North Coast Journal: “The Case of the Missing $5 Million”

north_coast_journa_cover_the_case_of_the_missing_5_million_dollarsA front-page investigative article in a Humboldt County newspaper offers a jaw-dropping examination of substandard care at Brius nursing homes. The article, entitled “The Case of the Missing $5 Million,” relies on state inspection records and interviews with multiple residents, family members, caregivers, and former caregivers.

Former caregivers describe how Brius officials reportedly falsify staffing levels at the nursing homes in order to conceal violations from state investigators. Substandard staffing levels at the nursing homes have contributed to falls, weight loss, infections, and even broken bones among residents, say current and former staff members.

The article also sheds light on Brius’ practice of siphoning millions of dollars from its nursing homes via a web of subsidiary corporations.

Reporter Linda Stansberry reviewed financial reports to examine the company’s public rationale for closing three nursing homes and evicting nearly 190 elderly residents.

Although Brius and its owner, Shlomo Rechnitz, claim to be experiencing financial losses at five nursing homes, Stansberry discovers that Brius is siphoning millions of dollars a year from the facilities. Furthermore, Brius has actually documented these financial transactions in obscure financial disclosures to a state agency, says Stansberry.

Here’s an excerpt from Stansberry’s article in the North Coast Journal:

“The [financial] disclosures include a section dubbed “related party transactions,” which describes financial interactions between parent companies and subsidiaries. Think of it as a kind of conflict of interest statement. In 2015, Eureka Rehabilitation and Wellness Center paid $42,000 to Boardwalk Financial Services, LLC for “administrative services.” The company employs Rechnitz as a consultant. It also paid $864,894 to lease the property. Who owns the property? Rechnitz. Eureka Rehabilitation and Wellness Center also paid $110,204 for medical supplies to TwinMed Medical Supplies and Services, owned by Shlomo Rechnitz and his twin brother, Steve. And it paid $47,663 to SR Capital, LLC, which lists Rechnitz as its managing member. Altogether, in the 2014-2015 fiscal year, as Rockport/Brius was playing a financial game of chicken with Partnership Healthcare and refusing to take in vulnerable seniors and people with disabilities, it managed to shunt more than $4.6 million back into companies affiliated with Shlomo Rechnitz.”

“While, on paper, the company may have lost money, Rechnitz still managed to profit. The amount he took in for lease payments alone in 2015 on the five properties — more than $3.5 million — was easily enough to cancel out Brius’ “unsustainable” combined loss of almost $1.5 million from the company’s Humboldt County holdings that year.”

Here’s a link to the full story in the North Coast Journal.