By Alexander Dworkowitz
A Kew Gardens Hills man and his son have been indicted on charges of taking money from a non-profit home for the mentally ill that they ran in Far Rockaway, authorities announced last week.
Sherman Taub, 57, of 135-34 78th Dr., and his son Juday (Jay) Taub, 33, of Lawrence, L.I., were indicted on various counts of grand larceny, fraud and scheme to defraud, said Manhattan District Attorney Robert M. Morgenthau. The two face up to 25 years in prison.
Sherman Taub was released on $1 million bond and his son was released on $500,000 bond.
The indictment centers on Ocean House, a 125-bed facility licensed by the New York State Department of Health to provide room, board and assistance to the mentally ill.
Ocean House had been known as the HI-LI Manor Home for the Aged, run by Beryl Zyskind, the brother-in-law of Sherman Taub. In 1990, the New York Commission on Quality Care for the Mentally Disabled investigated the home. Zyskind was convicted of bank fraud and stealing from residents.
Zyskind then declared bankruptcy, defaulting on the home’s two existing mortgages of $1.65 million, the DA said.
Sherman Taub then arranged to purchase the mortgages at a steep discount by using a nominee to make it appear a disinterested third party was the purchaser, Morgenthau said. Sherman Taub purchased the mortgages for $400,000, effectively taking control of the home, the DA said.
Sherman Taub renamed the home Ocean House and installed his son as president, although he retained control of the facility, according to Morgenthau.
Charles Stillman, a lawyer for the Taubs, addressed the charges against his clients in a statement:
“Through hard work, personal sacrifice and substantial financial commitments, Sherman Taub turned Ocean House from a deplorable facility into a first class home for mentally ill adults,” Stillman said. “Unfortunately, he and his son are now being tarnished for the systematic problems that have recently been reported about the industry.”
But the DA said Sherman Taub transferred the mortgages to his company, International Mortgage Servicing Company, inflating their stated value to $4 million. Sherman Taub then had Ocean House make mortgage pre-payments to IMSC instead of improving its facilities, Morgenthau said.
From 1995 to 1999, $1.5 million of the $2.2 million in mortgage payments from Ocean House to IMSC ended up directly in Sherman Taub’s pockets, according to the district attorney.
In order to pay the mortgages, Ocean House had to take out another bank loan for $1.4 million to renovate the facility, Morgenthau said. The construction company hired also built a $135,000 renovation to Jay Taub’s home using money from Ocean House, the cost of which was hidden by falsely inflated costs for work at Ocean House, the DA said.
The Ocean House board of directors did not exercise any meaningful oversight over its operations because the group was dominated by the Taubs, their friends and their business associates, the DA said. The minutes of the board were falsified to reflect meetings which never took place, according to Morgenthau.
Reach reporter Alexander Dworkowitz by e-mail at Timesledger@aol.com or call 229-0300, Ext. 141.
