FILED: ONONDAGA COUNTY CLERK 06/07/2023 10:43 AM INDEX NO.

005793/2023
NYSCEF DOC. NO. 1 RECEIVED NYSCEF: 06/07/2023

SUPREME COURT OF THE STATE OF NEW YORK

COUNTY OF ONONDAGA

In the Matter of the Application of:

LETITIA JAMES, Attorney General of the
State of New York, ATTORNEY
AFFIRMATION
Petitioner, IN SUPPORT OF MOTION
BY ORDER TO SHOW
For an order pursuant to CPLR 2308(b) to compel CAUSE TO COMPEL
compliance with subpoenas issued by the Attorney COMPLIANCE WITH THE
General ATTORNEY GENERAL’S
-against- INVESTIGATORY
SUBPOENAS FOR
Uri Koenig and Efraim Steif, TESTIMONY

Respondents.
Index No.

Melanie Spuches Carden, being an attorney duly admitted to practice before the courts

of New York, affirms under penalty of perjury:

1. I am a Special Assistant Attorney General employed by the Office of the New York

State Attorney General, assigned to the Medicaid Fraud Control Unit (“MFCU”), and I am

responsible for the investigation of matters authorized to be prosecuted by MFCU under Executive

Law §§ 63, et seq.

2. This Affirmation is based upon direct knowledge, and upon information and belief,

the sources of which are conversations and correspondence with members of MFCU and counsel

for Respondents, 1 numerous related witness interviews, review of external documents related to

this matter, and MFCU’s confidential investigative file kept in conjunction with this matter.

1
Attorney David R. Ross, Francis J. Smith, and Samantha L. Femia of O’Connell and Aronowitz
are collectively referred to herein as “Van Duyn Counsel,” “Respondent Counsel,” or “Counsel.”
Counsel represents both Van Duyn Center for Rehabilitation and Nursing, and Respondents.

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3. I make this Affirmation in support of a Motion by Order to Show Cause, to compel

Respondents Uri Koenig and Efraim Steif (collectively, “Respondents” or “Respondent owners”),

owners of VDRNC, LLC, doing business as Van Duyn Center for Rehabilitation and Nursing

(“Van Duyn”), a 513-bed residential health care facility, to appear for and answer questions under

oath pursuant to Executive Law § 63(12) investigatory subpoenas dated May 12, 2023 (the

“Subpoenas”). (Carden Aff. Ex. 1.) Respondents have willfully and unlawfully refused to submit

to examinations under oath as required by the Attorney General’s properly issued investigatory

Subpoenas. The Subpoenas seek testimony by Respondents relevant to the care that Van Duyn is

required by law to provide to its residents, which is the subject of MFCU’s investigation of Van

Duyn (the “Van Duyn Investigation”). The testimony sought by the Subpoenas is therefore

necessary for the Attorney General’s ongoing investigation.

4. As set forth below, and in the accompanying Memorandum of Law, the Van Duyn

Investigation, to date, has identified indications of (1) repeated and persistent resident neglect

resulting in serious harm and death; (2) insufficient staffing; and (3) diversion of substantial funds

intended for resident care to Respondents and related companies. The Attorney General has found

evidence that, to prioritize their personal financial interests, Respondent owners made repeated

business decisions to divert Medicaid funds from Van Duyn to related parties to enable the owners

to take “up-front profit” from Van Duyn. The practice of making payments from the nursing home

to Respondents in the guise of pre-determined and self-negotiated “expenses” and other transfers

of funds as a priority over, and without regard to, ensuring that the nursing home uses the public

funds it receives to meet the nursing home’s duty to provide required care, with sufficient staffing

to render such care, to its residents is referred to herein as “up-front profit.”

5. This emphasis on maximizing “up-front profit” to Respondents while they

simultaneously disregard their duties to operate Van Duyn with sufficient staffing to provide

required care violates many legal duties. These duties include paying compensation at levels that

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would recruit the direct care workers necessary to operate the nursing home with sufficient

staffing, instead of continually extracting up-front profit to prioritize Respondents’ financial

interests above residents’ well-being.

6. Respondents have unlawfully refused to appear pursuant to the Subpoenas,

baselessly stating that the Van Duyn Investigation “into resident neglect does not come within the

purview of Executive Law § 63(12),” and claiming that the Subpoenas are “overbroad, unduly

burdensome, excessive . . . unreasonable, unnecessary, and constitute[] harassment.” (Carden Aff.

Ex. 2, p. 3.) As laid out more fully below, Respondents’ counsel raised these arguments almost

verbatim in opposition to a previous motion to compel MFCU was forced to file because Van

Duyn refused to produce its own emails pursuant to another Executive Law § 63(12) subpoena

related to the instant investigation. (Van Duyn Memorandum of Law in Opposition to Motion to

Compel Email Production (“Respondent MOL”), Index No. 010158/2022 [NYSCEF Doc No.

69].) In that motion, Counsel similarly baselessly argued that MFCU did not have legal authority

pursuant to Executive Law § 63(12) to conduct the Van Duyn Investigation (id. at pp. 13–19) and

that the subpoena at issue was “overbroad,” “burdensome,” and constituted “harassment.” (Id. at

pp. 19–25.) In its decision, the Court rejected Counsel’s position, stating that “[r]unning a nursing

home without sufficient staff so that Medicaid funds intended for resident care can be siphoned

off to benefit the owners is a well stated allegation of fraud, if not illegal conduct.” The Court

further stated that Counsel’s position to the contrary had “no merit as a matter of law.” (Decision

and Order, dated January 24, 2023, Index No. 010158/2022, at p. 2 [NYSCEF Doc No. 87].)

7. Notwithstanding the fact that these exact arguments relating to this exact

investigation have already been rejected by the Court, Respondents brazenly present the same

faulty excuses for their refusal to comply with the laws of this State, merely as a means to delay

and obstruct the Attorney General’s investigation. Their reliance on previously rejected, baseless

legal arguments belies their true intent to delay the Attorney General’s efforts to protect the

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vulnerable nursing home residents for whom they are supposed to care, yet continue to disregard.

Quite simply, the Subpoenas were lawfully issued, and Respondents have refused to testify without

legal basis and despite good faith efforts by MFCU to address even their baseless concerns.

Petitioner’s motion to compel compliance with the Subpoenas should be granted.

The Attorney General’s MFCU Has Broad Investigatory Powers in Order to Fulfill its
Mandate to Protect Nursing Home Residents from Abuse, Mistreatment, and Neglect

8. The Attorney General issued the Subpoenas to Respondents pursuant to its broad

investigative authority under Executive Law § 63(12), which enables this Office to aggressively

and effectively carry out its vital role to protect the people of New York and ensure their general

safety and welfare. (See, e.g., LaRossa, Axenfeld & Mitchell v Abrams, 62 NY2d 583, 589 [1984];

Am. Dental Coop., Inc. v Attorney-General, 127 AD2d 274, 279 [1st Dept 1987]; Lennon v Cuomo,

92 AD3d 411, 412 [1st Dept 2012]; Oncor Commc'ns, Inc. v State, 165 Misc 2d 262, 267 [Sup Ct,

Albany County 1995] aff’d, 218 AD2d 60 [3rd Dept 1996]; Pavillion Agency, Inc. v Spitzer, 9

Misc 3d 626, 630 [Sup Ct, NY County 2005]; Fulton Commons Care Center, Inc. v James, No.

618413/2021 [Sup Ct, Suffolk County Jan. 4, 2022], appeal filed [2d Dept Jan. 4, 2022] [holding

that Attorney General had authority to examine records demonstrating the flow of Medicaid funds

through and out of a nursing facility to related companies and owners] [Carden Aff. Ex. 3]; James

v Richard Platschek, et al., No. 702241/2022 [Sup Ct, Queens County July 25, 2022] [Carden Aff.

Ex. 4]; see also James v VDRNC, LLC, No. 002285/2022 [Sup Ct, Onondaga County Aug. 2,

2022], appeal filed [4th Dept Aug. 8, 2022] [NYSCEF Doc No. 145]; see also James v Debra Ann

Donnelly, No. 816287/2020 [Sup Ct, Erie County Feb. 16, 2021] [ordering former nursing home

Director of Nursing to testify pursuant to MFCU-issued Executive Law § 63(12) subpoena]

[Carden Aff. Ex. 5].) Moreover, an Executive Law § 63(12) subpoena “will withstand challenge

as long as the information sought bears a reasonable relationship to the subject matter under

investigation and the public interest to be served.” (Am. Dental Co-op., Inc. v Attorney Gen. of

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State of N.Y., 127 AD2d 274, 280 [1st Dept 1987].)

9. The Attorney General’s MFCU has a federal statutory mandate to investigate and

prosecute providers engaged in all forms of fraud against the Medicaid Program and to protect the

State’s vulnerable nursing home residents from exploitation, neglect, and abuse irrespective of the

resident’s Medicaid status. (See 42 USC § 1396b[q][4][A]; 42 CFR 1007.11[b][1].) Specifically,

MFCU is mandated to “investigat[e] and prosecut[e] . . . violations of all applicable State laws . .

. pertaining to . . . [f]raud in the administration of the Medicaid program, the provision of medical

assistance, or the activities of providers,” (42 CFR § 1007.11[a]), and to investigate “abuse or

neglect of patients or residents in health care facilities receiving payment under Medicaid.” (42

CFR 1007.11[b][1].) (See also 18 NYCRR §§ 504.3[a], [g], 515.2[a], [b][1]–[4], [6], [12] [defining

unacceptable practices in the Medicaid program].)

10. Further, New York State law dictates that a nursing home must provide each

resident with “the necessary care and services to attain or maintain the highest practicable physical,

mental and psychosocial well-being, in accordance with the comprehensive assessment and plan

of care subject to the resident’s right of self-determination.” (10 NYCRR § 415.12.) Importantly,

a nursing home must “accept and retain only those residents for whom it can provide adequate

care.” (10 NYCRR § 415.26[i][1][ii].) New York State law also requires that nursing homes must

maintain “sufficient . . . personnel on a 24-hour basis to provide nursing care to all residents in

accordance with resident care plans.” (10 NYCRR § 415.13[a][1] [emphasis added]; see also 42

CFR § 483.25 [requiring that “the facility must ensure that residents receive treatment and care in

accordance with professional standards of practice, the comprehensive person-centered care plan,

and the resident’s choices”].)

11. Among other things, MFCU’s Van Duyn Investigation seeks to uncover whether

Van Duyn is meeting these legal requirements in light of the many troubling allegations about

resident care at Van Duyn, as detailed below. It is challenging to envision a situation where the

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exercise of the Attorney General’s investigatory powers is more appropriate and necessary than in

the present matter.

12. The Court should grant forthwith Petitioner’s motion to compel compliance with

the Subpoenas because they seek testimony that is relevant and essential to the Attorney General’s

Van Duyn Investigation, which is conducted in furtherance of this Office’s mission to protect

nursing home residents from abuse and neglect.

The Van Duyn Investigation

13. In late 2017, the Attorney General’s MFCU commenced its investigation into

allegations of resident neglect at Van Duyn. Respondent Uri Koenig owns 60% of Van Duyn,

Respondent Efraim Steif owns 39.9%, and David Camerota owns .1%. Since the investigation’s

inception, MFCU has received numerous complaints from Van Duyn residents, families, and other

sources, relaying deeply troubling allegations, including but not limited to, neglect, deficient

documentation, improper nursing practices, and inadequate staffing.

14. Van Duyn Failed New York State Department of Health (“DOH”) Inspections:

Van Duyn has performed poorly on DOH inspections, amassing 78 citations, including two related

to Actual Harm or Immediate Jeopardy, between May 1, 2019, and April 30, 2023. 2 Since 2019,

Van Duyn has also been designated as a “candidate” for placement on the Special Focus Facility

(“SFF”) list reserved for “nursing homes that have a history of serious quality issues.” 3 (Carden

Aff. Ex. 5.)

2
(New York State Department of Health Nursing Home Profiles – Van Duyn Rehabilitation and
Nursing Center,
https://profiles.health.ny.gov/nursing_home/view/150495#inspections:~:text=Citations,in%20
no%20citations [last accessed June 1, 2023].)
3
Centers for Medicare and Medicaid Services (“CMS”) has published its SFF list since 2019.
Since that time, Van Duyn has been designated an SFF candidate for the following time periods:
June 2019–September 2019; September 2021–December 2022; and February 2023–May 2023.

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15. Respondents’ Conversion of Medicaid Funds: MFCU’s Van Duyn Investigation

has also shown, during the period of Van Duyn’s poor performance, significant fund transfers out

of the nursing home, whereby Respondents funneled millions of dollars paid to Van Duyn by

government programs for resident care to themselves and related party companies. Indeed, a non-

profit organization’s analysis found that Van Duyn’s owners routinely engage in related company

transactions designed to siphon taxpayer funds away from resident care. (See Empire Center

Report, Following the Money: An analysis of ‘related company’ transactions in New York’s

nursing home industry, July 5, 2022) (Carden Aff. Ex. 6.) 4 The Attorney General recently sued a

nursing home in Orleans County and two homes in Nassau County for similar self-dealing based

on findings that the homes’ owners and related parties converted millions in government funds,

while operating the home with insufficient staffing and failing to provide the homes’ residents

with required. care. 5

16. Respondents not only own Van Duyn, but also own or are strongly affiliated with

many of the related parties to which Van Duyn transfers funds and transacts business, including

without limitation, 5075 West Seneca, LLC (“5075 West Seneca”); Upstate Services Group, LLC,

which provides purported administrative consulting services to Van Duyn; Fiscal Care, LLC,

which provides Van Duyn’s billing services; CFare Foods, LLC, which provides Van Duyn’s food

services; and Upstate SK, LLC. The Van Duyn Investigation revealed that Respondents use these

related companies to transfer government money away from resident care, through non-arm’s-

length transactions, and into their own pockets.

4
Also available at: https://www.empirecenter.org/publications/following-the-money-2/ [last
accessed June 1, 2023]
5
(New York State Attorney General’s Office,
https://ag.ny.gov/sites/default/files/orleans_nh_petition.pdf;
https://ag.ny.gov/sites/default/files/fulton_commons_petition.pdf;
https://ag.ny.gov/sites/default/files/cold_spring_people_of_the_state_of_v_people_of_the_state_
of_petition_1.pdf [last accessed June 1, 2023].)

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17. For example, 5075 West Seneca is a real estate company owned by Respondents

Uri Koenig and Efraim Steif. This company owns the building and real property on which Van

Duyn is located. The vast majority of 5075 West Seneca’s income is the rent it receives from Van

Duyn. MFCU’s investigation has revealed that in 2015 and 2017, Respondents Koenig and Steif

mortgaged the property and financed the mortgage by obligating Van Duyn to pay the debt through

a vastly inflated rent to 5075 West Seneca.

18. Rent paid by skilled nursing facilities can be analyzed on several different matrices:

rent as compared to revenue and rent per patient day. This information is reported to DOH

annually and is publicly available. On both of these measures, the purported rent Van Duyn pays

to its related party landlord is exorbitantly inflated, exceeding the average “rent” paid, excluding

downstate facilities. This is particularly true during 2016 and 2017, when Van Duyn’s average so-

called “rent” expenses were more than double their upstate cohort by both measures, as reflected

in the charts below. For example, in 2017, Van Duyn’s inflated “rent” totaled 22.98% of its

revenue, vastly exceeding the New York State Average of 8.25%, and the Upstate average of

10.21%.

Rent to Revenue Analysis (No Outliers <1% and >30%)

Excluding Downstate
Economic Regions of Mid-
Year NY State Average Van Duyn
Hudson, Long Island and
NYC
2016 7.69% 9.24% 22.18%
2017 8.25% 10.21% 22.98%
2018 8.65% 9.97% 11.70%
2019 9.05% 9.67% 11.45%
2020 10.36% 10.28% 12.37%
2021 10.61% 10.74% 15.13%

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Similarly, as reflected in the chart below, under the rent per patient day measure, Van

Duyn’s “rent” also is vastly inflated compared to the statewide average, consistently outpacing

upstate facilities. In 2016 and 2017, in the two years after Respondents mortgaged Van Duyn, the

rent per patient day exceeded the upstate average by approximately $40.

Rent Per Patient Day (No Outliers <1% and >30%)

Average Excluding Downstate
Year Economic Regions of Mid- Van Duyn
Hudson, Long Island and NYC
2016 $25.56 $65.80
2017 $28.18 $68.13
2018 $28.58 $34.14
2019 $28.45 $33.20
2020 $32.02 $36.10
2021 $35.54 $41.62

19. An analysis of 5075 West Seneca’s income statement between 2016 and 2019

shows that the vast majority of its income is rent paid by Van Duyn, 66% of which is financed by

taxpayer Medicaid and Medicare dollars (Medicaid is 53.6% of the 66%). The public money paid

to 5075 West Seneca represents more than $29 million that 5075 West Seneca took as up-front

profit for Respondents. As shown in the chart below, 5075 West Seneca’s net profit margins6

ranged from 51.01% to 85.26% from 2016–2019.

5075 West Seneca Income Statement Analysis

2016 2017 2018 2019

Income
Rental Income $11,561,683 $11,500,000 $5,400,000 $5,400,000
Cell Tower Rental Income $63,981 $70,267
Parking Lot Rental Income $15,000
Other Income $63,104
Total Income $11,561,683 $11,578,981 $5,463,104 $5,470,267

6
As used herein, net profit margin means the measure of how much net income a company makes expressed as a
percentage, i.e. how much of the revenue is realized as profit.

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Expenses
Sales Tax Expense
Amortization $390,385 $389,177 $413,005 $271,217
Interest Expense $1,312,367 $1,547,740 $2,259,932 $2,335,522
NYS Tax LLC $1,500 $1,500 $3,236 $3,000
Total Expense $1,704,252 $1,938,417 $2,676,173 $2,609,739

Net Income $9,857,431 $9,640,564 $2,786,931 $2,860,528

Net Profit Margin 85.26% 83.26% 51.01% 52.29%

20. MFCU’s analysis of Van Duyn’s Cost Reports, K-1 tax forms, and other financial

information from 2014 to 2020 found that Respondent owners withdrew a total of $37,614,104

from Van Duyn while Van Duyn’s total operating revenue for this period was $324,111,617.

Converted to a percentage, Respondent owners withdrew a total of 11.61% in revenue from 2014

to 2020. The majority of the withdrawals, $29,294,071 of $37,614,104, came from Van Duyn’s

real estate entity distributions, financed by rent payments from the facility. An additional

$7,994,565 came directly from the facility in the form of salaries paid to owners and direct equity

withdrawals. The remainder consisted of smaller distributions through related company

transactions.

21. The money pocketed by Respondents as a result of the collusive related party

transactions could have instead been used by Van Duyn to provide resident care. However, rather

than permitting Van Duyn to spend funds to hire and retain sufficient staffing levels of direct care

employees to provide required care to its residents, Respondents created elaborate webs of nursing-

home-affiliated businesses through which they transferred money from Van Duyn to themselves

at the expense of residents. The Attorney General should be permitted to question Respondents

about these financial arrangements, which served to siphon government funds from their intended

purpose of supporting required resident care.

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22. Resident Neglect at Van Duyn: MFCU is currently investigating over forty

incidents of resident neglect at Van Duyn, including neglect resulting in serious harm, as well as

five complaints relating to resident deaths. The allegations include the following:

a. a resident who was found deceased with indications of rigor mortis after he

suffered a fall;

b. a resident who died after Van Duyn failed to take appropriate and timely action

regarding an elevated glucometer fingerstick reading;

c. a resident who died after a fall that caused her nightgown to catch on the door

handle, creating a noose around her neck; and

d. two residents with dementia who died after developing wounds at the facility,

and suffering malnutrition and dehydration.

23. Van Duyn’s Inadequate Staffing: Before, and during the course of the Van Duyn

Investigation, Van Duyn’s owners often operated it with such low staffing levels that CMS

repeatedly assessed Van Duyn’s staffing level at the lowest possible level of 1-Star [“much below

average”]. 7 At various points during the course of the Van Duyn Investigation, Van Duyn’s

staffing levels have been insufficient to provide its vulnerable residents the clinical and supportive

care that was required by the residents’ assessed care plans. While residents suffered neglect due

to chronically insufficient and inadequate staffing, Van Duyn continued to admit residents, many

of whom had conditions requiring intensive interventions by nursing staff. Because of these

policies, the nurses, aides and other employees were unable to provide appropriate care, resulting

in devastating failures by Van Duyn.

7
(Medicare.gov Care Compare Site related to Van Duyn Rehabilitation and Nursing Center,
https://www.medicare.gov/care-compare/details/nursing-
home/335184?city=Syracuse&state=NY&zipcode=13202 [last accessed June 1, 2023].)

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24. MFCU analyzed Payroll Based Journal (“PBJ”) 8 data, related to staffing and

census, submitted by Van Duyn to CMS for the period January 1, 2019, to December 31, 2022.

The data includes the hours staff worked each day aggregated by staff reporting category. From

this data, MFCU calculated the average Hours per Resident Day (“HPRD”), excluding

administrative hours, for each month for the time period for total nursing staff (Registered Nurses

(“RNs”), Licensed Practical Nurses (“LPNs”), and Certified Nurse Aides (“CNAs”)); licensed

nursing staff (RNs and LPNs); and CNAs. The monthly HPRD was calculated by dividing the

sum of total hours staff worked in the month by the sum of the resident census. The average HPRD

was then compared to the state minimum HPRD levels set forth in Public Health Law § 2895-

b(3). 9

25. Out of the 48 months analyzed, under its current owners’ control, Van Duyn’s total

nursing HPRD averaged below the minimum 3.5 threshold for 40 months, 83.33% of the time.

For 27 months (56.25% of the time), Van Duyn averaged below 3.0 HPRD. Licensed nursing

averaged below the minimum threshold of 1.1 HPRD for a total of 31 months, 64.58% of the time.

CNA staffing levels averaged below the minimum threshold of 2.2 for 35 months, 72.92% of the

time, falling below 2.0 for a total of 26 months, 54.17% of the time.

Respondents’ Testimony Is Highly Relevant to the Van Duyn Investigation

23. On May 15, 2023, MFCU issued the Subpoenas seeking testimony from

Respondents. As owners of the facility, Respondents are legally responsible for operating Van

8
(Centers for Medicare and Medicaid Services Payroll Based Journal Daily Nurse Staffing,
https://data.cms.gov/quality-of-care/payroll-based-journal-daily-nurse-staffing [last accessed
June 1, 2023].) CMS requires nursing homes to provide staffing and census information. This
publicly available data is audited and analyzed by CMS.
9
Public Health Law § 2895-b(3) requires that “every nursing home shall maintain daily average
staffing hours equal to 3.5 [HPRD] by a certified nurse aide or a licensed nurse; provided that out
of such 3.5 hours, no less than 2.2 hours of care per resident per day shall be provided by a
certified nurse aide, and no less than 1.1 hours of care per resident per day shall be provided by a
licensed nurse.”

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Duyn within the bounds of the many state and federal laws and regulations that govern skilled

nursing facilities. (10 NYCRR §§ 600.9[a] and [d][2][4].) Respondents’ relevance to the Van

Duyn Investigation cannot be overstated.

24. As described above, the Van Duyn Investigation has already identified extensive

patient neglect and resultant harm—including avoidable injuries, accidents, illnesses, infections,

hospitalizations, and deaths—that appear to result from high-level policy decisions about how the

facility is operated and conducts business with related parties. The policies that keep staffing

levels low and resident census high appear to stem from decisions made by those who control Van

Duyn’s operations and business decisions, including Respondent owners. This is further supported

by financial documents demonstrating that Respondent owners diverted money away from resident

care and into their pockets by way of disbursements and related company transactions.

25. Respondents’ central relevance to the Van Duyn Investigation is so obvious that

Respondents’ claim that the Subpoenas are “overbroad, unduly burdensome, excessive . . .

unreasonable, unnecessary” or “constitute[] harassment” is all-the-more frivolous. Respondents’

objections are blatant red herrings in attempt to again delay the Attorney General’s inquiry. All

that the Attorney General must show is that the testimony “sought bears a reasonable relationship

to the subject matter under investigation and the public interest to be served.” (Am. Dental Co-op.,

Inc. v Attorney Gen. of State of N.Y., 127 AD2d 274, 280 [1st Dept 1987].) Where, as here,

Respondent owners are legally responsible for operating the facility in question, their relevance to

this investigation is beyond question. Respondents must not be allowed to continue delaying

MFCU’s attempts to investigate and to protect Van Duyn’s residents.

The Respondents’ Self-Serving False Assertion Regarding the Possibility of Settlement

Does Not Preclude MFCU from Continuing Its Investigation
26. In his letter dated May 23, 2023, indicating that Respondents refused to testify per

the Subpoenas, Counsel disingenuously and cynically suggests that MFCU issued the Subpoenas

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in contravention of an impending settlement between the parties. This could not be further from

the truth. While MFCU had engaged in preliminary settlement discussions with Counsel (who

represents both Van Duyn and Respondents) more than six months ago, Van Duyn’s conduct

reflects only an interest in more delay of the Attorney General’s investigation and no interest in

any meaningful concrete reforms that would remedy the deplorable conditions at the facility and

hold its owners accountable for wrongfully converted government funds. MFCU has been

abundantly clear about the required parameters for meaningful settlement, and that the Van Duyn

Investigation is continuing simultaneously. Van Duyn’s conduct reflects no interest in the former,

and a repeated effort to delay the latter.

27. The parties have not communicated about the substance of any potential settlement

in approximately six months, since November 9, 2022, when Respondents’ counsel sent a brief

letter inadequately responding to questions from the Attorney General about Van Duyn’s low

staffing and its electronic medical records system. In this letter, counsel provided excuses and

failed to propose any substantive solutions that would remedy the deficiency in Van Duyn’s

operations. The parties intended to speak about counsel’s November 9, 2022, letter during a call

on December 7, but it became clear that Van Duyn was not negotiating in good faith as they

continued to refuse to produce any emails in response to MFCU’s subpoena for electronic records.

It is false and disingenuous for Respondents’ counsel to now claim that the parties were on the

precipice of a negotiated settlement, when in fact, there has been no progress in settlement

negotiations since November 2022, after which the parties engaged in motion practice due to Van

Duyn’s refusal to comply with a subpoena for production of emails. Moreover, there is simply no

authority for the notion that because settlement was discussed between the parties, the Attorney

General should cease its lawful investigation.

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28. A full recitation of the relevant facts that necessitated the Attorney General’s

Motion to Compel Van Duyn to comply with this Executive Law § 63(12) subpoena for relevant

electronic communications is discussed in my Affirmation, dated December 7, 2022, submitted in

support of that motion. (Index No. 010158/2022, at pp. 10–21 [NYSCEF Doc No. 3].)

Court’s Rejection of Van Duyn’s Prior Obstruction and Delays in Complying with
Subpoenas
29. On January 24, 2023, this Court issued a Decision and Order on MFCU’s motion

to compel compliance with the subpoena for relevant electronic communications. The Decision

noted that Van Duyn Counsel’s argument challenging the Attorney General authority to issue

subpoenas under Executive Law § 63(12) had “no merit as a matter of law.” (NYSCEF Doc No.

87, at p. 2.) Justice Gilbert went on to reject Counsel’s assertion that abuse and neglect of nursing

home residents was somehow an improper subject matter for an Executive Law § 63(12)

investigation, saying “[r]unning a nursing home without sufficient staff so that Medicaid funds

intended for resident care can be siphoned off to benefit the owners is a well stated allegation of

fraud, if not illegal conduct.” (NYSCEF Doc No. 87, at p. 2.) The Court ordered Van Duyn to

produce emails and electronic communications, pursuant to the Attorney General’s Subpoena for

electronic records within seven days.

30. On January 25, 2023, Van Duyn approached MFCU for a deadline extension saying

they were unable to produce the responsive emails and electronic communications within seven

days. Although MFCU was not obligated to do so, the parties negotiated a stipulation agreeing

that Van Duyn would produce half of the responsive communications by February 10, 2023, and

the remaining communications by March 3, 2023. (Index No. 010158/2022; NYSCEF Doc No.

89.)

31. On January 30, 2023, Hon. Gilbert executed the proposed stipulation, ordering the

modified production schedule.

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Van Duyn’s Meritless Objections to the Instant Subpoenas

32. On May 15, 2023, MFCU emailed David Ross to inquire whether he represented

Respondents, and if he would accept service of the Subpoenas on their behalf; Mr. Ross indicated

that he represented Respondents and would accept service. (Carden Aff. Ex. 7.) MFCU served the

Subpoenas on Mr. Ross via email scheduling Efraim Steif for in-person testimony on June 6 and

7, 2023, and scheduling Uri Koenig for June 13 and 14, 2023. (Carden Aff. Ex. 8.)

33. On May 16, 2023, MFCU emailed Mr. Ross to confirm that Respondents would

appear for testimony as scheduled. Mr. Ross did not respond. (Carden Aff. Ex. 7.)

34. On May 22, 2023, MFCU emailed Mr. Ross again at 3:03 pm asking him to confirm

that Respondents would appear for testimony as scheduled. (Carden Aff. Ex. 7.) Mr. Ross

responded at 4:14 pm stating he would send a response the next day. (Carden Aff. Ex. 7.) At 11:35

pm, Counsel emailed a letter stating that Respondents would not appear. (Carden Aff. Ex. 2.)

35. Counsel once again took the frivolous position—which had previously failed when

Counsel unsuccessfully raised them in opposition to the Attorney General’s Motion to Compel

compliance with its Executive Law § 63(12) subpoena for electronic communications—that

Respondents would not comply with the Subpoenas because the Van Duyn Investigation “into

resident neglect does not come within the purview of Executive Law § 63(12)” because it is a

“fraud-based statute.” (Carden Aff. Ex. 2, p. 3.)

36. Mr. Ross also added another frivolous objection based on the disingenuous

“complaint” that MFCU was continuing its investigation after engaging in settlement talks, falsely

mischaracterizing the status of those negotiations as being “on track to settle.” (Carden Aff. Ex. 2,

p. 3.)

37. Moreover, despite having no legal right to set the terms of the Attorney General’s

investigation, Counsel attempted to condition Respondents’ compliance with the lawful

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Subpoenas on the following unacceptable terms: 1) testimony would be under an immunity

agreement shielding Respondents from criminal prosecution; 2) questions would be limited only

to Van Duyn, notwithstanding the fact that Respondents own or are strongly affiliated with at least

five businesses that are inextricably linked to the Van Duyn Investigation, in addition to 16

additional skilled nursing facilities 10 that also contract with the these businesses; and 3) testimony

would be limited to one, seven-hour day. (Carden Aff. Ex. 2, p. 3.) These are all baseless

objections designed only to further delay the Investigation.

38. On June 5, 2023, at 4:44 pm, MFCU responded to Counsel’s attempts to dictate the

terms of Respondents’ examinations. Although MFCU had no obligation to do so, we agreed to

limit Respondents’ testimony to one day each (June 13 for Respondent Steif, and June 20 or 22

for Respondent Koenig), but rejected Counsel’s other legally unsupported criteria. MFCU

requested response by 4 pm on June 6, 2023. Counsel responded at 3:10 pm indicating that

Respondents would not appear before “the latter part of August” without being “compelled to

testify” in order for Respondents to review their own internal records to prepare for testimony.

MFCU replied, pointing out that the records Respondents claim to need time to review are their

own, and are materials Respondents have always had access to. (Carden Aff. Ex. 9.)

39. At 5:54 pm, Counsel emailed Deputy Chief of the Civil Enforcement Division,

Diana Elkind, requesting a call to discuss MFCU’s response to his 3:10 pm email. (Carden Aff.

Ex. 10.) After a brief telephone conversation, Counsel agreed in an email at 6:19 pm that Efraim

Steif will appear for an examination under oath on June 13, 2023 and that he still needed to confirm

10
Counsel’s letter erroneously states that Respondents own only 12 skilled nursing facilities.
(Carden Aff. Ex. 2, p. 4.) In fact, CMS confirms that Uri Koenig and Efraim Steif own at least a
5% stake in 17 skilled nursing facilities. (Centers for Medicare and Medicaid Services, Skilled
Nursing Facilities All Owners, https://data.cms.gov/provider-characteristics/hospitals-and-other-
facilities/skilled-nursing-facility-all-owners [last accessed June 1, 2023].)

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whether Uri Koenig would appear. (Carden Aff. Ex. 11.) MFCU replied at 6:24 pm that we need

affirmative representation that Uri Koenig would appear in person for testimony on either June 20

or 22. (Id.) Counsel replied at 7:00 pm that Efraim Steif would not in fact appear on June 13 and

Uri Koenig would also not appear in June. (Id.) Given the Respondents’ history of obstruction of

the Van Duyn investigation, MFCU sought judicial intervention to avoid further delay.

The Attorney General’s Subpoenas Are Lawful and Respondents Must Be

Directed to Comply
40. Respondents and Van Duyn have taken every opportunity to delay the Attorney

General’s investigation, including dragging out their response to the subpoena for electronic

records, and now advancing the same specious arguments the Court rejected in its decision

compelling Van Duyn to comply with that subpoena, to further obstruct MFCU’s investigation.

41. As articulated above, and more fully in Petitioner’s Memorandum of Law, the

Subpoenas were issued within the lawful parameters of the Attorney General’s broad investigatory

powers pursuant to Executive Law § 63(12). The testimony sought by the Subpoenas is plainly

relevant to the Van Duyn Investigation. Moreover, there are few greater “public purpose[s] to be

achieved” than the protection of vulnerable nursing home residents. (Abrams v Thruway Food Mkt.

& Shopping Ctr., Inc., 147 AD2d 143, 147 [2d Dept 1989] citing Anheuser-Busch, Inc. v Abrams,

71 NY2d 327, 332 [1988].)

42. Due to Respondents Steif and Koenig’s continued refusal to comply with the

Subpoenas, and given the tortured history of delay by Van Duyn and its Counsel, MFCU now

seeks judicial intervention to direct prompt compliance with the Subpoenas.

43. No other request for relief has been made.

WHEREFORE, Petitioner requests that this Court issue an Order compelling Respondents

Steif and Koenig to appear for and answer questions under oath pursuant to the Subpoenas, along

with such other further relief as the Court finds just and proper.

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DATED: Syracuse, NY
June 7, 2023 By: ______________________________________
Melanie Spuches Carden
Special Assistant Attorney General
300 South State Street, Suite 350
Syracuse, New York 13202

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CERTIFICATION PURSUANT TO RULE 202.8-b

I, Melanie Spuches Carden, an attorney duly admitted to practice law before the Courts of

the State of New York, hereby certify that this Affirmation complies with the word count limit set

forth in Rule 202.8-b as it contains 5,495 words, excluding the parts of the Affirmation explicitly

exempted by Rule. In preparing this certification, I have relied on the word count of the word

processing system used to prepare this Affirmation.

Dated: New York, New York

June 7, 2023
Respectfully Submitted,
LETITIA JAMES
Attorney General of the State of New York

By: __________________________________________
Melanie Spuches Carden
Special Assistant Attorney General
Office of the Attorney General
Medicaid Fraud Control Unit
300 South State Street, Suite 350
Syracuse, New York 13202
Attorney for Petitioner

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