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News Release

US Labor Department sues Bridgeport Health Care Center Inc., executive for diverting nursing home retirement plan assets improperly

Lawsuit also alleges unsecured $3.8M loan by defendants

HARTFORD, Conn. – The U.S. Department of Labor has sued a Bridgeport nursing home and its chief officer alleging that they diverted millions of dollars from the company’s retirement plan improperly to a religious corporation and to themselves. 

“The best interests of plan participants are paramount under federal law, and this agency will seek every remedy when retirement dollars are misdirected,” said Assistant Secretary of Labor for Employee Benefits Security Phyllis C. Borzi. “The alleged breaches in this case are certainly serious enough to take to court, and based on our investigation, have clearly had a negative impact on plan participants.”

The Bridgeport Health Care Center Inc. Retirement Plan was established to provide retirement benefits for the employees and beneficiaries of two Bridgeport nursing homes, Bridgeport Health Care Center and Bridgeport Manor. Bridgeport Health Care Center, Inc. sponsors the plan; Chaim Stern is the plan’s trustee and acts on behalf of Bridgeport Health Care Center, Inc. as the plan administrator. Stern, who also serves as chief financial officer, chief operating officer and nursing home administrator for Bridgeport Health, is the plan’s sole decision maker with check-signing and fund transfer authority. Stern and the company are responsible for receiving and collecting all monies due to the plan and for managing its assets properly.

An investigation by the department’s Employee Benefits Security Administration found the defendants have been violating their fiduciary duties since at least January 2011, and have continued to do so. During that time, they allegedly diverted at least $4 million in plan assets, directly or indirectly, to Bridgeport Health, to Stern and to Em Kol Chai, a New York religious corporation that lists Stern as its president and trustee on its certificate of incorporation. It appears some portion of this amount was transferred back to the plan. A full accounting will be required to determine the precise extent of the diversions.

In October 2011, a promissory note worth $3.8 million, made payable to the plan, was executed on behalf of Em Kol Chai. The note provides for payment of minimal interest, and no collateral was offered to secure the payment. The obligation to pay the note, the amount of which has represented more than 75 percent of the retirement plan’s assets, has been extended to Sept. 30, 2016, without consideration. 

Filed in the U.S. District Court for the District of Connecticut, the lawsuit asks the court to:

  • Remove Stern as plan fiduciary and appoint an independent fiduciary.
  • Permanently enjoin Stern from serving as a fiduciary to any ERISA-covered plan.
  • Require the defendants to undo the prohibited transactions and restore to the plan any losses incurred as a result of their fiduciary breaches, including lost earnings and appropriate interest.
  • Require the defendants to perform an accounting of all plan transactions from Jan. 3, 2011 to the present.
  • Permanently enjoin Stern and Bridgeport Health from future ERISA violations.

The EBSA’s Boston Regional Office investigated the case, and senior trial attorneys Celeste Moran and Nathan Henderson in the department’s Regional Office of the Solicitor in Boston are litigating. Workers, retirees and employers may contact EBSA toll free at 866-444-3272 to speak with a benefits advisor, or through

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Perez v. Bridgeport Health Care Center Inc. and Chaim Stern, individually.
Civil Action Number:  3:16-cv-01519-AVC

Employee Benefits Security Administration
September 21, 2016
Release Number
Media Contact: Ted Fitzgerald
Media Contact: James C. Lally
Phone Number