Residents sue Palo Alto retirement community for 'up-streaming' $190 million
Vi at Palo Alto residents -- including a retired Nobel Prize winner -- filed a class action lawsuit in federal court Wednesday alleging the continuing care retirement center funneled $190 million in refundable entrance fees to its corporate parent with no assurances they would be returned.
According to the 34-page complaint, CC-Palo Alto Inc., the entity that owns and operates the center at 600 and 620 Sand Hill Road, failed to obtain a repayment promise from Chicago-based CC-Development Group Inc., which maintains it has no obligation to refund the fees.
But the fees were to be returned to the residents when they moved out or to their families when they died, the suit states.
CC-Palo Alto is now running a deficit of $300 million as a result of "up-streaming" the entrance fees and owes more than $450 million to 500 residents, according to the complaint.
"These senior citizens were promised financial security," said attorney Niall McCarthy of San Francisco-based law firm Cotchett, Pitre and McCarthy LLP. "Instead, their money was funneled out of state."
The complaint, which is believed to be the first of its kind challenging a continuing care retirement center's financial practices, also accuses CC-Palo Alto of inflating monthly fees through bogus charges... (To read the entire article, please click HERE)