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Iowa Nursing Home Charged With Consumer Fraud

May 26, 2005
Iowa Attorney General Tom Miller has filed a lawsuit against the owners of Heather Manor, a Des Moines nursing home, accusing them of engaging in consumer fraud.

The civil lawsuit, filed in Polk County District Court by the Attorney General's Consumer Protection Division, charges the home's owners purchased the property for much lower than market price through their company, Heather Manor, L.L.C. The defendants then entered into a lease with a company they also controlled, Horace Mann Home for the Aged, Inc., to operate the facility.

Miller said that, because they controlled both companies, the defendants signed the January, 2003 lease as both tenant and landlord. That lease contained higher rent payments to the defendants and resulted in greater financial risk for the residents of Heather Manor.

"We allege the defendants acted for their personal financial gain with little consideration of the harm that would result for the residents of Heather Manor," Miller said. "By signing on both sides of the lease the defendants benefited themselves at the expense of the home and its residents. This deal put continued operation of the facility at risk."

Miller said that the lawsuit alleges defendants' actions violated Iowa laws by committing unfair practices in violation of the Iowa Consumer Fraud Act and breaching their fiduciary duties as Trustees of the Board of Horace Mann Home for the Aged, a non-profit corporation. The defendants' company, Heather Manor, L.L.C., is also named as a defendant in the lawsuit.

Miller said the lawsuit seeks a court order to prevent the defendants from acting to put the facility at further risk, require them to pay restitution and damages to residents and pay civil penalties.

Individual defendants named in the suit are Carroll Robert McClurg, Larry A. Weide, and Daniel Lee Spencer.

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