May 7, 2018

Self-Dealing and Diversion of Funds

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Bridgeport Health Care Center Inc., a Connecticut nursing home sued by the federal government over allegations it diverted millions of dollars from the company’s retirement plan to itself and to a Brooklyn-based Jewish nonprofit, has filed for chapter 11 bankruptcy protection, WSJ Pro Bankruptcy reported.  Em Kol Chai, a New York religious corporation that lists Stern as its president and trustee on its certificate of incorporation received millions of dollars.

Bridgeport, which filed for chapter 11 in the U.S. Bankruptcy Court in Bridgeport, Conn., listed Brooklyn-based health-care company Caretech Supplies Inc., with a $4.2 million claim, as its largest unsecured creditor. The Internal Revenue Service, owed $3.3 million, is listed second, followed by People’s United Bank, located in Bridgeport, owed $2.3 million. All the claims are disputed. The Labor Department sued Bridgeport and its chief financial officer in September 2016, claiming they diverted millions of dollars from the company’s retirement plan improperly to a religious corporation and to themselves.

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