EUGENE - The Securities and Exchange Commission last week filed a fraud complaint against Sunwest Management, which runs one of the largest retirement home chains in the country.
The company operates dozens of homes in Oregon, including Hermiston Terrace Assisted Living Community. A manager there confirmed this week it is still operated under Sunwest, but said the federal complaint or the company's long-running financial troubles haven't affected operations at Hermiston Terrace. She deferred further comment to Sunwest.
The lawsuit, filed in a Eugene federal court, claims that Sunwest misled investors by telling them the company had never missed a payment and would generate 10 percent returns. "In reality," the report said, "at least half of the homes managed by Sunwest had been losing money, and investors were taking on huge risk for illusory profits."
By the end of 2008, the SEC alleged Sunwest was operating "almost like a big Ponzi scheme."
Steve English, a lawyer for former Sunwest CEO Jon Harder, called the complaint's wording "over the top."
"We deny this is a house of cards any more than any other real-estate investment," he said. "These are legitimate properties with retirees in them that have value and that value has collapsed, based, in large part, on the economy."
Harder declared bankruptcy for himself and the company late last year. The SEC last week also asked for a court order to freeze the assets of Sunwest, but English said the judge in the case denied the request.
- The Associated Press
and Eric Florip