Attorneys Unravel Nursing Home Debacle

Valencia, CAAttorneys at Owen, Patterson & Owen thought they were looking at a nursing home abuse case and found a ruthless Ponzi scheme that put greed far ahead of the safety and well-being of patients. And it was this callousness, says lawyer Greg Owen, that left 92-year-old dementia patient Sophie Schwartz alone and unguarded one night in December 2007.

As Schwartz slept, a caregiver at the Oakdale Heights nursing home entered Sophie Schwartz's room and found another staffer, Jose Eduardo Vasquez, sexually assaulting her.

On behalf of Sophie Schwartz and her family, attorney Greg Owen sued the nursing home operators for negligence. In the course of the two-year investigation, Owen routed out what he says "was the biggest Ponzi scheme in the history of California."

The man at the top of the scheme, James Koenig, tricked older investors into buying into his string of 26 nursing homes. "I personally took his deposition," says Owen. "He would pay cash for the nursing homes then refinance them and spend the money on luxury cars and vacations. Koenig would run the places into the ground, then go bankrupt."

The scheme left investors depleted, but perhaps worst of all was the negligent care of nursing home residents like Sophie Schwartz. To make the homes look profitable on paper, administrators cut corners and paid wages so low the homes had trouble attracting staff.

Owen hired a private investigator to find out more about homes run under the name of Oakdale Heights Management Corporation, Newell Seniors Housing and Northstar Housing. The two-year pursuit revealed a string of violations of California law and an out-of-control work environment.

"Nursing homes are required to have a supervisor around the clock," says Owen. "But they didn't. They only had someone from 8 to 5 so there was no one supervising the home.

"On this particular day when Sophie Schwartz was assaulted, Jose Eduardo Vasquez and group of other workers had been drinking vodka all day long. The day supervisor went home and two hours later Vasquez took the key he was issued to this beautiful woman's door and attacked her."

Lloyd's of London was the insurer at Oakdale Heights. "It offered us $40,000 to settle this case," says Owen. "Our clients deserve better, so we went to trial."

Sophie Schwartz and her family were awarded $12.5 million. She is now in a proper facility with proper care. Vasquez, who was a cook at Oakdale Heights, is in jail.

Greg Owen is a name partner with Owen, Patterson & Owen. He practice includes auto, motorcycle and premise liability cases as well as complex international air disasters and defective pharmaceutical cases and other kinds of personal injury, wrongful death and product liability cases.