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Post date: July 20 2004

Operator Of Queens Adult Home Pleads Guilty And Pays $1.65 Million In Restitution

Attorney General Spitzer today announced the resolution of criminal, civil and administrative charges against Sherman Taub, his wife Chana Taub their son, Judah Taub, and the officers and directors of Ocean House Center, Inc., a not-for-profit adult home in Queens, which requires the resignation of the board of directors and payment of $1.65 million in restitution.

The Attorney General's civil case and the Manhattan District Attorney's criminal case both stem from an investigation into Sherman Taub's misappropriation of Ocean House's funds through the illegal acquisition and manipulation of mortgages and other debts of Ocean House. By transferring and inflating Ocean House's debt to a company that he and his wife owned, Sherman Taub caused the not-for-profit adult home to pay him millions of dollars in improper principal and interest payments.

"The sanctions resulting from the resolution of the civil action and the criminal prosecution are an appropriate response to the financial abuse of one of the State's most vulnerable populations," Attorney General Spitzer said.

Manhattan District Attorney Robert Morgenthau simultaneously announced that Sherman Taub and his mortgage company, International Mortgage Servicing Company LLC ("IMSC") today entered guilty pleas to the crime of Grand Larceny in the First Degree before the Honorable James Yates. According to the plea agreement, it will be recommended that Taub receive a state sentence of 1-3 years.

In the civil action against the Taubs, his accountants and the board of directors of Ocean House, the Attorney General was seeking restitution and the directors' removal. The settlement with Spitzer's office requires Sherman Taub to pay $1.65 million for the benefit of Ocean House or other charities in New York serving the same population as Ocean House. Ocean House has also agreed to dissolve. The Taubs and the remaining Ocean House directors, who were sued for failing to oversee and prevent Sherman Taub's misconduct, will not in the future serve as officers, directors or executives of any not-for-profit health care facilities. The case against Taub's accountants, defendants Samuel Sonnenschine and Martin Schreiber, continues before the Honorable Karla Moskowitz in New York Supreme Court.

In a separate but related proceeding, the New York State Commissioner of Health, Dr. Antonia C. Novello, has settled charges the Department of Health brought against Ocean House. Under the Health Department's administrative settlement, Ocean House has agreed to the suspension and eventual revocation of its operating certificate as an adult home and the appointment of a temporary operator to take over its operations until a new operator assumes responsibility for it.

Attorney General Spitzer thanked Commissioner Novello for the assistance provided by the Department of Health in the case.

The Attorney General also expressed his gratitude to Gary O'Brien, Chairman of the Commission on Quality of Care for the Mentally Disabled, for his work in uncovering the misconduct revealed in the investigation.

The case was handled by Assistant Attorney General Andrew P. Davis of the Attorney General's Charities Bureau, under the supervision of Assistant Attorney General and Section Chief Robert Pigott and Assistant Attorney General-in-Charge of the Charities Bureau William Josephson.