Attorney General Sues And Obtains Restraining Order Against Home Health Services Company That Lured Hundreds Of New York’s Elderly Into A Costly Fraud
ALBANY, NY (August 14, 2007) - Attorney General Andrew Cuomo today sued and obtained a restraining order against a Pennsylvania-based company and its owners for preying on New York's elderly by selling expensive home health services agreements and not delivering on the promises.
Homeward Bound Services of North America and its owners, Marc Orth and Thomas Muldoon, are accused in the lawsuit of using deceptive and fraudulent practices to sell agreements to well over 600 New York seniors. They would promise services meant to help keep the seniors out of nursing homes and in home-based care settings and then didn't deliver on their agreements.
Upon request of the Attorney General's Office, a temporary restraining order barring Homeward Bound from selling or renewing agreements across the state was signed today by state Supreme Court Justice Joseph D. Mintz in Buffalo.
"This company misled and fleeced hundreds of New York State's elderly citizens with a fraud that won't be tolerated under my watch," said Attorney General Cuomo. "They exploited the fears of elderly consumers of being placed in nursing homes. Too often, disreputable businesses and individuals look to the most vulnerable in our society to line their own pockets, and I am committed to using the full force of my office to come down hard on anybody who tries to get away with it."
Homeward Bound Services sold a product it calls the Assisted Living Services Agreement to more than 600 elderly New York consumers in all corners of the state. The product was billed as a service designed to keep senior citizens out of nursing homes. By purchasing the Agreement, elderly consumers thought they were pre-paying, at discounted rates, for a variety of home care services. Very few, however, actually received any benefit from the agreement, which usually costs thousands of dollars per year.
Homeward Bound Services used deceptive practices to market and sell its agreements, and then failed to honor its agreements once sold. As a result, the victims cumulatively paid well over $1.2 million for agreements that have proved to be virtually worthless.
"AARP commends Attorney General Andrew Cuomo for his leadership in putting the brakes on a horrendous fraud that is targeting older New Yorkers with long-term care needs," said Lois Aronstein, AARP New York State director. "It is just not acceptable in any manner for a business to prey on seniors' utmost desire to remain independent and living in their homes and we are thankful Mr. Cuomo is not going to tolerate this exploitation either."
According to Homeward Bound Services, elderly consumers who purchased one of its agreements simply had to call the company to receive home care services. Homeward Bound Services, in turn, would contract with a local home care provider to provide the home care services. The home care provider would bill Homeward Bound Services directly for the services provided to the elderly consumers.
As it turned out, Homeward Bound Services failed to pay for the home care services provided to elderly consumers who had purchased agreements. As a result, home care agencies terminated needed home care services to elderly consumers and pursued them for the payments Homeward Bound Services failed to make. According to Homeward Bound Services' own records, since 2004, only about 45 seniors actually received home care services and Homeward Bound Services failed to pay for many of them. During the same time period, only one customer received services during their first year of their Agreement.
Also, Homeward Bound Services made unilateral changes to its Agreements and presented them to seniors on a "take it or leave it" basis. The company engaged in many other deceptive practices including the following:
- Misrepresenting that it has created a "National Trust Fund" administered by a third party and has set aside funds to pay for all of the current and future needs of its customers.
- Misrepresenting that it has a business relationship with Lloyd's of London.
- Misrepresenting that its Agreements are available in all 50 states.
Attorney General Cuomo's lawsuit seeks to bar Homeward Bound Services of North America from selling the Assisted Living Service Agreement unless it posts a bond for $1 million. Cuomo is also seeking full restitution for all consumers (total billed for agreements amounting to more than $1.2 million) and a $500 penalty for each Agreement signed as well as $60,000 from Homeward Bound, its owners and affiliate companies.
Art Mason, director of the Elder Abuse Prevention Program at the not-for-profit seniors' advocacy and services organization Lifespan, said his group has received numerous complaints about Homeward Bound.
"Companies that deceive older New Yorkers often do so by preying on their fears and their concerns about going into nursing homes," Mason said. "They often do not present all of the options and facts that are available in a community and take advantage using high-pressure tactics to effectively separate elderly people from their life savings. This action by the Attorney General's Office will be a tremendous boost to protect seniors in our community both now and in the future."
The case is being handled by Assistant Attorney General James Morrissey of the Buffalo regional office under the supervision of Buffalo Assistant Attorney General-in-Charge Russell Ippolito and Deputy Attorney General for Regional Affairs Frank Hoare.