Did El Al owner misappropriate Medicaid funds to buy airline?

New York State alleges that Rozenberg used millions of dollars earmarked for elderly care for investments, including purchasing controlling stake in El Al.

By Lauren Marcus, World Israel News

The American owner of Israel’s national airline, El Al, took control of the company by misappropriating hundreds of millions of dollars in government funding that were earmarked for elderly care, according to a new lawsuit filed by the state of New York.

In 2020, New York-based entrepreneur Kenneth Rozenberg acquired a controlling stake in the airline – which was heavily in debt and struggling to stay in business during the coronavirus pandemic – for $107 million.

Rozenberg, a successful businessman and founder of Centers Health Care, made much of his fortune by establishing and operating the chain of elderly care facilities throughout New York state.

But according to New York Attorney General Leticia James, Rozenberg’s purchase of El Al was just one of several investments he made by illegally using Medicaid funding, which was meant to be used solely for operations and other costs in the nursing homes.

“Nursing homes are meant to be safe spaces where the most vulnerable members of our community receive the care and dignity they deserve,” said Attorney General James in a statement.

“Instead, the owners of Centers Health Care allegedly used these four nursing homes — and the vulnerable New Yorkers who lived there — to extract millions of dollars for their personal use, leading to elderly residents and those with disabilities suffering unconscionable pain, neglect, degradation, and even death.”

Rozenberg and his partner, Daryl Hagler, “converted more than $83 million in Medicaid and Medicare funds to enrich themselves, their families, and business associates through an elaborate network of related companies and collusive, fraudulent transactions, rather than use the funds for their intended purposes of providing sufficient staffing and required resident care,” the suit charged.

Notably, the suit specifically named the El Al purchase as evidence of Rozenberg’s financial wrongdoing.

“This $103 million loan came, at least in part, from Hagler’s fraudulently and illegally obtained profits from Medicaid-funded nursing homes,” the suit claimed.

“Rozenberg’s investment in El Al, which ultimately allowed him to become the controlling shareholder of the airline, was made possible by his and Hagler’s longstanding pattern of fraud and illegality.”

A spokesman for Rozenberg’s business ventures vehemently denied the allegations in a statement.

“Centers Health Care prides itself on its commitment to patient care. Centers denies the New York Attorney General’s allegations wholeheartedly and attempted to resolve this matter out of court. We will fight these spurious claims with the facts on our side,” spokesperson Jeff Jacomowitz said.

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