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Real Estate Investor Schron Sues Partner, Lawyer Over Fiduciary Breaches
New York real estate investor Rubin Schron sued property attorney Leonard Grunstein and his law firm Troutman Sanders LLP, as well as Grunstein’s business partner Murray Forman, accusing them of breaching fiduciary duties to benefit themselves at their clients’ expense.
Their conduct caused hundreds of millions of dollars in damages to Schron and entities controlled by his family, he said today in a complaint filed in state court in New York. Plaintiff companies included SMV Property Holdings LLC, SWC Property Holdings LLC and Cam-Elm Co. LLC.
Grunstein represented Schron and his entities from the 1980s to the fall of 2009, according to the suit. He later brought deals to Schron’s attention and took equity interests in them for himself and others, the suit says.
In the past seven years, Grunstein and Forman became involved in a series of companies that operate more than 300 nursing homes. The operators of the facilities are among the defendants in the suit.
The transactions were financed by Schron, the complaint alleges. Grunstein and Forman allegedly got “extremely valuable ownership interests” without contributing cash or taking risk, “stealing for themselves tens of millions of dollars of value, properties and rights that actually belong to Schron.”
Grunstein, a partner at Troutman Sanders, didn’t immediately return a call for comment. He is on a leave of absence, according to Mark Braykovich, a spokesman for the firm. Braykovich had no immediate comment on the suit.
Forman couldn’t immediately be reached for comment.
Millions in Damages
Schron is seeking damages including hundreds of millions of dollars in misappropriated assets. More than $100 million he says is owed under loan agreements, tens of millions are claimed in legal and professional fees for conflicted and fraudulent services, and $50 million in losses arising from a Citibank interest-rate swap transaction.
In February, the U.S. reached a $14 million settlement with nursing home chains and SavaSeniorCare Administrative Services LLC over allegations of kickbacks from a supplier of drugs to nursing home patients. The government accord resolved claims that the companies and their principals, Grunstein, Forman and Schron, solicited kickbacks from Omnicare Inc., the U.S. Justice Department said in an e-mailed statement at the time.
Mariner and SavaSeniorCare are among the defendants in Schron’s suit.
The case is Schron v. Grunstein, 650702/2010, New York State Supreme Court, New York County (Manhattan).
-- Editor: Fred Strasser, Glen Holdcraft
To contact the reporter on this story: Karen Freifeld in New York at kfreifeld@bloomberg.net.
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