Palo Alto care home accused of keeping fees
Elderly residents of an exclusive continuing-care community in Palo Alto who paid entrance fees as high as $2 million are accusing management of reneging on a promise to return most of the money to them if they moved, or to their heirs if they died.
Instead, the residents say, the Vi at Palo Alto and its Chicago parent company transferred the money - $190 million - to corporate headquarters, with little prospect of repayment.
In a proposed class-action lawsuit filed Wednesday in federal court in San Francisco, six residents - led by Burton Richter, winner of the 1996 Nobel Prize in physics - said Vi at Palo Alto and the parent company have drained the retirement home of its reserves, run up a deficit of more than $300 million and illegally hidden their financial practices.
Despite reassuring hundreds of residents for years that their funds were safe, the suit said, the company owners "have taken hundreds of millions of dollars from a group of vulnerable senior citizens, deprived them of their security, and placed much of their lifetime savings at risk."
In response, Sam Singer, spokesman for the owners, said, "The charges are completely unfounded, and Vi will vigorously defend itself in court."
Vi at Palo Alto, on 22 acres of land leased from Stanford University, houses about 500 seniors in apartments and another 100 in an assisted-living center. Their average age is almost 85, lawyers said. It is one of 10 such retirement homes operated by CC-Chicago, a company founded in 1987 by Penny Pritzker, now President Obama's commerce secretary.
The Palo Alto home has a long waiting list, charges rents of $4,320 to $9,320 a month, and collects substantial entrance fees from incoming residents - as high as $2 million for the six plaintiffs, and currently between $745,000 and $4.6 million, the suit said. It said the residents are promised that 75 to 90 percent of the money will be refunded when they leave, or turned over to their estates when they die... (To read the entire article, please click HERE)