Allure Group Settles with AG Over Rivington House Scandal, Forced to Pay $1.25M to LES Nonprofits

Posted on: January 8th, 2018 at 5:06 am by

Coming up on the second anniversary of the controversial $116 million sale of Rivington House into luxury condos, Attorney General Eric Schneiderman last Friday announced a settlement with the Allure Group for its role in shutting down and selling the deed-restricted nursing home. In 2015, after acquiring the property, they paid the city $16.1 million to lift the deed that led to the scandalous transaction.

(Buyers were Slate Property Group, China Vanke Co., and Adam America Real Estate.)

Under the terms of the settlement, Allure must pay $750,000 in penalties and costs to the State, in addition to $1.25 million to Lower East Side healthcare non-profits. They will also construct another Lower East Side health care facility to “fill healthcare gaps caused by the closure of Rivington House.” The deal did not specify a location, but the Mayor did previously offer up the DEP facility at 30 Pike Street (between Madison and Henry) as consolation.

Relevant excerpts from the media advisory are below:

Attorney General Eric T. Schneiderman today announced a comprehensive settlement with the Allure Group to revitalize the Greater Harlem Nursing Home and replace healthcare gaps in Brooklyn and the Lower East Side. The agreement results from the Attorney General’s investigations into the closings of two nursing homes, Rivington House – The Nicholas A. Rango Health Care Facility on the Lower East Side, and the CABS Nursing Home in Brooklyn. As part of the settlement, the Attorney General required new measures to fully reform the processes that led to the closure of Rivington House and CABS Nursing Home. Allure will also pay $750,000 in penalties and costs to the State, in addition to $1.25 million to Lower East Side healthcare non-profits.

“The processes that led to the closure of Rivington House and CABS never should have happened – this settlement ensures they won’t happen again, while addressing critical healthcare gaps in the impacted communities,” said Attorney General Schneiderman. “We’re requiring Allure to open new healthcare facilities in Brooklyn and the Lower East Side, and make major improvements to its Harlem facility, while also providing $1.25 million to non-profits serving vulnerable New Yorkers.”

The settlement resolves an investigation by the Attorney General’s office into the closure of two facilities that had been sold by non-profit nursing home operators to the Allure Group and its principals, who own and manage a group of nursing homes in New York City. In each case, the facilities were closed shortly thereafter with minimal notice to the affected communities. While such closures were taking place, the Allure Group was managing the Greater Harlem Nursing Home as a Receiver; the non-profit owner of the Greater Harlem Nursing Home is now petitioning the Court to sell its facility to Allure-related companies.

The Allure Group will also create a Lower East Side healthcare facility at a new location to fill healthcare gaps caused by the closure of Rivington House. Allure is required to fully fund a new skilled nursing facility or other healthcare facility primarily providing long-term care to the elderly or disabled; there will be a restriction on the future sale or closure of that facility for at least eight years from commencement of services. Pursuant to the agreement, Allure will also pay $1.25 million to Lower East Side non-profit organizations that provide healthcare services to vulnerable members of the community.

In a related settlement, three directors of the Rivington House charitable board – which the Attorney General found to have not met its duties under State law – will be barred from new charities boards for at least five years and Allure will pay $400,000 in penalties under the Not-for-Profit Corporation Law. Allure will also pay $350,000 to cover investigative costs.

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