SEC Charges Retirement Home Operator With Fraud
LINDA WERTHEIMER, host:
Federal regulators have announced new charges of financial fraud. This time the alleged scheme involves retirement homes. From Seattle, NPR's Martin Kaste has details.
MARTIN KASTE: Oregon-based Sunwest Management runs more than 200 homes in 30 states. Investors had been enjoying annual returns of about 10% until this past summer, when the payouts dried up. That's when the Securities and Exchange Commission took a closer look, says assistant regional director Kerry Robnett(ph).
Ms. KERRY ROBNETT (Securities and Exchange Commission): We started looking at it; you know, then there started to be some press reporting and some information about it. That's when we started to look.
KASTE: What the SEC found, Robnett says, was a company that told investors that they were buying into specific retirement homes while in reality spreading the investors' money around to other properties, some of which were bad real estate deals. And the firm's books were a mess. The SEC filed fraud charges last Friday, but Gary Grenley(ph), a lawyer representing about 400 of the investors, wishes the government had stepped in sooner.
Mr. GARY GRENLEY (Attorney): This has been pretty much most of my wakeful hours for the last eight months.
KASTE: Grenley says things are actually looking up now because Sunwest has new management and is negotiating with investors to try to untangle the good investments from the bad. Sunwest spokesman Steve Stradley(ph) says none of this should have affect day to day live in the homes.
Mr. STEVE STRADLEY (Sunwest Management): The state of operations, you know, if you exclude the financial piece, are very strong.
KASTE: The company says retirement homes are still a solid business and it's trying to avoid selling off too many of its properties now at depressed prices.
Martin Caste, NPR News, Seattle.