By Francisco Alvarado, FloridaBulldog.org
For the second time in four years, Miami Beach builder Russell Galbut and a nursing-home chain his family cofounded have been accused of illegal misconduct by a whistleblowing former executive.
This time the accuser is William Zubkoff, ex-CEO of Aventura-based Plaza Health Network. Zubkoff was a defendant in a 2012 whistleblower complaint against the non-profit company. Joyce Galbut, Zubkoff’s wife and Plaza’s former chief nursing officer, is also suing Russell Galbut and the non-profit.
In separate complaints filed in Miami-Dade Circuit Court, the couple accuse Galbut, Plaza and it’s current board chairman, attorney Ronald Lowy, of milking non-profit Plaza Health to benefit themselves at the expense of the their elderly residents.
“Russell Galbut has paid himself, his relatives and…(certain) employees and consultants well over $100M,” says Zubkoff’s suit. “During that same time period, not-for-profit facilities have been closed, nurses and other employees have been fired, staffing ratios have been reduced, and appropriate pay raises for nurses and other employees have not been implemented.”
Similarly, Joyce Galbut’s complaint accuses Galbut and Lowy of “improperly and illegally” diverting funds from Plaza Health while presiding over “dramatic cuts affecting the quality of nursing care and using not for profit finances for private interests.”
Zubkoff and Joyce Galbut claim they fought to put a stop to the abuses and even notified federal authorities about what was happening. They also say they rejected Galbut and Lowy’s offers of “multi-year, 6-figure consulting agreements” in exchange for their silence. Both said they were fired within weeks of rejecting those offers.
The twin lawsuits seek damages for lost wages and emotional distress suffered after because of prohibited retaliation under Florida’s Private Sector Whistleblower’s Act.
Responding for Russell Galbut and himself, Lowy said Zubkoff and his wife are making a last-ditch effort for monetary gain by filing frivolous lawsuits. “We will fight this abuse of the judicial process in the most vigorous way possible,” Lowy said in an email to FloridaBulldog. “We will do everything in our power, including filing counterclaims if necessary, to put a stop to this.”
Jon Herskowitz, an attorney for Zubkoff and Joyce Galbut, whose ex-husband is Russell Galbut’s cousin, said his clients have the evidence to back up their accusations. “They would not be coming forward with these allegations if there was not significant proof over the years of what we consider not only improper illegal actions but various objections and complaints raised by Joyce Galbut and William Zubkoff,” Herskowitz said.
Plaza Health was founded 66 years ago as Hebrew Homes for the Aged, a convalescent home for Jewish people and war veterans. Today, the network operates seven nursing homes in Miami-Dade and counts former state Rep. Elaine Bloom as its president and CEO.
Galbut family founded Plaza Health
Members of the Galbut family have been involved with Plaza since its inception in 1950. Russell Galbut, a power broker in Miami Beach whose building portfolio includes the Alexander Hotel, the Castle Beach Club, 100 Lincoln Road, and the Shelbourne Hotel, joined Plaza’s board of directors in 1995. A year later, he was named chairman, a post he held until 2014.
Plaza’s board, at the time led by Galbut, hired Joyce Galbut in 2005 and Zubkoff in 2008, according to their lawsuits.
Last June, Plaza agreed to pay the U.S. government $17 million to settle allegations made in a 2012 federal lawsuit by the non-profit’s ex-Chief Financial Officer Stephen Beaujon. The complaint was also against Zubkoff. Using Beaujon’s claims, the Department of Justice found that Plaza had violated the False Claims Act by improperly paying doctors for referrals of Medicare patients requiring skilled nursing care.
“From 2006 through 2013, [Plaza] allegedly operated a sophisticated kickback scheme in which they hired numerous physicians ostensibly as medical directors pursuant to contracts that specified numerous job duties and hourly requirements,” according to a June 16, 2015 federal press release. “The United States alleged that in reality these were ghost positions, and that most of the medical directors were required to perform few, if any, of their contracted job duties.”
In his March 8 lawsuit, Zubkoff alleged that was essentially Galbut’s flunky during his tenure, and that the developer “completely controlled” both the board and Plaza Health’s management for more than two decades. Galbut used that control to pick his relatives and friendly employees and consultants from his other companies to sit on the non-profit’s board, the complaint alleges.
Three of Plaza’s five current directors have ties to Galbut: Lowy has represented the developer on some transactions, Joan Brent is his cousin, and Ben Rozsansky, is a former vice president of Galbut’s real estate firm, Crescent Heights.
“These decisions have always been made in the best personal financial interest of Russell Galbut,” Zubkoff’s complaint states. “Mr. Zubkoff states that he objected to and attempted to stop the illegal personal for-profit actions.”
For instance, Zubkoff claims, Galbut and his slate on the board forced the shutting of a 104-bed Miami Beach nursing home at 320 Collins Ave. in 2013 and then sold the property for $13.6 million to a New York developer a year later. In February of last year, FloridaBulldog.org reported how the board had initially agreed to sell the site to a private partnership that included Galbut, but that his partnership had submitted a lower offer than the top bidder, JMH Development.
When JMH threatened to sue Plaza, the board reversed course and sold the property to the Brooklyn-based company. Company documents obtained by a reporter and confirmed by Lowy say Plaza paid back a $2.5-million unsecured mortgage that Galbut had provided the non-profit. An additional $1 million was used to pay for a security deposit on another nursing home facility at 42 Collins Ave. that Plaza rents from Crescent.
Lowy told FloridaBulldog.org that Zubkoff is making false and outrageous statements. “Mr. Galbut always acted as a volunteer member of the Board and left the management of the Plaza Health Network to William Zubkoff and his management team,” Lowy said. “All of the Plaza records and emails reviewed by the U.S. Government in their 2014 and 2015 investigation support the conclusion that William Zubkoff was the decision maker and person whom all employees went to for authorization and decisions.”