An executive associated with a portfolio of nursing facilities that saw a record-setting federal loan default has been indicted on a single count of equity skimming, the Department of Justice announced late last week.
Mark Yampol of St. Louis faces up to five years in prison if convicted, according to the DOJ.
A federal grand jury handed down the indictment last week in U.S. District Court in Chicago. No trial date was set as of last Friday.
Yampol, according to the indictment, managed and controlled the Rosewood portfolio of nursing facilities in Illinois and Missouri, including locations in the Chicago and St. Louis metropolitan areas.
All but one of those facilities had a mortgage loan insured by the Department of Housing and Urban Development (HUD), with the HUD-backed loans entering default after March 1, 2015, the government alleged in the indictment.
The government accused Yampol of using $1.1 million in funds associated with the HUD-insured properties to cover mortgage and operational costs on the non-HUD facility in the portfolio, located in Galesburg, Ill., from May to August 2015.
“The alleged diversion of funds is not only significant in its own right but played a significant role in one of the largest insured claims involving HUD’s Section 232 mortgage insurance program for elderly and disabled residents,” HUD inspector general Rae Oliver Davis said in a statement. “This office remains steadfastly committed to ensuring the integrity of HUD programs and particularly those designed to assist vulnerable populations.”
The legal filings available Monday did not list an attorney for Yampol; an e-mail to an address associated with Yampol was not returned as of press time.
The Rosewood portfolio became the subject of national media attention last year after the New York Times revealed that its owners had defaulted on $146 million in HUD-backed mortgages, resulting in a record loss for the government’s Section 232 lending program for nursing homes and other congregational care facilities.
HUD was forced to take over those facilities, operating them on a temporary basis until the New York City-based Greystone assumed permanent control earlier this year for an undisclosed sum.
The fallout from the Rosewood default has included a nearly $1 million penalty against portfolio owner Zvi Feiner, as well as a lawsuit filed by the Securities and Exchange Commission (SEC).
But the effects of the Rosewood affair will likely linger in the industry for years to come, as HUD and its lending partners beef up their vetting of owners and operators to avoid future defaults.
“What Rosewood did, in HUD’s mind — it’s a 180. Anything that was a gray area, or not as heavily investigated — those days are long gone,” Joshua Rosen, senior vice president and managing director at HUD lender Walker & Dunlop, said during an industry event in February. “If you’re a one-star building, if you have survey issues, if the abuse tag is up — a bridge lender may not put the stop sign on you. [With HUD] I don’t want to say it’s a non-starter, but it’s a very difficult, comprehensive process to get those deals done today.”
