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New York Attorney General Seeks to Halt Sale of 2 Nursing Homes Amid Inquiries

The building at 45 Rivington Street in Manhattan, once a nursing home, was sold in February to a condominium developer. Aspects of that sale are now under investigation by the state attorney general, Eric T. Schneiderman.Credit...Dave Sanders for The New York Times

Citing misrepresentations and broken promises, the New York State attorney general’s office is seeking to prevent the purchase of two nursing centers by a company that was involved in transactions that put a Manhattan nursing home in the hands of luxury condominium developers.

In letters sent on Monday to lawyers representing nursing care providers in Harlem and Coney Island, Brooklyn, an official from the charities bureau of the attorney general said that the office was objecting to “any proposed sales of not-for-profit organizations, in particular nursing homes, to the Allure Group.”

Allure earned roughly $72 million in profit from the sale in February of the Rivington House, a nursing home on the Lower East Side of Manhattan.

Aspects of that transaction are now the subject of investigations by the state attorney general, Eric T. Schneiderman, the New York City comptroller and the city’s Investigation Department. Chief among them are the circumstances that led to the lifting of a restrictive deed by city officials last year in exchange for $16.15 million that paved the way for the former schoolhouse to be sold to the developers.

“Allure made clear and repeated promises to continue the operation of two nursing homes for the benefit of a vulnerable population — promises that proved to be false,” said Matt Mittenthal, a spokesman for the attorney general, referring to Rivington House and a nursing home bought by Allure in the Bedford-Stuyvesant section of Brooklyn, which were closed within a year of a court petition’s being filed. “Until we conclude our investigation, we will object to Allure buying additional nursing homes.”

In New York, any nonprofit seeking to sell its assets must petition a state court for approval; the attorney general reviews all such requests and can object if there are grounds to do so. The court has the final say.

The attorney general’s position appeared to buttress an argument made by Mayor Bill de Blasio, a Democrat, soon after the sale of the nursing home came to light in March. The mayor claimed that Allure, a for-profit company, had misled city officials into approving the deed change. Those officials, Mr. de Blasio has said, believed the company would keep the nursing home at the site, a former AIDS hospice at 45 Rivington Street.

Karen Hinton, the top spokeswoman for Mr. de Blasio, said the letters made clear that “the Rivington transaction was not an isolated incident,” and that the de Blasio administration would cooperate with the investigations “until a final determination is made concerning possible fraud against the city.”

The letters from the charities bureau were sent to lawyers for the Greater Harlem Nursing Home and lawyers for the SS. Joachim and Anne Nursing & Rehabilitation Center in Coney Island; Allure is seeking to buy the centers from the nonprofit organizations that own them. (Allure has been operating the Harlem center under a 2014 receivership agreement with the State Health Department.)

Both letters cite “misrepresentations” by Joel Landau, a principal in the Allure Group, to state officials. In a November 2014 letter filed with the court petition for the sale of Rivington House by the nonprofit Village Care to Allure, Mr. Landau appeared to outline to the department his intention to keep the nursing home open for at least two years.

In his letter, Mr. Landau articulated a “commitment” to the department to have a certain percentage of Medicaid and Medicare patients in the nursing home “within two years from the date of the approval” of the application to convert the AIDS patient beds to general patient beds. Allure bought the property from Village Care for $28 million in February 2015; by May, the company had entered into a contract to sell the property to real estate developers for $116 million.

In a statement, a lawyer for Allure, Andrew Levander, forcefully denied the attorney general’s claims, saying they “ignore critical facts.”

“At no time has Allure misled any public authority about its intentions or commitments,” he said. “As the Department of Health-approved receiver for Greater Harlem, over the last two years, Allure has advanced many millions of dollars to renovate and upgrade Greater Harlem, which is now fully occupied. Allure is committed to running Greater Harlem as a nursing home as part of its mission to save needed facilities and jobs.”

A version of this article appears in print on  , Section A, Page 16 of the New York edition with the headline: Attorney General Aims to Halt the Sale of 2 Nursing Centers. Order Reprints | Today’s Paper | Subscribe

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