State Lawsuit Seeks To Recover Adult Home Funds

Attorney General Spitzer today announced a lawsuit charging the operator of a Queens adult home with manipulating the facility's resources for personal gain.

The suit alleges that Sherman Taub, the Ocean House Center, a facility in Far Rockway controlled by Taub, fraudulently obtained at least $3 million. The suit seeks recovery of these funds, removal of the board of Ocean House, and a permanent bar against Taub and others from serving with any non-profit organization in New York.

"The duty of the officers and directors of a charitable organization is to avoid even the appearance of self-dealing," Spitzer said. "Whenever my office finds evidence of such conduct, we will respond aggressively."

The suit alleges that Taub illegally acquired and manipulated mortgages and other debt of Ocean House, transferring them to a company that he and his wife owned. Taub's company then collected more than $3 million which should have been applied to the well-being of the adult home's residents.

In addition to seeking recovery from Sherman Taub, the complaint seeks recovery against Ocean House's accountants, Samuel Sonnenschine and Martin Schreiber, who the complaint charges aided and abetted the frauds perpetrated by Taub and who did not prepare financial statements in accordance with professional standards.

The suit also seeks removal of the following officers and directors of the facility: Sherman Taub; his sons, Judah Taub and Michael Taub; Michael Kraus; Samuel Sonnenschine; David Friedman; Samuel Fuhrer; William Neuman; Emanuel Pollack; Martin Schneider; and Rosemarie Weingarten. The suit seeks a permanent injunction against any of these individuals serving as fiduciaries in any charitable entity.

Ocean House, a 125-bed facility serving people with physical and mental disabilities, has been the subject of several investigations by law enforcement officials and other state agencies.

Sherman Taub and his son Judah were indicted in June 2002 by a Manhattan grand jury on 34 counts, including grand larceny, falsifying business records and engaging in a scheme to defraud, all of which allegedly arose from their involvement with the operations of Ocean House. Sherman and Judah Taub have pled not guilty and the case is pending.

In a separate proceeding, the New York State Commissioner of Health, Dr. Antonia C. Novello, has served a proposed statement of charges against the operator of Ocean House seeking to revoke its operating certificate and to assess civil penalties.

The Attorney General thanked the Commission on Quality of Care for the Mentally Disabled and Gary O'Brien, its Chair, for assistance with the case.

The case is being handled by Assistant Attorney General Robert Pigott and Special Assistant Attorney General Andrew P. Davis of the Attorney General's Charities Bureau.