El Al Israel Airlines (LY, Tel Aviv Ben Gurion) controlling shareholder Kenny Rozenberg is being sued by the New York Attorney General for fraud and illegal misuse of USD83 million of US government funds that resulted in neglect, harm and humiliation at four nursing homes he co-owns, instead funnelling money for their care into purchasing up to 49.95% in the Israeli flag carrier.
Rozenberg became El Al's controlling shareholder in 2020 after investing ILS360 million shekels (USD96.9 million) as part of an offering conducted to save the airline from collapsing during the Covid pandemic. He later paid another ILS166 million (USD44.7 million) for more shares and extended a USD70 million owner's loan.
Rozenberg is the founder, co-owner and CEO of Centers Health Care, with more than 50 facilities across five US states, one of the largest healthcare companies in the US. According to his LinkedIn page, Rozenberg's "visionary approach transformed once-failing facilities into flourishing community nuclei". "At each new facility under the Centers banner, he initiated a complete renovation: bright, cheerful environments; advanced technology; and innovative care modalities."
Yet, New York Attorney General Letitia James has filed suit against Centers Health Care and co-owners Rozenberg and Daryl Hagler for "converting more than USD83 million in Medicaid and Medicare funds to enrich themselves, their families, and business associates through an elaborate network of related companies and collusive, fraudulent transactions, rather than use the funds for their intended purposes of providing sufficient staffing and required resident care". Rozenberg and Hagler are named in their individual capacities, as are several of their family members and business partners.
James alleges that residents at four Centers Health Care nursing homes were "forced to sit for hours in their own urine and faeces, suffered from severe dehydration, malnutrition, and increased risk of death, developed infections and sepsis from untreated bed sores and inconsistent wound care, sustained life-changing injuries from falls, and died". "The horrors endured by the nursing homes' residents began well before the COVID-19 pandemic and resulted from Rozenberg and Hagler repeatedly operating the facilities with insufficient staffing in order to increase their own profits." Allegations of mistreatment, neglect, and humiliation at the nursing homes are detailed in the lawsuit. More than 400 residents died across all four nursing homes in 2020 of Covid-19.
According to the suit, Rozenberg and Hagler used various illegal and fraudulent schemes to convert the Medicare and Medicaid funds into profits they could use to enrich themselves.
Amongst the allegations is that in 2020, Hagler transferred USD103 million from a bank account to Rozenberg to finance the El Al purchase. "This USD103 million loan came, at least in part, from Hagler's fraudulently and illegally obtained profits from Medicaid-funded nursing homes. Rozenberg's investment in El-Al, which ultimately allowed him to become the controlling shareholder of the airline, was made possible by his and Hagler's longstanding pattern of fraud and illegality," the suit charges.
ch-aviation has reached out to Rozenberg and El Al for comment.
Centers Health Care has denied the allegations. In a statement to Associated Press, the company said it "prides itself on its commitment to patient care". "Centers denies the New York Attorney General's allegations wholeheartedly and attempted to resolve this matter out of court. We will fight these spurious claims with the facts on our side," it said.
