The Washington Post

Lawsuit seeks millions from developer of retirement communities

John C. Erickson, who built one of the nation’s largest retirement community businesses, improperly diverted company assets to himself and his family, a trustee for creditors of the firm said in a lawsuit filed Thursday.

Trustee Dan Lain is trying to recoup more than $100 million from several members of the Erickson family and former officers and directors of Baltimore County-based Erickson Retirement Communities, which sought bankruptcy protection in 2009 and emerged under new leadership.

The suit says Erickson and members of his family “devised roundabout ways to transfer company assets to themselves — all the while, knowing the assets were not legally available to them.”

The transfers included payments toward yachts, homes and a jet; advances for a television venture called RLTV; and a $55.9 million loan from the affiliated Erickson Group to a family trust in 2005, for which none of the principal or interest has been repaid, the lawsuit said.

The loan drove the already troubled privately owned business deeper into insolvency, the lawsuit said.

The suit, filed in a federal bankruptcy court in Texas, says directors and officers of the business permitted the use of company assets for Erickson family expenses. For example, the company bought a house for use by John Erickson and his wife, Nancy, at a cost of about $4.6 million, the suit said.

The defendants include former Johns Hopkins University president William R. Brody, who served on the Erickson board.

Lawyer William J. Murphy, who represents Brody and other outside directors, said the claims “are lacking in merit.” Lawyer Kenneth Biermacher, who represents former officers, expressed the same view.

John Erickson and a number of family members did not return calls.

Erickson was a leader in the development of continuing-care retirement communities, which typically offer residents a spectrum of housing from independent apartments to assisted living to nursing care. In the Washington area, Erickson developed Greenspring, Ashby Ponds and Riderwood.

The company is now called Erickson Living. Dan Dunne, a spokesman for Erickson Living, said it “has no involvement” in the suit’s claims.

In December, after prospective defendants were notified about possible claims, Dunne provided a statement from John Erickson saying, in part, “I am not interested in responding to baseless allegations by lawyers that use exaggeration and hyperbole to negotiate in litigation for insurance proceeds.”



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