DOH Joins Criminal Investigation: Allegations Of Fraud In Home Care Business Take over
"There is no partnership agreement because I never signed any as my attorney at the time Samuel Rieff will attest. All Judge Schack needs to do is hold a hearing and ask Klein and Zilberberg to produce original copies."
[Black Star News Investigation]
Following inquiries by The Black Star News, the New York State Department of Health is investigating allegations by a Queens business woman that a financier who once loaned her money ended up gaining control of her businesses with the use of forged contracts.
The financier, Abraham Klein, eventually obtained a license from DOH to run the home care businesses. The DOH's investigation comes in the heels of a criminal probe launched by the District Attorney's office in Queens County into the same matter, following inquiries by The Black Star News.
Christine Persaud, the Queens woman who claims she lost control of her businesses through forged documents and a fraudulent arbitration hearing, is a Guyanese immigrant and founder of Caring Home Care, and a number of other businesses, which she built from scratch starting in 1997.
Persaud has alleged that Klein, after working with her for about two years financing her payroll, from 2007 to 2009, plotted with her former financial manager, Melquisedec Escobar, an immigrant from the Philippines, to seize control of her businesses. She contends Klein used forged documents purporting to be a partnership agreement to gain control of the businesses.
Persaud estimates that her businesses --three in all-- are worth more than $40 million. Caring Home Care alone pulled in annual revenues of about $9 million, she says.
In the disputed proposed partnership agreement that Persaud contends she never signed, Klein had suggested that a lawyer named Marvin Neiman arbitrate future disputes between the two parties; Neiman had previously done work for Klein's family, according to the contract proposed by Klein, a copy of which was reviewed by The Black Star News.
Persaud says she and her attorney at the time, Samuel Rieff, met with Klein and his attorney Mendel Zilberberg but that she refused to sign the papers when Klein's party refused to delete objectionable clauses, including the proposal that disputes be steered to Neiman for arbitration.
"I would have to be crazy to sign something like that," Persaud says. "My fears were later confirmed. I built my businesses from scratch and I want them back."
There was subsequently an arbitration hearing March 19, 2009 before Neiman, attended by Klein and his attorneys; Persaud and her attorney, who had objected in a letter to Neiman, citing his conflict of interest, did not attend. Neiman on March 31, 2009 awarded 100% control of Caring to Klein, even though he had sought to enforce a 50% stake. He also awarded 50% control of another Persaud business, Liberty Home Care, which was not subject to the dispute, based on Klein's statement that he had a verbal agreement with Persaud for a stake in Liberty.
Neiman has not responded to requests for comment from The Black Star News.
Supreme Court Judge Arthur M. Schack, in King's County, later confirmed the award which also gave Klein a $2 million money judgment. Persaud has filed an appeal in the appellate department.
The Black Star News wrote to Judge Schack, asking: whether it was in the court's best interest to verify if the original Neiman arbitration award had been based on forged documents as alleged by Persaud; whether Klein had filed the same papers as part of the case records in State Supreme Court in King's county and if these papers were authentic; and whether Klein
could be asked to produce original copies of the contracts.
The same questions were sent to David Bookstaver, spokesperson for the New York Unified Courts system, who did not respond--judge Schack's law clerk responded.
"Judge Schack acknowledges receiving your fax regarding the Persaud case but he is not making any comments," Ronald Bratt, Judge Schack's law clerk said, in a telephone conversation with The Black Star News. "He can't make any comments on the issues." When asked whether the issue of the contract's authenticity, Bratt said: "He will make no comments."
Separately, The Black Star News sent an e-mail message on May 25, 2010 to Zilberberg for a response to Persaud's allegations that the documents used by him and his client, Klein, to acquire the $40 million businesses were forgeries--Zilberberg was also asked if he and Klein had original copies of the partnership contracts Klein claims were signed with Persaud in his possession. Zilberberg did not respond.
"They cannot respond because they know that the documents were forged," Persaud says. "There is no partnership agreement because I never signed any as my attorney at the time Samuel Rieff will attest. All Judge Schack needs to do is hold a hearing and ask Klein and Zilberberg to produce original copies."
After gaining control of Caring Home Care, Klein then approached DOH for a license to operate the businesses. In the meantime, the courts had appointed Escobar, Persaud's former finance manager as a monitor, and Jacob Spitzer, as receiver. An accountant hired by Persaud had filed a report concluding that Escobar had misappropriated about $200,000.
Even though Persaud has filed an appeal on her case in the Second Appellate court, DOH earlier this year granted Klein a license to operate Caring Home Care. Last week The Black Star News wrote to DOH Commissioner Richard F. Daines,
asking whether his department had investigated Persaud's allegations that Klein had used forged documents purporting to be partnership agreements. The Black Star also inquired as to why DOH issued the license to Klein before Persaud's appeal had been heard.
"On advice of counsel because there are law enforcement agencies investigating this instance," Daines's spokesperson, Claudia Hutton wrote, in a letter to The Black Star News dated May 27, 2010, "I must decline further comment. You can trust that the results of the investigation will be made public."
DOH had been rocked with a licensing procedure scandal in the past, during the Pataki Administration, when, allegedly applications submitted by political donors were expedited--The New York Times published reports on the matter.
The Black Star News is an investigative newspaper. Please send e-mail messages to firstname.lastname@example.org or call (212) 481-7745 if you have documentation about cases that need to be investigated.
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