Feds sue nursing home, chief executive for diverting millions in retirement funds
The U.S. Department of Labor is suing a Connecticut nursing home and its chief financial officer, alleging that they funneled $4 million from the facility's retirement plan to themselves and a religious organization.
The retirement plan was established to provide benefits for employees and beneficiaries of both Bridgeport Health Care Center and Bridgeport Manor, located in Bridgeport, CT. The plan's trustee and sole decision maker, Chaim Stern, also serves as the chief financial officer, chief operating officer and administrator for Bridgeport Health, the DOL said in a press release published Wednesday.
Since January 2011, Stern allegedly diverted at least $4 million in plan assets to Bridgeport Health, himself, and Em Kol Chai, a New York-based religious organization that lists Stern as its president and trustee.
A promissory note of $3.8 million, made payable to the retirement plan, was executed by the religious organization in 2011. Authorities have extended the note's obligation to pay the $3.8 million — more than 75% of the retirement plan's assets — until Sept 30. Some portion of the diverted funds have been returned to the plan, the DOL said, but further accounting will be required to determine the full extent of the diversions.
The lawsuit, which was filed earlier this month, asks the court to remove Stern as the plan's fiduciary and require Stern and Bridgeport to restore any losses incurred to the plan.
Bridgeport Health did not respond to McKnight's request for comment by press time on Wednesday.