Stockholder's Lawsuit Wants Executives Held Responsible if (Investment) Scheme is Proved

[NashVegas]

Source: Tennessean

The suit, filed earlier this week in U.S. District Court, claims National Health Investors Inc. bought property and then sold it at an inflated price to Care Foundation of America. The lawsuit alleges NHI created the nonprofit to carry out the
transaction.

Company directors named in the suit include Pinnacle Financial Partners Chairman Robert A. McCabe Jr., a member of the Nashville Downtown Partnership board of directors; and real estate developer Ted H. Welch, a former commissioner of the state Department of Finance and Administration and a major player in national Republican fundraising.

Claims of wrongdoing against the company, based in Murfreesboro, surfaced this year in a complaint filed in bankruptcy court by Care Foundation of America. The complaint claims NHI executives controlled the charity's board of directors for nearly 10 years and used that control to unfairly force the agency to buy six Florida nursing homes from NHI for millions more than they were worth.

...

Care Foundation of America filed for voluntary Chapter 11 bankruptcy protection on Dec. 31.

According to bankruptcy filings, the foundation bought six nursing homes from NHI for $32.3 million in 1999. NHI had just bought the nursing homes out of bankruptcy for much less, the suit alleges.

Read more: http://www.tennessean.com/article/20091024/NEWS03/910240359/

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I think this is significant because non-profits are a growing sector. Especially non-profits created to profit a specific group of people.

[orpupilofnature57]

1. The Billions that have juggled to & fro are still being funneled and drawn

from the same places ,us paying for them ,fellow Americans.

[naaman fletcher]

2. An interesting case...

I was not aware of this case before. Basically it look s like NHI executives controlled the board of a charity. They then used that charity to buy assets at an inflated price from NHI to enrich themselves.

I don't know Tennessee law specifically, but the directors of a charity have a fiduciary duty to the charity. It appears they ignored that duty, and the new directors of the charity (or is there a bankruptcy trustee?) are suing NHI to recover the inflated payments.

The NHI shareholders are saying "Hey, what the fuck, the company (shareholders) shouldn't have to pay this, the crooked executives should. Which of course is a reasonable point.

It should be an interesting case.

[NashVegas]

3. Tennessee Is Huge w/Charities

think of all the ministries. I suspect this case may ripple.

[naaman fletcher]

4. also

this is not so much an investment scheme as it is outright fraud.

[RUMMYisFROSTED]

5. Often the same thing.