Article Archives >> Lead Stories >> May 1-15, 2007
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‘Related’ Nonprofit Denied
Higher Nursing Home Payments
Court rules that owner of for-profit homes
retained indirect control over new nonprofit
When Robert Odell was unsuccessful in selling three nursing homes that he owned in rural Minnesota, he created a nonprofit Foundation for Rural Health Care and sold the homes to the new organization for $8.4 million, financed entirely by purchase money mortgages to himself.
Odell had appointed the three Board members, including two employees who were most active in the negotiations. His lawyer drafted the documents for both parties. His financial consultant established the price based on his analysis before the nonprofit was formed. The nonprofit’s Board never met before authorizing the purchase; no one inquired whether the deal would be financially viable for the nonprofit; and no one asked for an appraisal of the properties. The two directors and the lawyer each had a financial interest in the transaction.
Article Archives >> Lead Stories >> May 1-15, 2007
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