The obscure Brooklyn company at the center of a City Hall scandal already owed millions of dollars in unpaid taxes, and its principals were accused of “secretly scheming” against a former business partner, long before the city signed off on a sweetheart deal that netted the firm a $72 million profit, records show.
The Allure Group, a cadre of young, seemingly disparate entrepreneurs, has been on a buying spree, snatching up nonprofit nursing homes across the city and turning them into for-profit cash cows.
Its $72 million payday for flipping a nonprofit Lower East Side nursing home to a luxury condo developer after first getting asleep-at-the-switch bureaucrats to lift a deed restriction that would have prevented the conversion has ignited a scandal that’s embroiled Mayor de Blasio and prompted two investigations.
City records show Allure owes $5.2 million in back taxes on a Brooklyn nursing home that used to be a nonprofit, and $853,795 on a shuttered nursing home in the borough that it bought last year and that is now slated for housing.
The for-profit firm also took over the operation of two nonprofit nursing homes — one in Harlem and one in Brooklyn — without buying the facilities themselves, thus keeping the properties tax exempt.
The burgeoning scandal surrounds Rivington House, a nursing home at 45 Rivington St. that Allure bought in February 2015 from Village Care, which had operated it as an AIDS hospice.
It paid $28 million, and Allure principal Joel Landau had assured the city in an e-mail, “I would also like to keep the home as it is.”
Allure applied to the state Department of Health to convert the home from one that cared for AIDS patients to a geriatric facility.
“Based on the materials submitted by the owner in connection with its conversion application, the department had every expectation that utilization would increase and the facility would continue to operate,” the DOH said.
Allure renamed the home the Rivington Center for Nursing & Rehabilitation. But it’s unclear if it treated a single patient there.
By May, the company signed a contract to sell the building to a developer for $116 million. It also asked the city to lift a deed restriction limiting the use of the property to a nonprofit residential health-care facility.
Top lobbyist James Capalino, a de Blasio pal and fund-raiser, had been lobbying for two years for the prior owner to have the deed restriction lifted.
The deed was changed in November 2015 in exchange for Allure’s $16 million payment to the city.
When the DOH returned to Rivington Street in December 2015 to recertify the nursing home, there was not a patient in sight.
De Blasio said last week that the administration was “too trusting” of Allure, which he said had “lied” to the city.
Landau did not return requests for comment.
Allure was incorporated in 2012, a few years after its principals acquired their first nursing homes.
In an online résumé, Landau, 35, calls himself a “master at turning poor-performing organizations into high-performing profitable companies.”
His partners are two Brooklyn men — Marvin Rubin, 39, and Solomon Rubin, 43 — and Melissa Guglielmo, 40, the company COO who is a licensed nursing-home administrator.
The purchases are made using limited liability companies. Most are heavily mortgaged.
In 2010, an Allure company paid $20 million to buy the nursing home at the former Victory Memorial Hospital in Brooklyn. It is now called the Hamilton Park Nursing and Rehabilitation Center.
At around the same time, Landau and other investors teamed up with Dr. Jonathan Mawere, a nursing-home administrator, to buy two ailing nonprofit Brooklyn nursing homes — the Marcus Garvey Residential Rehab Pavilion and the Ruby Weston Manor.
Mawere accuses Landau and his investors of squeezing him out and says they were “secretly scheming to misappropriate the facility’s assets and steal them for the benefit of themselves and their confederates,” according to legal papers.
His lawsuit is ongoing, but Allure now runs both homes, having renamed them the Linden Center and the Crown Heights Center.
The $5.2 million tax bill for the Linden Center was due Friday. Of that sum, $4.4 million was for unpaid back taxes.
In 2013, Allure — using the name Williamsburg Services LLC — took over operation of the former nonprofit Aishel Avraham home in Brooklyn. It signed a 25-year lease agreement to run what it calls the Bedford Center for Nursing and Rehabilitation.
The property at 40 Heyward St. is still owned by Aishel Avraham and pays no taxes thanks to a state tax break. Only the sale of the property would lift that benefit.
Allure is avoiding a property-tax bill this year of $471,000, the city Finance Department says.
A similar arrangement seems to be in place at the former Greater Harlem Nursing Home in Manhattan, which was run by a nonprofit.
Allure took over its operation in 2014 but doesn’t own the property.
The nonprofit is still enjoying a tax break of about $300,000, the Finance Department says.
Greater Harlem’s tax-exemption renewal application to the city in October 2015 did not indicate it was renting any part of its property, said Theodore Oberman, Finance’s director of commercial exemptions and abatements.
Renting to a for-profit entity would remove the tax exemption, he said.
The city did cancel the exemption at the shuttered Cabs Nursing Home in Bedford-Stuyvesant when Allure bought it in 2015 for $15.6 million.
Its $853,795 tax bill including $652,724 in back taxes — was also due Friday.
An application was filed with the city to demolish the Nostrand Avenue building to construct a seven-story residential building.