the principal owner. State investigators discovered he used his son Avi Philipson as a straw owner. Avi Philipson held a 24 percent stake and served as the managing member. This arrangement allowed Bent Philipson to conceal his true control from the New York State Department of Health. The state described Avi Philipson as a report participant inserted to deceive regulators.

The facility generated substantial revenue from taxpayer funded programs. Between 2017 and 2021, Cold Spring Hills received over 157 million from the New York Medicaid program. The federal Medicare program paid the facility over 88 million during the same five year period. This combined 245 million represented taxpayer money intended for the care of elderly and disabled residents. The state found that the owners siphoned nearly ten percent of this total revenue through their fraudulent schemes. The owners prioritized personal profit over their legal duty to provide required care.

Three Primary Methods of Financial Extraction

The operators used three primary methods to extract the 22. 6 million. report, they paid 15. 3 million in fraudulent rent to Cold Spring Realty Acquisition LLC. This real estate entity was owned by the same individuals who operated the nursing home. The state noted that Cold Spring Hills paid 10. 8 million in rent in a single year, which included 2. 6 million in direct profit for the owners. The intercompany debt structure ensured that the facility always owed money to its own owners.

Second, the owners funneled 5. 2 million to several deceptive entities for supposed consulting services. Companies like Ventura Services LLC, Highview Management Inc., and B and L Consulting LLC received these funds. The state investigation revealed these entities provided no actual services. The payments functioned solely as a method to extract cash from the facility. The owners created invoices for non existent work to justify the transfers. This deceptive practice allowed them to classify the extracted funds as business expenses.

Third, the respondents executed a 2. 1 million fraudulent promissory note scheme during the initial purchase of the facility in 2016. The Philipson and Landa portfolios acquired the facility for 67. 8 million. The promissory note scheme allowed the owners to extract an immediate 2. 1 million profit from the transaction. This upfront profit taking set the pattern for the subsequent years of financial diversion.

The 13 Company Network

The complex network of companies allowed the owners to hide their identities and orchestrate multiple deceptive schemes. The extracted funds financed the lavish lifestyles of the owners. The state named several individuals in the lawsuit. The list included Bent Philipson, Avi Philipson, Joel Leifer, Esther Farkovits, Rochel David, and Leah Friedman. The Attorney General sought to remove these individuals from any further role at Cold Spring Hills. The state also demanded they disgorge all funds wrongfully received.

The 13 shell companies served specific roles in the diversion operation. Cold Spring Realty Acquisition LLC owned the physical property. Philipson Family LLC and Lifestar Family Holdings held partial ownership of the realty company. Graph MGA LLC, Graph Management LLC, and Graph Insurance Company A Risk Retention Group acted as insurance brokerages. detailed Care Solutions LLC claimed to provide services and supplies. Ross CSH Holdings LLC, Rosewell Associates LLC, and ZBL Management LLC operated as pass through accounts.

The extraction of 22. 6 million directly reduced the funds available for patient care. The facility operated with severe understaffing. The state investigation found that the owners prioritized their personal financial benefit over the welfare of the residents. The diverted funds could have paid for additional nurses, better medical supplies, and improved facility maintenance. Instead, the money flowed into the bank accounts of the Philipson Control Group. The Attorney General stated this structure directly facilitated the financial diversion.

The financial diversion directly impacted daily operations at the 588 bed facility. The state documented that the nursing home failed to maintain adequate staffing levels. The absence of proper funding meant the facility could not hire enough registered nurses or certified nursing assistants. The state investigation linked the 22. 6 million extraction directly to the substandard conditions inside the building. The owners extracted cash while the physical infrastructure of the building declined. The state noted that the facility failed to replace broken wheelchairs, beds, and air conditioning units. The financial records proved the facility had the money to fix these problems, report the owners chose to divert the cash into their pass through entities instead.

Investigative Breakdown: 20 Questions on the Benjamin Landa Rulings

1. Who is Benjamin Landa? Benjamin Landa is the chief executive officer of SentosaCare LLC.

2. What amount must Landa pay? The court ordered Landa to pay 500, 000 dollars in restitution.

3. When did the judge sign this order? Nassau County Supreme Court Judge Lisa Cairo signed the order on March 15, 2024.

4. What role did Landa claim at Cold Spring Hills? Landa claimed he acted only as a landlord.

5. When did Landa say he divested from the operations? His attorney stated Landa divested from operations on April 1, 2019.

6. Who did the state allege acted as a straw owner for Landa? The state identified his daughter Esther Farkovits as a straw owner.

7. Where does Esther Farkovits live? She resides in Israel.

8. What company received the 5. 6 million dollar interest payments? Cold Spring Realty received those payments.

9. Who owned Cold Spring Realty? Benjamin Landa and other investors owned the realty company.

10. What interest rate applied to the promissory note? The note carried a 13 percent interest rate.

11. Did Landa sell other nursing homes report? Yes, he sold multiple facilities.

12. Which facility did Landa sell in September 2024? He sold Premier Nursing and Rehab Center for 47 million dollars.

13. Which facility did Landa sell in 2025? He sold Meadow Park Rehabilitation and Health Care Center for 23 million dollars.

14. What federal audit involved Landa in 2025? The Office of Inspector General audited Pinnacle Multicare Nursing and Rehabilitation Center.

15. What did the Pinnacle audit find? Auditors found 99 out of 100 Medicare claims did not meet payment rules.

16. How much did the government estimate Pinnacle overbilled? The government estimated 31. 2 million dollars in overpayments.

17. What other New York facility faced a lawsuit involving Landa? The state sued The Villages of Orleans in 2023.

18. How much money did owners divert from The Villages of Orleans? The state alleged owners diverted 18. 6 million dollars.

19. Who nominated Landa for a federal position? Donald Trump nominated Landa.

20. What position did the president nominate Landa for? The president nominated him to be the United States Ambassador to Hungary in November 2025.

The March 2024 Financial Penalty

Nassau County Supreme Court Judge Lisa Cairo directed Benjamin Landa to pay 500, 000 dollars in restitution on March 15, 2024. The payment represents one quarter of the 2 million dollar total penalty levied against the ownership group of Cold Spring Hills Center for Nursing and Rehabilitation. The New York Attorney General proved the owners executed a 22. 6 million dollar financial fraud scheme. Landa serves as the chief executive officer of SentosaCare LLC. He operates as a major investor in the New York nursing home industry.

The Defense and the Straw Owners

Landa and his legal representation argued he held no operational control over the Woodbury facility. Attorney Howard Fensterman stated Landa divested his operational shares on April 1, 2019. Fensterman claimed Landa acted solely as a landlord. State investigators presented evidence contradicting this defense. The Attorney General identified Esther Farkovits as a straw owner. Farkovits is the adult daughter of Landa. She resides in Israel. The state proved Landa used his daughter to conceal his continued control over the facility finances.

The Promissory Note Scheme

The financial diversion relied on a 13 percent interest promissory note. Investigators found this note functioned as a concealed vehicle to extract funds. The nursing home paid 5. 6 million dollars in interest through this note. The money went directly to Cold Spring Realty. Landa held a direct ownership stake in Cold Spring Realty. The court determined these payments prioritized owner profits over patient care. The extraction of these funds directly reduced the money available for facility staffing.

Other Landa Facilities and Federal Audits

The Cold Spring Hills judgment represents one part of a broader legal record for Landa. The federal Office of Inspector General audited Pinnacle Multicare Nursing and Rehabilitation Center in 2025. Landa operates this facility. The audit reviewed 100 Medicare claims. Investigators found 99 of those claims violated Medicare payment rules. The government estimated Pinnacle overbilled Medicare by 31. 2 million dollars. The state also sued Landa in 2023 regarding The Villages of Orleans. The Attorney General alleged Landa and his partners diverted 18. 6 million dollars from that facility.

Defamation Lawsuit Dismissal

Landa attempted to sue a publication called The American Prospect for defamation in 2022. The publication printed an article detailing his business practices. The text referenced human trafficking lawsuits and Medicare fraud settlements. Eastern District of New York Judge Joan Azrack dismissed the lawsuit in August 2023. The judge ruled the published statements were substantially true or protected as fair reports of official proceedings. Court documents from that case highlighted a previous 3. 7 million dollar Medicaid fraud settlement involving a Landa facility. The court record also noted incidents where a resident attempted to escape a facility through a third story window.

Political Connections and Campaign Contributions

Landa maintains active political connections in New York. Nassau County Executive Bruce Blakeman visited the residence of Landa in the Five Towns area. Blakeman attended this meeting alongside Israeli national security minister Itamar Ben Gvir. Campaign finance records show Landa donated 7, 500 dollars to the campaign of Blakeman. The son of Landa currently holds a position on the Nassau County public payroll. These political ties remain active as Landa awaits his Senate confirmation hearings for the ambassador position.

Recent Divestments and Political Nominations

Following the Cold Spring Hills ruling Landa began selling his nursing home assets. He sold the Premier Nursing and Rehab Center in Far Rockaway for 47 million dollars in September 2024. He sold the Meadow Park Rehabilitation and Health Care Center in Queens for 23 million dollars in 2025. President Donald Trump nominated Landa to serve as the United States Ambassador to Hungary in November 2025. The nomination moved to the Senate Committee on Foreign Relations on January 13, 2026.

The Skyline Network Comparison

Industry analysts compare the financial tactics of Landa to other large nursing home operators. The Senior Care Policy Briefing published a report in December 2025 analyzing these operations. The report examined the Pinnacle Multicare audit alongside the collapse of the Skyline network. The publication noted that operators execute large financial extractions for years because state oversight provides minimal deterrence. The document detailed how owners use complex corporate structures to shield themselves from direct liability when patient care fails.

Financial Diversion and Restitution Metrics

The Financial Diversion Network

State investigators mapped a specific financial diversion network at Cold Spring Hills Center for Nursing and Rehabilitation. The New York Attorney General filed a 186 page lawsuit in December 2022 detailing these exact financial transfers. The operators used 13 separate companies to extract cash from the facility. The state proved these transactions provided zero actual services to the patients. The owners prioritized upfront profit taking over patient care. The financial extraction occurred between 2017 and 2021.

1. The 5. 2 Million Consulting Fee Structure

The state investigation identified 5. 2 million dollars paid to deceptive entities for supposed consulting services. The operators used these companies to create the appearance of legitimate nursing home expenses. The funds actually served as upfront profit for the owners. Bent Philipson ran Philosophy Care during this period. This firm provided consulting services for other nursing facilities across New York and New Jersey. The court records show these consulting arrangements provided zero corresponding benefits for the residents at Cold Spring Hills. The operators simply moved the money from the facility accounts to the consulting entities.

State investigators dedicated a large portion of their inquiry to this consulting fee structure. The operators established these consulting firms to extract cash from the facility. The state found zero evidence that these firms provided actual guidance or operational support to the nursing home staff. The consulting fees functioned as a direct pipeline from the facility bank accounts to the owners. The operators authorized monthly payments to these firms. The nursing home staff never interacted with any consultants from these companies. The state auditors reviewed the facility records and found zero deliverables or reports generated by these consulting entities. The payments simply reduced the available cash for patient care and increased the personal wealth of the ownership group.

2. The 15. 3 Million Rent Extraction Model

Cold Spring Hills operators paid 15. 3 million dollars in fraudulent rent to Cold Spring Realty. The same individuals who operated the nursing home owned this real estate entity. The real estate company functioned as a shell entity to hold the property title and charge excessive rent to the operating company. The rent easily covered the actual property expenses and generated large shareholder distributions. State investigators proved the rent payments were collusively designed to transfer wealth directly back to the shareholders.

The rent extraction model represented the largest single diversion of funds. The state proved the rent payments far exceeded the actual cost of maintaining the property. The real estate company functioned solely to pass the excess cash directly to the shareholders. The operators claimed the rent payments represented fair market value. The state auditors rejected this claim. The auditors demonstrated that the rent easily covered all property expenses and left a large surplus. The owners distributed this surplus to themselves. The court found this arrangement collusive. The owners negotiated the rent prices with themselves. They had zero incentive to keep the rent costs low. High rent prices simply meant higher personal profits.

3. The 10. 6 Million Insurance Self Dealing Network

The owners funneled 10. 6 million dollars through concealed self dealing transactions. They used entities that ostensibly operated as insurance companies. The investigation revealed these transactions simply moved Medicaid and Medicare funds from the facility accounts into the personal accounts of the ownership group. The state found zero evidence that these insurance companies provided actual coverage or risk mitigation for the facility.

The facility paid high premiums to these entities. The state noted that legitimate insurance policies transfer risk from the facility to an independent provider. The Cold Spring Hills arrangement transferred zero risk. The owners controlled the insurance entities. They set the premium prices. They authorized the payments from the facility. The entire structure existed solely to extract cash from the nursing home operations.

4. The 8. 1 Million Supply Company Facade

The state identified another 8. 1 million dollars diverted through a separate entity. This company purportedly provided services and supplies to Cold Spring Hills. The investigation proved the entity functioned primarily to extract cash from the facility rather than deliver necessary operational supplies. The operators created fake invoices to justify the large payments to this supply company.

The facility operators authorized payments to this entity for supposed operational materials. The state auditors reviewed the invoices and found them fraudulent. The supply company delivered zero actual goods to the facility. The payments simply drained cash from the nursing home. The nursing home staff reported severe deficits of basic supplies during this period. The facility operated without clean linens and basic hygiene products. The state investigation proved the facility had the funds to purchase these supplies. The operators chose to divert the funds to their pretend supply company instead of buying the necessary materials for the patients.

5. The 2 Million Promissory Note Transaction

The owners executed a 2 million dollar fraudulent promissory note transaction during the facility purchase. The note carried a 13 percent interest rate. This arrangement guaranteed high returns for the investors while draining operational capital from the nursing home. The state noted that standard business investments carry a risk of loss. The Cold Spring Hills transactions carried zero risk because the owners controlled both sides of the deal.

The facility paid the high interest rates directly to the owners. The high interest payments drained operational capital from the nursing home. The facility struggled to pay for sufficient staffing while simultaneously paying 13 percent interest to the owners. The court found this arrangement prioritized shareholder profits over patient care.

6. The 245 Million Public Funding Source

Between 2017 and 2021 the facility received 245 million dollars in public money. The New York Medicaid program paid the facility more than 157 million dollars. The federal Medicare program provided over 88 million dollars. The operators siphoned a large percentage of this total into their own pockets.

The facility relied entirely on public funds for its operations. The state investigation proved the owners transferred more than 42. 4 million dollars to themselves and related parties during this time. The operators used the 13 company network to hide these transfers from state regulators.

7. The Ownership Structure

The state named 12 individuals in the financial fraud lawsuit. The list included Bent Philipson and his adult son Avi Philipson. The state also named Benjamin Landa and his adult daughter Esther Farkovits. Other named individuals included Joel Leifer and David Zahler and Chaya Zahler and Rochel David and Leah Friedman and Chaim Zahler and Jacob Zahler.

The state accused Benjamin Landa of concealing his ownership stake. The court records show the owners used their family members to hide the true control of the facility. The operators filed false documents with the State Department of Health to obscure the ownership structure. The hidden owners directed the financial diversion network while avoiding regulatory scrutiny.

Operational Impact of the Financial Diversion

The financial extraction directly degraded the quality of care at the facility. The operators diverted 42. 4 million dollars while the nursing home operated with severe staffing deficits. The state investigation documented the direct correlation between the financial fraud and the patient neglect. The facility staff confirmed the staffing deficits existed long before the pandemic began. The operators refused to hire additional staff because doing so reduced their upfront profits.

The state auditors calculated the exact cost of sufficient staffing. The facility had more than enough public funding to hire sufficient nurses and aides. The operators intentionally kept the staffing levels low to maximize the cash available for the consulting fees and excessive rent payments. The court found this behavior violated the legal duties of the nursing home operators. The law requires operators to prioritize patient care over shareholder profits.

The financial diversion also impacted the physical environment of the facility. The operators deferred necessary maintenance and repairs. The facility infrastructure degraded while the owners extracted millions of dollars through their real estate shell company. The state inspectors documented broken equipment and unsanitary conditions throughout the building. The operators claimed they had zero funds to fix the problems. The state investigation proved the operators had the funds report chose to transfer the money to themselves.

Financial Diversion Breakdown

Patients Left In Soiled Garments And Denied Regular Baths Spark Severe Infection Outbreaks

State investigators and the New York Attorney General documented a pattern of severe hygiene deprivation at Cold Spring Hills Center for Nursing and Rehabilitation. Between 2019 and 2022, facility staff routinely left elderly adults in soiled incontinence briefs for extended durations. The lawsuit detailed how management prioritized financial extraction over basic human dignity. The owners reduced staffing levels to the point where regular bathing schedules collapsed. Residents sat in their own waste. This environment led to a surge in preventable skin breakdowns, urinary tract infections, and bacterial outbreaks.

The state investigation highlighted specific cases of physical decay resulting from these conditions. One diabetic resident required a wheelchair for mobility. Facility staff provided a wheelchair without footrests. The resident was forced to drag his feet on the floor to move around the building. He developed friction sores on his right foot. Staff failed to provide adequate wound care. The sores became severely infected. Medical personnel at Plainview Hospital informed the family they might need to amputate three or four toes because the infection resisted antibiotics. Surgeons eventually had to amputate a portion of his big toe to stop the infection from spreading. The hospital then discharged the resident back to Cold Spring Hills.

Another resident, identified in court documents as S.H., arrived at the facility in August 2019 for short term rehabilitation. She had suffered a massive stroke that left her unable to walk, speak, or use her dominant hand. Over a five month period, facility records and family testimony confirmed she received exactly three showers. Staff blamed a broken bariatric shower chair. Instead of fixing the equipment, staff resorted to occasional sponge baths. Her daughter noted the resident constantly suffered from bad body odor due to the absence of bathing.

During a care plan meeting in October 2019, the family confronted the nursing staff about the hygiene failures. The staff falsely claimed the resident was being showered regularly and that the showers were documented in her medical chart. Later, the staff changed their story and claimed the resident was refusing to take showers. The family eventually had to visit the facility weekly to bathe her themselves from September 2019 through March 2020. The resident developed a bacterial skin infection from scratching unwashed skin and required hospitalization for a severe urinary tract infection.

Documented Cases of Resident Neglect at Cold Spring Hills (2019-2022)

The physical state of the resident bathrooms and living quarters presented serious biohazards. Family members photographed feces smeared on bathroom walls. Sinks had no running water or missing hot water handles. Dark brown rust ringed the drains. Families found food, a fork, clothing, a medication cup, shoes, a newspaper, and other garbage shoved under the beds. In the case of Resident 47, a jammed bathroom door remained unfixed for nearly four months. Denied access to the toilet, the resident was forced to urinate and defecate on the bedroom floor. The family complained to the nurses and the receptionist repeatedly. Staff members admitted to state investigators that they placed continent residents in adult diapers purely for staff convenience. There were not enough aides to assist with bathroom trips.

Other families reported similar hygiene denials. One daughter, Ms. Arrazola, testified that staff told her they could not give her father showers for more than seven months due to pandemic rules. He was scheduled to receive a bed bath two times a week. Staff failed to provide even these minimal sponge baths regularly. She observed his physical decline and unwashed state via weekly video calls. The facility ombudsmen also received numerous complaints regarding the complete absence of regular showers and the frequent loss of resident clothing.

Beyond hygiene, the staffing cuts triggered serious nutritional deficits. One resident in his seventies arrived for rehabilitation after a car accident. He lost thirty pounds in less than four months. Facility staff failed to monitor his food and fluid intake. He required emergency hospitalization for serious protein malnutrition and dehydration. Food trays routinely sat untouched in rooms. The rotting food attracted vermin and flies while residents who could not feed themselves wasted away.

The baseline hygiene failures compounded the facility failure to manage infectious diseases. During the height of the COVID-19 pandemic, staff operated with an absence of basic personal protective equipment. Employees resorted to wearing plastic garbage bags instead of medical gowns. Management stopped placing warning signs on the doors of infected residents in May 2020. Infected and non infected residents shared the same spaces. This practice accelerated the viral spread. Families received automated phone calls detailing the daily death toll and new infection counts. The combination of unwashed bodies, untreated bedsores, and rampant viral exposure created a lethal environment.

The New York Attorney General Medicaid Fraud Control Unit compiled these accounts from hundreds of interviews with staff, residents, and family members. Investigators reviewed medical records proving that the facility billed Medicare and Medicaid for care that was never delivered. The owners extracted 22.6 million dollars through a fraudulent network of thirteen companies. They used these companies to create a facade of legitimate expenses. The money was meant for staffing and patient care. The deliberate understaffing directly caused the hygiene failures.

The lawsuit detailed several schemes used to siphon funds away from patient care. The owners executed fraudulent rent payments and questionable consulting fees. They also used a promissory note scheme to enrich themselves while the facility operated on skeleton crews. From 2017 through 2021, Cold Spring Hills received over 157 million dollars from the New York Medicaid program and over 88 million dollars from Medicare. Instead of using these taxpayer funds to hire enough aides to bathe residents and change soiled garments, the operators funneled the money into their own accounts.

Government Funding Received by Cold Spring Hills (2017-2021)

The court evaluated these specific instances of soiled garments, denied baths, and resulting infections. The judge determined these facts established a clear violation of state public health laws requiring facilities to maintain sanitary surroundings and provide adequate activities of daily living.

Judge Lisa Cairo Rejects Tens Of Millions In Fines For Cold Spring Realty Ownership Group

New York Attorney General Letitia James sought tens of millions of dollars in financial penalties against the owners of Cold Spring Hills Center for Nursing and Rehabilitation. The state alleged the ownership group diverted $22. 6 million in Medicaid and Medicare funds through a network of 13 affiliated companies. Nassau County Supreme Court Judge Lisa Cairo rejected the majority of the financial penalties requested by the state in her March 2024 ruling. The court ordered four ownership entities to pay a combined $2. 015 million in restitution, dismissing the broader demands for tens of millions in fines.

The ruling delivered a partial victory to Cold Spring Realty Acquisition LLC and the associated ownership entities. Judge Cairo denied the state request to install an independent financial monitor to oversee the facility finances. The court also rejected the state demand to remove Bent Philipson from his ownership position. The judge determined that the state could not hold the real estate entity members fully liable for the operational failures of the nursing home. The court found that the drastic remedy of a preliminary injunction for financial oversight was unwarranted without further evidence.

The Alleged $22. 6 Million Diversion Network

The state lawsuit detailed specific financial transfers that the attorney general classified as fraudulent schemes. The court reviewed the allegations report did not impose the corresponding financial penalties. The rejected fines pertained to the following alleged diversions:.

The state attorney general office claimed that the operators of Cold Spring Hills used these 13 companies to create the appearance of paying for legitimate services. The state asserted the network of companies served to hide the real owners of the nursing home and divert Medicaid and Medicare funds directly to the ownership group. The lawsuit named Cold Spring Hills, Cold Spring Realty Acquisition LLC, Ventura Services LLC, Highview Management Inc., B&L Consulting LLC, Graph MGA LLC, Graph Management LLC, Graph Insurance Company A Risk Retention Group, Philipson Family LLC, Lifestar Family Holdings, detailed Care Solutions LLC, Ross CSH Holdings LLC, Rosewell Associates LLC, and ZBL Management LLC as respondents.

The Mechanics of the Alleged Rent Scheme

The state attorney general dedicated of the lawsuit to the relationship between the operating entity and Cold Spring Realty Acquisition LLC. The state alleged that the owners paid more than $15. 3 million in fraudulent rent to the real estate entity. The lawsuit detailed that the same individuals who operated the nursing home also owned the property. The state claimed that this arrangement allowed the owners to siphon Medicaid and Medicare funds away from patient care and directly into their own accounts. The state classified these payments as up-front profit taking, designed to enrich the owners while the facility suffered from severe understaffing.

The defense countered these claims by emphasizing the legal separation between the operating entity and the real estate holding company. The attorneys maintained that rent payments represent a standard business practice in the nursing home industry. The defense stated that the state failed to prove the rent payments were fraudulent or excessive compared to market rates. Judge Cairo reviewed these claims and report declined to impose the massive fines requested by the state. The court decision protected the real estate entity from the severe financial penalties sought by the attorney general.

The Insurance and Consulting Diversions

The state also targeted the $10. 6 million funneled through insurance brokerages. The lawsuit named Graph MGA LLC, Graph Management LLC, and Graph Insurance Company A Risk Retention Group as the primary vehicles for this alleged diversion. The state asserted that these entities acted as pass-through companies, allowing the owners to extract additional funds from the facility under the guise of insurance premiums. The state claimed these transactions represented concealed self-dealing.

The $5. 2 million paid for consulting services faced similar scrutiny. The state alleged that Ventura Services LLC, Highview Management Inc., B&L Consulting LLC, and Rosewell Associates LLC provided little to no actual value to the nursing home. The attorney general classified these payments as deceptive methods used to drain resources from the facility. The state alleged that the owners prioritized these consulting fees over hiring adequate staff to care for the residents. The court acknowledged the possible misuse of facility funds for personal profit report ruled that the state did not provide sufficient evidence to warrant the immediate installation of a financial monitor or the imposition of tens of millions in fines.

Defense Arguments and Legal Victories

The defense attorneys contended that the state overreached by attempting to penalize real estate investors for the daily operations of the nursing home. Attorney Howard Fensterman stated that Benjamin Landa divested his ownership in the operating entity on April 1, 2019. This divestment occurred nearly a year before the COVID-19 pandemic struck the facility. Fensterman stated that the state tried to tie Landa to his daughter, Esther Farkovits, who resides in Israel and acts as a passive investor. The defense maintained that all ownership information was fully disclosed to the New York State Department of Health.

The law firm Kasowitz Benson Torres represented Lifestar Family Holdings and its investors in the proceedings. The firm successfully defeated the motion for a preliminary injunction brought by the attorney general. The state sought the appointment of an independent financial monitor for the nursing home, which sits on property owned by Cold Spring Realty Acquisition LLC. Judge Cairo denied the motion on October 20, 2023. The court agreed with the defense that the state failed to provide sufficient evidence to justify the immediate installation of a financial overseer.

The $2. 015 Million Restitution Order

While rejecting the tens of millions in fines, Judge Cairo did find that Cold Spring Hills engaged in misleading facility financing. The court mandated that four ownership entities pay a combined $2. 015 million in restitution to the nursing home. Benjamin Landa received a mandate to pay $500, 000 of that total. The court limited the financial penalties to this specific restitution order, allowing the ownership group to avoid the massive financial ruin sought by the state.

The state attorney general office expressed dissatisfaction with the financial aspect of the ruling. The state continues to pursue additional penalties in ongoing legal proceedings. The ownership group maintained control of the real estate and the operating licenses. The facility continues to operate under the scrutiny of the health care monitor, report the owners retain full control over the facility finances. The rejection of the financial monitor and the massive fines represents a significant legal victory for the Cold Spring Realty Ownership Group.

Ongoing Financial Struggles and Bankruptcy

The legal victory regarding the fines did not resolve the underlying financial instability of the facility. Cold Spring Hills Center for Nursing and Rehabilitation filed for Chapter 11 bankruptcy protection on January 2, 2025. The bankruptcy petition revealed that the nursing home owed nearly $22 million in unpaid rent to its landlord, Cold Spring Realty Acquisition LLC. This entity is controlled by the Philipson family. The intercompany debt structure meant that a substantial portion of the estate liabilities were owed to entities controlled by the same principals who managed the debtor.

The bankruptcy filing disclosed between $1 million and $10 million in assets against $50 million to $100 million in liabilities. The facility reported losing more than $600, 000 weekly leading up to the filing. The financial distress originated from the 2022 attorney general lawsuit, census declines driven by the COVID-19 pandemic, and union restraining notices that blocked access to operating cash. The facility owed more than $4. 2 million to the 1199SEIU National Benefit Fund for employee health care coverage.

The union restraining notices played a serious role in the financial collapse of the facility. The 1199SEIU National Benefit Fund delivered the notices after the nursing home failed to make court-ordered payments for employee health care coverage. Judge Cairo previously held the owners in contempt for ignoring a directive to pay $2. 65 million to the fund. The judge levied a $250 fine against the owners and ordered them to pay administrative and attorney fees. The owners stated they did not have the cash reserves to make the payment, referencing the ongoing legal battle with the state as a primary cause of their financial distress.

The bankruptcy case resulted in a receivership sale structure. 378Sywood LLC assumed operations for a $10 purchase price and the assumption of approximately $75. 9 million in mortgage obligations. General unsecured creditors faced an estimated 2 percent recovery on $79. 1 million in claims. The ownership group, while avoiding the massive state fines, eventually lost control of the operating entity through the bankruptcy process. The real estate entity, Cold Spring Realty Acquisition LLC, retained its position as a major creditor in the bankruptcy proceedings.

The Straw Owner Scheme To Bypass State Regulators

New York Attorney General Letitia James filed a 186 page civil lawsuit in December 2022 detailing a large financial deception at Cold Spring Hills Center for Nursing and Rehabilitation. The state accused principal investors Bent Philipson and Benjamin Landa of installing their adult children as front operators to deceive the New York State Department of Health. State prosecutors labeled these children as straw owners. The arrangement allowed the true operators to conceal their control from state regulators. The Department of Health requires accurate ownership disclosures to vet nursing home operators and enforce care standards. By hiding their involvement behind family members, Bent Philipson and Landa bypassed mandatory state scrutiny.

The legal filings name specific family members inserted into the corporate structure. Avi Philipson, the adult son of Bent Philipson, held a 24 percent stake in the facility. The state approved Avi Philipson as the managing member based on submitted documents. Prosecutors characterized Avi Philipson as a report straw owner inserted to deceive regulators. Benjamin Landa installed his adult daughter, Esther Farkovits, as another partial owner. Court records show Farkovits testified under oath that she was wholly unaware of her ownership interest in Cold Spring Hills until she received a state subpoena in 2022. David Zahler and his wife Chaya Zahler also participated in the scheme. They named their daughters, Rochel David and Leah Friedman, as straw owners to mask their own financial control over the Woodbury facility.

Alleged Straw Owners and True Controllers

The concealed ownership structure directly violated New York Public Health Law Section 2801. This statute governs the establishment and incorporation of medical facilities. The law mandates exact character and competence reviews for anyone holding an ownership stake in a nursing home. State regulators use these reviews to prevent individuals with histories of poor patient care from acquiring new facilities. Bent Philipson and Landa had extensive histories in the nursing home industry. By omitting their names from the official Cold Spring Hills operating certificate, the men avoided the mandatory character and competence evaluations. The Department of Health approved the facility license based on the fabricated ownership roster.

The straw owner arrangement facilitated a large extraction of public funds. The operators established a network of 13 separate corporate entities to siphon money away from patient care. From 2017 through 2021, Cold Spring Hills received more than 157 million dollars from the New York Medicaid program and over 88 million dollars from Medicare. The state lawsuit detailed three primary methods used to drain these funds. The operators paid more than 15. 3 million dollars in fabricated rent to Cold Spring Realty Acquisition LLC. The Philipson family controlled this landlord entity. The operators also funneled 5. 2 million dollars to deceptive entities for supposed consulting services. Companies like Ventura Services LLC, Highview Management Inc., and B and L Consulting LLC claimed to provide management advice. State investigators found these companies served primarily as pass through vehicles to enrich the hidden owners. The operators also executed a 2 million dollar fraudulent promissory note scheme during the initial 2016 facility acquisition.

Financial Diversion Breakdown

The operators also used captive insurance companies to extract funds. The state lawsuit named Graph MGA LLC, Graph Management LLC, and Graph Insurance Company A Risk Retention Group. These entities purportedly acted as insurance brokerages for the nursing home. The hidden owners directed facility funds to these brokerages to pay for liability coverage. The state alleged these payments were artificially increased and served as another method to divert Medicare and Medicaid money into the pockets of the Philipson and Landa families. The complex network of limited liability companies made it nearly impossible for state auditors to track the public funds. The operators used Lifestar Family Holdings and Philipson Family LLC as partial owners of the real estate entity. They used Ross CSH Holdings LLC, Rosewell Associates LLC, and ZBL Management LLC as additional pass through companies.

The financial drain directly impacted the daily operations at the 588 bed facility. The hidden owners prioritized profit extraction over mandatory patient care. The Department of Health sent a formal notice to Cold Spring Hills on February 6, 2020. The state directive ordered all nursing homes to prepare for the incoming respiratory virus pandemic. Bent Philipson ignored the state warning. In February 2020, he planned to cut 1. 6 million dollars in facility expenses by reducing the nursing staff. The facility operated with a severely reduced staff before the pandemic began. The staff reductions left the facility entirely unprepared for the medical emergency. Between March 1, 2020, and June 4, 2020, 166 residents died at Cold Spring Hills. The facility recorded 98 deaths from the virus and 68 from other causes. State investigators found the facility failed to report 51 of those virus deaths to the Department of Health.

The financial extraction had severe consequences for the elderly residents. The state lawsuit documented specific instances of severe neglect resulting from the staff reductions. Family members frequently observed unclean conditions and broken medical equipment. Wheelchairs, beds, shower chairs, and air conditioners remained broken for months. The reduced staff left residents sitting in soiled briefs for extended periods. The facility failed to provide proper wound care. One resident entered the facility to regain mobility after a car crash. The man developed a severe infection in the bone of his right foot. His medical records showed a preexisting pressure sore advanced to a stage 4 injury during his stay. The man lost 30 pounds due to severe malnutrition and dehydration. He eventually told his wife that the facility staff tried to kill him. These conditions directly correlated with the 22. 6 million dollars the hidden owners removed from the facility budget.

The operators also directed funds toward political campaigns while the facility declined. State campaign finance records show individuals linked to the nursing home made multiple political contributions. A person identified as Deborah Philipson, the late wife of Bent Philipson, is linked to political donations made in July 2022. The estate of Deborah Philipson was named in the state lawsuit. Other individuals associated with the Philipson family and the hidden ownership network also made contributions to state political figures. The state attorney general noted that the operators prioritized political influence and personal wealth over their legal obligation to provide adequate medical care.

The deceptive ownership structure complicated the eventual financial collapse of the facility. Cold Spring Hills filed for Chapter 11 bankruptcy on January 2, 2025. The facility reported losing more than 600, 000 dollars every week. The bankruptcy filings revealed the extent of the intercompany debt created by the hidden owners. The facility owed approximately 21. 8 million dollars in unpaid rent to Cold Spring Realty Acquisition LLC at the time of the bankruptcy filing. This meant the bankrupt facility owed its largest debts to the exact same people who controlled its operations. The bankruptcy court appointed an examiner to investigate the ownership arrangement. The federal bankruptcy judge eventually approved a receivership sale of the facility for just 10 dollars. The buyer assumed approximately 75. 9 million dollars in mortgage obligations. Unsecured creditors received an estimated 2 percent recovery on 79. 1 million dollars in claims.

The state pursued severe penalties for the deception. Attorney General James asked the court to ban Bent Philipson, Avi Philipson, Joel Leifer, Esther Farkovits, Rochel David, and Leah Friedman from having any future role at Cold Spring Hills. The state demanded the operators return all funds wrongfully received through the scheme. The lawsuit also sought to prohibit the facility from admitting any new residents until staffing levels met legal standards. The court eventually installed an independent financial monitor to oversee the facility operations. The legal actions exposed the weaknesses in the state regulatory system. The Department of Health relied on self reported ownership documents. The Cold Spring Hills case demonstrated how operators could easily manipulate those documents to bypass state oversight and extract millions in public healthcare funds.

The December 2022 Lawsuit Filing

New York Attorney General Letitia James filed a civil lawsuit on December 16, 2022. State prosecutors detailed a financial diversion operation at Cold Spring Hills Center for Nursing and Rehabilitation. The legal action named multiple defendants under Executive Law 63(12), which report repeated fraudulent or illegal acts in business operations. The list included Bent Philipson, Benjamin Landa, Avi Philipson, Joel Leifer, Cheskel Berkowitz, Rochel David, Esther Farkovitz, Leah Friedman, Chaim Zahler, Chaya Zahler, David Zahler, Jacob Zahler, Joel Zupnick, and the estate of Deborah Philipson. report of these individuals share family ties. They also control massive portfolios of healthcare facilities across the country. Court records show Bent Philipson owns 68 nursing homes nationwide. Benjamin Landa holds ownership report in 100 facilities. The state investigation focused on how these operators managed the Woodbury facility and prioritized personal profit over patient care.

Medicaid and Medicare Revenue vs. Diversion

Between 2017 and 2021, the Woodbury facility collected $157 million from the New York Medicaid program. The nursing home also received $88 million from Medicare during the same period. State regulations require operators to use these taxpayer funds for patient care and facility operations. Prosecutors found the owners routed $22. 6 million into their own accounts instead. Investigators mapped a network of 13 distinct corporate entities. The operators used these companies to conceal the true owners of the facility from the Department of Health. This corporate structure allowed the defendants to execute multiple financial extraction methods while avoiding immediate regulatory detection. The state sought to order the respondents to disgorge and return the illegally converted Medicaid funds under Executive Law 63-c.

The Two Million Dollar Promissory Note Scheme

A central component of the financial extraction involved a specific promissory note. The operators executed a $2 million note during the initial purchase of the facility. State filings show this financial instrument carried a 13 percent interest rate. A promissory note creates a formal debt obligation. In this case, the owners created debt to justify continuous cash extraction from the nursing home revenues. Prosecutors identified this transaction as a deliberate method to convert Medicaid and Medicare care funds into upfront personal profit. The high interest rate accelerated the rate of capital extraction. The facility paid this debt using funds intended for resident care. This specific scheme demonstrated how the owners manipulated financial instruments to drain operating capital.

The Real Estate and Consulting Extraction

The financial diversion extended far beyond the initial purchase note. The operators paid $15. 3 million in rent to Cold Spring Realty. The same individuals who operated the nursing home owned this real estate company. By paying exaggerated rent to themselves, the owners bypassed state regulations. The operators also distributed $5. 2 million to several deceptive entities. They labeled these payments as compensation for management and consulting services. State investigators found these consulting firms provided no actual value to the nursing home or its residents. The payments served only to move cash from the facility accounts to the owners. The state noted that the facility paid these sham management fees while its federal quality ratings dropped.

Insurance and Supply Funnels

Prosecutors identified two additional channels used to extract capital. The owners funneled $10. 6 million through concealed self dealing transactions. They disguised these transfers as insurance payments to entities they controlled. The operators routed another $8. 1 million through a separate entity. This company supposedly provided services and supplies to the nursing home. The state found these transactions were part of the broader extraction operation. Between 2016 and 2021, the total amount transferred to the owners and related parties reached $42. 4 million. The lawsuit sought to prohibit Cold Spring Hills from admitting any new residents until staffing levels met appropriate standards. The state also demanded the facility engage and pay for a financial monitor to oversee all financial operations.

Financial Diversion Channels Identified by State Prosecutors

The New York Attorney General documented multiple methods used by Cold Spring Hills operators to extract funds between 2016 and 2021.

The Human Cost of Financial Extraction

The financial extraction directly impacted the frail residents living at the facility. In February 2020, principal owner Bent Philipson ordered a $1. 6 million reduction in staffing expenses. He mandated these budget cuts just days after the state Department of Health warned all nursing homes to prepare for the impending viral outbreak. The state issued this warning on February 6, 2020. While the facility operated with reduced staff, Philipson extracted $4 million for himself in 2020. The consequences proved fatal. Between March 1 and May 31, 2020, 92 residents died at Cold Spring Hills. This death toll represented one third of the facility population. The state findings demonstrated the respondents repeatedly prioritized their personal profits over the duty to provide required care.

Specific Cases of Neglect

The state attorney general collected testimonies from staff and family members detailing severe neglect. One diabetic resident experienced difficulty walking. Facility staff provided him with a wheelchair missing footrests. The patient dragged his feet on the floor. He developed severe sores as a result. In August 2021, another resident required emergency hospital admission. Medical staff diagnosed him with severe malnutrition and dehydration. He also suffered from a stage four sacral pressure injury and a bone infection in his right foot. The resident told his wife the facility staff tried to kill him at Cold Spring Hills. Family members frequently observed unclean conditions and broken care equipment inside the building.

Legal Defenses and Broader Context

Defense attorneys presented counterarguments to the state claims. Howard Fensterman represents Benjamin Landa. Fensterman stated Landa divested his ownership stake in Cold Spring Hills on April 1, 2019. This date falls nearly a year before the viral outbreak. Fensterman also noted that Esther Farkovits lives in Israel as a passive investor. The state action against Cold Spring Hills represents part of a broader enforcement effort. The Attorney General filed similar lawsuits against other nursing homes in late 2022. Prosecutors sued the Villages of Orleans Health and Rehabilitation Center on November 29, 2022. They alleged Landa and 11 others stole nearly $19 million from that facility between 2015 and 2021. The state also sued Fulton Commons Care Center on December 13, 2022. Investigators found that facility made loans with no business purpose to other nursing homes under common ownership. The Fulton Commons operators also paid salaries to their adult children for absentee jobs.

Department Of Health Certificate Of Need Disclosures Complicate Fraud Allegations Over Rent Payments

New York State Attorney General Letitia James built a massive financial fraud case against the owners of Cold Spring Hills Center for Nursing and Rehabilitation. The state accused the operators of extracting millions of dollars through inflated rent payments to a related real estate company. Yet the defense strategy defeated the core financial allegations using the state government records. The operators proved they disclosed their entire real estate ownership structure to the New York State Department of Health during the initial licensing process. The court evaluated the regulatory filings and determined the state health regulators explicitly approved the financial arrangements the attorney general later classified as fraudulent.

1. The Rent Diversion Accusation

State investigators mapped a network of thirteen companies connected to the Cold Spring Hills operators. The attorney general focused heavily on Cold Spring Realty Acquisition LLC. The state alleged the nursing home operators paid $15. 3 million in fraudulent rent to this related entity between 2017 and 2021. The lawsuit classified these transactions as a scheme to extract cash flow rental payments and hide upfront profits. Prosecutors claimed the operators siphoned Medicaid and Medicare funds through these real estate payments while leaving the facility with a severe deficit of funds for patient care. The state maintained the rent payments exceeded fair market value and served only to enrich the ownership group.

2. The Certificate Of Need Disclosure Defense

Lawyers from Garfunkel Wild represented the nursing home operators and presented a paper trail of state approvals. The operators submitted a Certificate of Need application to the New York State Department of Health in 2016 when they purchased the facility. This application fully disclosed the lease terms and the related party nature of Cold Spring Realty Acquisition LLC. The Public Health and Health Planning Council reviewed the ownership arrangement and granted official approval. The defense established that the operators hid nothing from the primary regulatory authority overseeing New York nursing homes. The legal team maintained the state could not retroactively criminalize a business structure it previously authorized.

3. Annual Cost Report Filings

The facility operators reinforced their defense by producing their annual cost reports. New York requires nursing homes to file detailed financial disclosures with the Department of Health every year. The 2020 cost reports showed Cold Spring Hills paid $10. 8 million in rent. The filings explicitly noted this amount included $2. 6 million in profit for the related real estate entity. The court reviewed these documents and determined the state possessed exact figures regarding the lease agreements and the profit margins for years before the attorney general filed the lawsuit. The defense proved the operators submitted these mandatory reports on time and the health department never flagged the rent payments for review.

4. Judicial Dismissal Of Rent Fraud Claims

The Nassau County Supreme Court evaluated the conflicting positions between the attorney general and the health department. The judge threw out the rent fraud allegations entirely. The court ruled the state could not claim the operators committed fraud when the Department of Health knew about and signed off on the related party transactions. The judge noted the legislature report changed laws to restrict this practice report the operators followed the rules existing at the time of their application. This ruling mirrored a similar decision in Orleans County Supreme Court where a judge dismissed identical rent fraud claims against The Villages of Orleans Health and Rehabilitation Center based on Certificate of Need disclosures.

5. The Unpaid Rent Bankruptcy Claim

The financial reality of the real estate arrangement surfaced again when Cold Spring Hills filed for Chapter 11 bankruptcy on January 2, 2025. The facility listed $79. 1 million in general unsecured claims. The bankruptcy petition revealed the nursing home owed $21. 8 million in unpaid rent to Cold Spring Realty Acquisition LLC. The court filings showed the facility had not paid full rent since 2016. The massive debt to the related landlord entity became a central focus of the bankruptcy proceedings as the facility lost more than $600, 000 every week. The operators listed the unpaid rent as a primary driver of their insolvency.

6. The 2024 Zelman Certificate Of Need Application

The operators attempted to exit the business by finding a new buyer. Eliezer Jay Zelman submitted a new Certificate of Need application to state health officials in December 2024. Zelman operated three other nursing homes in New York and applied to take over the cash starved facility through a voluntary receivership. The application detailed plans to rename the facility to Woodbury Heights Nursing and Rehabilitation Center. The state health department delayed the approval process and requested more information from the 707 page document. The pending application left the facility in operational limbo during the final weeks of 2024.

7. The Receivership Sale And Mortgage Assumption

The bankruptcy court finalized a resolution in March 2025 after the facility submitted a closure plan to the state. The court approved a receivership sale for a purchase price of exactly $10. The buyer paid no cash to the bankruptcy estate. The purchaser instead assumed the obligation to fund all operating expenses and took over a $75. 9 million mortgage held by Greystone Funding Company. The Department of Health granted approval for the transaction on February 27, 2025. The sale wiped out the $21. 8 million in unpaid rent owed to the related real estate entity and left unsecured creditors with a projected recovery of just two percent.

8. Legislative Changes Targeting Related Party Transactions

The court rulings exposed a major disconnect between state health regulations and state fraud enforcement. The New York legislature responded to these cases by passing new laws to restrict related party transactions in the nursing home industry. Lawmakers enacted a statute limiting nursing home operators to a five percent annual profit margin. The new law also required operators to spend seventy percent of their revenue directly on patient care. Nursing home owners filed a federal lawsuit in December 2021 to block these new rules. The owners claimed the state would confiscate $510 million from the industry if the profit limits took effect. The state defended the legislation as a required measure to stop operators from using real estate companies to drain funds from patient care.

Thirteen Affiliated Companies Identified In Complex Network Of Diverted Taxpayer Funds

The New York Attorney General filed a 186 page lawsuit in December 2022 detailing a $22. 6 million financial diversion at Cold Spring Hills Center for Nursing and Rehabilitation. State investigators identified 13 affiliated companies used by the facility owners to extract taxpayer funds. Between 2017 and 2021, the 588 bed Woodbury nursing home received $157 million from the New York Medicaid program. The facility also collected $88 million from Medicare during the same period. The state alleged the ownership group transferred $42. 4 million to themselves and related parties. Investigators determined $22. 6 million of that total represented diverted government funds intended for patient care. The operators used the 13 entity network to conceal their profit taking and hide the true ownership structure from state regulators.

The ownership group executed three primary financial schemes to siphon the money. The primary extraction occurred through real estate transactions. The operators paid $15. 3 million in overpriced rent to Cold Spring Realty Acquisition LLC. The same individuals who operated the nursing home owned this realty company. The state identified Philipson Family LLC and Lifestar Family Holdings as partial owners of the real estate entity. The overpriced rent payments allowed the owners to pull capital directly from the facility operating budget. The state noted the operators executed these transfers while the nursing home operated with insufficient staff to cover basic resident needs.

The second scheme involved a network of consulting and insurance firms. The owners routed $5. 2 million to Ventura Services LLC, Highview Management Inc., and B& L Consulting LLC. These entities claimed to provide consulting services to the nursing home. Investigators found the payments functioned as a method to extract cash. The operators funneled another $10. 6 million through Graph MGA LLC, Graph Management LLC, and Graph Insurance Company A Risk Retention Group LLC. These three companies operated as captive insurance brokerages. The state determined these self dealing transactions enriched the owners while draining resources from the facility.

The third extraction method used supply contracts and debt instruments. The owners directed $8. 1 million to detailed Care Solutions LLC. This company purportedly provided services and supplies to the nursing home. The state lawsuit also detailed a $2. 0 million fraudulent promissory note scheme. The operators executed this note when they purchased the facility. The debt instrument carried a 13 percent interest rate. The owners used this high interest note to justify additional cash transfers from the facility to their personal accounts. Ross CSH Holdings LLC, Rosewell Associates LLC, and ZBL Management LLC functioned entirely as pass through companies to move the extracted capital.

The financial diversion directly degraded patient care. The owners cut facility staffing to save $1. 6 million in expenses in February 2020. The state Department of Health had warned nursing homes to prepare for a viral outbreak during that exact month. The operators ignored the warning and reduced the workforce. The facility failed to provide adequate nutrition, medication, and sanitation to the residents. State investigators documented residents sitting in soiled clothing for extended periods. The staff reductions left the facility unable to prevent severe wounds and infections among the patient population.

The Attorney General named specific individuals in the lawsuit. The state identified Bent Philipson, Avi Philipson, Joel Leifer, Esther Farkovits, Rochel David, and Leah Friedman as the primary operators and hidden owners. The lawsuit sought to remove these individuals from any role at Cold Spring Hills. The state demanded the respondents disgorge all funds wrongfully received through the 13 company network. The legal action also sought to ban the owners from admitting new residents and required the installation of independent monitors. The state maintained the owners violated laws designed to protect nursing home residents by prioritizing personal profit over basic care standards.

New York law requires nursing home operators to disclose related party transactions. The state defines these transactions as business deals between a facility and any entity owned or controlled by the facility operators. The 13 companies identified in the Cold Spring Hills lawsuit fit this exact definition. The owners used these entities to bypass state regulations governing nursing home profits. In December 2021, nursing home owners across New York filed a federal lawsuit to block a state law limiting annual profits to five percent. The law also required facilities to spend 70 percent of their revenue on direct patient care. The related party network at Cold Spring Hills allowed the operators to extract profits well above the five percent threshold.

The state investigation relied on extensive documentation to map the 13 company network. Detectives from the Medicaid Fraud Control Unit interviewed past and present employees. Investigators reviewed internal communications, financial ledgers, and bank records. The evidence showed the owners created the shell companies specifically to drain the facility accounts. The consulting firms produced no verifiable work product. The insurance brokerages charged premiums far above market rates. The supply company increased the cost of basic medical goods. Every dollar routed through these 13 entities represented a dollar taken away from resident care.

The corporate structure also shielded the true owners from liability. Bent Philipson served as the principal owner of Cold Spring Hills. State enforcement filings alleged he used straw owners to conceal his control from regulators. His son Avi Philipson held a 24 percent stake and served as the managing member. The state Public Health and Health Planning Council approved Avi Philipson for this role. The ownership arrangement became a central focus of the state investigation. The Attorney General stated the complex web of LLCs and holding companies existed solely to confuse regulators and protect the Philipsons from accountability.

The financial extraction continued even as the facility faced severe operational problems. The nursing home lost more than $600, 000 weekly by late 2024. The facility filed for Chapter 11 bankruptcy on January 2, 2025. The bankruptcy filing revealed the landlord entity, Cold Spring Realty Acquisition LLC, claimed the facility owed $21. 8 million in unpaid rent. The Philipson family controlled both the nursing home and the landlord entity. The state viewed this unpaid rent claim as another attempt by the owners to extract capital from the failing facility.

The 13 company network represents a common tactic in the nursing home industry. Operators use related party transactions to avoid financial liability and siphon funds. The Center for Elder Law and Justice noted this business model directly correlates with worse care and worse conditions for residents. The Cold Spring Hills case provided state regulators with a detailed blueprint of how these networks operate. The Attorney General used the evidence gathered from the 13 companies to build a detailed case against the owners. The lawsuit demonstrated how financial fraud in the healthcare sector directly harms elderly and disabled residents.

Court Documents Expose Severe Resident Harm

New York Attorney General Letitia James filed a 186 page lawsuit detailing specific instances of medical neglect at Cold Spring Hills Center for Nursing and Rehabilitation. The legal filings outline a direct correlation between intentional staffing reductions and severe physical injuries among the resident population. Investigators found the facility operators reduced staffing budgets by $1. 6 million in February 2020. This financial decision occurred just before the COVID 19 pandemic reached New York. The resulting absence of personnel left the facility unable to provide basic medical monitoring.

The state investigation documented a direct link between the missing personnel and the physical deterioration of the patients. Between March 1, 2020, and June 4, 2020, 166 residents died at the facility. The official count included 98 deaths attributed to COVID 19 and 68 deaths from other causes. Facility administrators failed to report 51 of those COVID 19 deaths to the Department of Health. This omission represented a 52 percent underreporting rate. The state noted these deaths happened while the owners diverted $22. 6 million in Medicaid and Medicare funds to 13 related companies.

Documented Cases of Medical Neglect

The lawsuit highlights individual cases where the absence of care resulted in permanent injury or death. One diabetic resident required a wheelchair for mobility. Facility staff provided him with a wheelchair missing footrests. The resident dragged his feet on the floor while moving. This friction caused sores on his right foot. Staff failed to treat the wounds, and the sores developed into severe infections. Medical providers eventually performed a partial toe amputation. The resident died shortly after returning to the nursing home from the hospital. Administrators never informed his co guardian about the amputation or his subsequent death.

Another man entered Cold Spring Hills to regain mobility following a car crash. He arrived with a preexisting pressure sore. During his stay, he lost 30 pounds. Medical records show his pressure injury advanced from a stage 3 wound to a stage 4 sacral pressure injury. Stage 4 represents the most severe classification for bedsores, indicating deep tissue destruction. In August 2021, emergency responders transported him to a local hospital. Doctors diagnosed him with severe malnutrition, dehydration, the stage 4 pressure injury, and a bone infection in his right foot. The patient told his wife that the facility staff tried to kill him.

A third resident, an 80 year old woman named Lorraine Kalleberg, suffered similar neglect in 2020. Her daughter Kimberly Biederman reported that her mother developed unnoticed kidney failure. Kalleberg also developed a stage 4 bedsore during her time at the facility. Her family stated the facility completely failed to monitor her deteriorating condition. The state lawsuit explicitly connects these individual tragedies to the deliberate understaffing orchestrated by the ownership group.

State Health Department Citations

The pattern of neglect continued well past the initial 2022 lawsuit. State health officials and the Centers for Medicare and Medicaid Services conducted a 10 day mandatory routine inspection in 2023. Inspectors issued 40 health and safety code citations. The federal agency initially fined Cold Spring Hills $408, 105 in August 2023. The agency later reduced the penalty to $165, 558 after the facility appealed the decision. The inspection report noted the facility failed to ensure a resident with serious bedsores received treatment. Inspectors also found staff failed to provide required pain medication to another patient.

The 2023 inspection revealed additional violations regarding medication administration. State records show residents received unapproved medications. Other patients did not receive physician ordered wound treatments. The Department of Health documented a severe absence of nursing staff during this period. The federal fine represented the second largest penalty issued by the Centers for Medicare and Medicaid Services to a New York nursing home between 2021 and 2024.

Preventable Tragedies in 2024

Conditions at the 588 bed facility resulted in further injuries in early 2024. In February 2024, a resident with a known history of unsafe smoking went into a courtyard unsupervised. The patient was using a nasal cannula to receive oxygen therapy. He ignited a cigarette while the oxygen flowed. The resulting fire caused serious burns to his cheeks, nose, and mustache. Emergency room doctors treated his facial injuries. State health officials fined the nursing home $10, 000 for this specific incident. This amount represents the maximum allowable penalty for a single event under state regulations.

One month later, in March 2024, a resident went into respiratory distress. A doctor ordered a nurse to call 911. The nurse ignored the order. The resident died while waiting for an ambulance. State health officials noted the facility was only then developing a policy on when to call emergency services. Richard Mollot, a nursing home advocate, publicly criticized the facility for failing to establish basic emergency report after years of state scrutiny.

Financial Penalties for Safety Violations

The federal government and state regulators levied multiple fines against the facility for these care failures. The Centers for Medicare and Medicaid Services fined the facility $987 in January 2022 and $650 in November 2021 for failing to report COVID 19 data. The state issued a separate $182, 095 fine for the 40 health and safety violations discovered during the 2023 inspection.

The court documents establish a clear timeline. The owners diverted millions in public funds while reducing the staffing budget. The resulting personnel deficit directly caused the documented cases of malnutrition, dehydration, untreated bedsores, and fatal accidents. By July 2024, the facility resident population dropped to 367 people. During that same month, 53 staff members resigned, including 26 nurses. The mass resignation further degraded the ability of the facility to provide basic wound care and hygiene to the remaining residents.

Financial Collapse Triggers Chapter 11 Reorganization

Cold Spring Acquisition LLC filed for Chapter 11 bankruptcy protection in the United States Bankruptcy Court for the Southern District of New York on January 2, 2025. The filing documented severe financial distress at the Woodbury facility. The nursing home recorded operating losses exceeding $600, 000 per week by late 2024. The facility maintained a weekly payroll obligation of $1. 14 million. The bankruptcy petition listed total assets between $1 million and $10 million. The filing disclosed total liabilities ranging from $50 million to $100 million.

The 588 bed facility experienced a severe drop in resident population throughout 2024. The census fell to 423 residents by April 2024. The population further declined to 318 residents by December 2024. This reduction in patient volume directly reduced Medicare and Medicaid reimbursements. The facility generated $75. 5 million in annual gross revenue in 2023. The revenue numbers plummeted as the resident count dropped by nearly half.

Martin A. Cauz served as the chief restructuring officer for the facility. He submitted declarations to the bankruptcy court detailing the financial collapse. He stated the state investigations and public statements severely damaged the facility reputation. He claimed the negative publicity made it impossible to attract high reimbursement Medicare patients. The facility relied heavily on these specific admissions to maintain profitability. The resulting cash flow deficit forced the operators to seek bankruptcy protection.

Union Restraining Notices Freeze Operating Cash

A major liquidity freeze occurred in October 2024. The 1199 SEIU United Healthcare Workers East union placed restraining notices on the facility Medicaid funds. The union took this action after the nursing home stopped paying employee health care benefits. The restraining notices blocked the facility from accessing essential operating cash. The financial records showed the nursing home owed $15. 6 million to union benefit and pension funds.

The unsecured debt totaled $31 million. The trade debt accounted for $14 million of that total. Legal fees consumed another $1. 4 million. The facility also owed $21. 8 million to its landlord. Bent Philipson and his son Avi Philipson controlled the landlord company. The bankruptcy filing classified this $21. 8 million debt as an insider obligation.

The court entered interim report day orders on January 8, 2025. These orders authorized the debtor to continue paying employee wages and maintaining insurance policies. An interim Debtor In Possession financing order followed on January 13, 2025. A company named CSHACQDIP LLC served as the lender. This post petition financing provided the working capital necessary to maintain patient care during the initial bankruptcy phase.

The Blocked December 2024 Emergency Evacuation

The financial constraints forced the operators to plan a complete facility shutdown. The company notified the New York Department of Health on December 16, 2024. The notice outlined an intent to conduct an emergency evacuation of the remaining 318 residents. The operators issued termination notices to over 500 employees on the same day. The operators scheduled the planned layoffs to begin on December 23, 2024.

The New York Attorney General intervened to stop the closure. The state filed an emergency motion in Nassau County Supreme Court. The court issued a temporary restraining order on December 20, 2024. The order prevented the evacuation and mandated the transfer of funds to meet payroll obligations. The company stated it did not possess sufficient resources to comply with the court directives. This legal standoff directly preceded the January 2 bankruptcy filing.

The United States Justice Department filed a request with the bankruptcy court in January 2025. The federal agency sought the appointment of a patient care ombudsman. This official reviews the nursing home patient records and monitors the quality of care during the bankruptcy proceedings. The United States Trustee also filed a motion on January 16, 2025. The Trustee sought the appointment of a Chapter 11 trustee to replace the current management. The motion listed concerns about insider conduct and the previous allegations of fund diversion. The parties resolved the Trustee motion by stipulation on January 23, 2025. The existing management remained in place.

Rule 2004 Discovery report Affiliated Entities

The unsecured creditors committee launched an extensive investigation into the facility finances. The committee conducted Rule 2004 discovery throughout November and December 2025. This process serves as the bankruptcy equivalent of pretrial discovery. The investigation targeted over 20 entities related to the Philipson family.

The discovery subpoenas demanded financial records from Bent and Avi Philipson personally. The committee also targeted Cold Spring Realty Acquisition LLC. The investigation encompassed several insurance and management companies. These included Graph Insurance Company, Graph MGA, and Graph Management. The subpoenas also reached Standard and Preferred Insurance Company and various Sentosa Care entities. The committee sought to trace the flow of funds between the nursing home and these affiliated businesses.

The Ten Dollar Receivership Sale

The bankruptcy court approved a closure plan on February 14, 2025. The New York Department of Health granted approval for the plan on February 27, 2025. The operators used the approved closure plan as use to negotiate a settlement with the 1199 SEIU union. The parties reached an agreement in March 2025. The bankruptcy court then entered a Receivership and Sale Order on March 20, 2025.

A new entity named 378Sywood LLC acquired the facility operations. Eliezer Jay Zelman controlled the purchasing company. The transaction featured a purchase price of exactly $10. The buyer also assumed approximately $75. 9 million in mortgage obligations held by Greystone Funding Company. The receivership structure preserved the facility as an operating business. The general unsecured creditors faced an estimated 2 percent recovery on $79. 1 million in total claims. The new operator commenced daily management as the receiver on April 22, 2025.