|Summarized by Eric Bunker
Nursing home firm, ex-executive settle
Orange County CA Register 1Jan99
By Penni Crabtree: Orange County Register
LITIGATION: Suit said money was diverted for Laguna Beach home.
A San Juan Capistrano nursing home company and a former executive, Stephen
Edward Samuelian, a founding director and shareholder of Covenant Care,
have settled a $2 million suit that accused the executive of fraudulently
diverting funds and using them to build his Laguna Beach home. The amount
of the settlement is undisclosed
Samuelian, who is also the bishop of the Laguna Beach Ward in California,
said the settlement closes a "hurtful" episode. The local LDS church
leadership was aware of the legal dispute and "supportive," he said.
However, the Covenant suit isn't the first time that Samuelian has faced
similar allegations. In 1995, an Orange County jury found him liable for
wrongfully diverting construction funds from another client, Fuji Natural
Samuelian, who denied any wrongdoing in both cases, had filed lawsuits
against Covenant and Fuji for breach of contract. Samuelian sought
developer fees that he felt that Covenant and Fuji owed him. As part of
the settlement, both suits were dropped. Samuelian termed the disputes a
"discrepancy over construction profits."
Covenant claims that Samuelian, who oversaw real estate development
projects for Covenant, which operates about 40 nursing homes in several
states, failed to disclose "secret contracts and side deals" he had with
Pacific Medcon Company Inc. Pacific, which landed the construction
contract for the Las Vegas nursing homes, is partly owned by Samuelian.
Samuelian said he fulfilled his duties as developer, and recommended that
Pacific be removed from the construction job after the company submitted
Covenant alleged that Samuelian, through Pacific, inflated estimates on the
two projects by at least $1.4 million. When Pacific's contract was
terminated, they claim that Samuelian accepted a $125,000 kickback from
another company in exchange for the construction job.
Samuelian denied that any Covenant funds were used to build his home or
enrich himself. He said Covenant knew of his relationship with Pacific
Medcon before the fact.