The Real Deal New York

AG settles with Allure Group over nursing home investigations

Developer will pay a total of $2M to state and nonprofits and create two new nursing facilities
By Will Parker | January 05, 2018 04:12PM

From left: Rivington House, Eric Schneiderman and Allure Group’s Joel Landau (Credit: Getty Images and Allure)

Attorney General Eric Schneiderman announced Friday that he is settling with the Allure Group, a real estate developer under investigation for closing deed-restricted nursing homes in Manhattan and Brooklyn that were then converted  into luxury residential properties.

The company will pay $750,000 in penalties and investigation costs to the state and pay an additional $1.25 million to Lower East Side nonprofit groups. It also requires the company to open two new nursing facilities and to fund improvements to the Greater Harlem Nursing Home.

The settlement terms released by the AG did not detail where exactly Allure will build the required Lower East Side and Central Brooklyn health care facilities, but said the sale or closure of the new buildings would be restricted for eight years.

A source familiar with the Allure Group told The Real Deal the company already had a site ready for the Lower East Side home, but did not yet have one for Central Brooklyn.

In 2015, Allure Group paid the city of New York $16 million to lift restrictions on the deed for the Rivington House nursing home so it could sell the property to investors led by condominium developer Slate Property Group. Slate bought the building for $116 million last year. Mayor Bill de Blasio claimed Allure Group lied about its intentions, saying the developer had instead promised to reposition the home as a for-profit nursing center. “I would also like to keep the home as it is,” Allure Group head Joel Landau wrote the city in 2014 before he bought property, according to emails released by the city.

The Allure Group also closed the CABS Nursing Home Brooklyn, which it then converted to condos. Schneiderman’s office had been investigating whether Allure misled health officials about its intentions at that site, too.

“The processes that led to the closure of Rivington House and CABS never should have happened – this settlement ensures they won’t happen again, while addressing critical healthcare gaps in the impacted communities,” Schneiderman said in a statement.

Allure Group’s attorney Andrew Levander told TRD in a statement that he and the company “are pleased that, following a careful review, both the New York Attorney General and the Department of Health have not only approved The Allure Group’s acquisition of the Harlem Center for Nursing and Rehabilitation, but are encouraging and supporting Allure’s future investments in healthcare facilities in the Lower East Side and in Brooklyn.”

As a condition of the settlement, Allure Group neither admits nor denies any of the allegations brought by the AG, which included the allegation that the Allure-connected charitable board overseeing Rivington House “did not operate in compliance with the New York Not-For-Profit Corporation Law.”