avi klein transcript

Case: 3:06-cv-02859-JGC Doc #: 19 Filed: 12/17/07 1 of 2. PageID #: 271

Case: 3:06-cv-02859-JGC Doc #: 19 Filed: 12/17/07 2 of 2. PageID #: 272

1

IN THE UNITED STATES DISTRICT COURT 1

FOR THE NORTHERN DISTRICT OF OHIO

WESTERN DIVISION 2

- - - 3

Transition Healthcare ) 4

Associates, Inc., )

) 5

Plaintiff, )

) 6

vs. ) Case No. 3:06CV2859

) James G. Carr, J. 7

Tri-State Health Investors, )

LLC., ) 8

)

Defendant. ) 9

- - - 10

11

Videoconference Deposition of Avi Klein, a witness 12

herein, called by the Plaintiff for oral examination 13

pursuant to the Federal Rules of Civil Procedure, taken 14

before Sara Glazer, Court Reporter and Notary Public 15

for the State of Florida, at the offices of Esquire 16

Deposition Services, 44 West Flagler, 14th Floor, 17

Miami, Florida, on Thursday, December 12, 2007, 18

commencing at 2:45 p.m. 19

- - - 20

21

22

23

24

25

Case: 3:06-cv-02859-JGC Doc #: 19-1 Filed: 12/17/07 1 of 149. PageID #: 273

2

APPEARANCES: 1

On behalf of the Plaintiff (via videoconference): 2

Douglas P. Whipple, Esq. 3

Seeley, Savidge, Ebert & Gourash Co., LPA

26600 Detroit Road 4

Cleveland, Ohio 44145-2397

216-566-8200 5

[email protected]

6

On behalf of the Defendant: 7

Michael I. Bernstein, Esq. 8

Law Office of Michael I. Bernstein, P.A.

1688 Meridian Avenue, Suite 418 9

Miami Beach, Florida 33139

305-672-9544 10

[email protected]

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25


3

I N D E X 1

WITNESS: DIRECT 2

Avi Klein 3

By Mr. Whipple 4 4

- - - 5

6

7

E X H I B I T S 8

NUMBER PAGE 9

2 9 10

7 25 11

8 25 12

9 25 13

3 35 14

4 38 15

5 39 16

10 53 17

11 56 18

12 59 19

13 63 20

14 63 21

1 71 22

- - - 23

24

25


4

Deposition taken before Sara Glazer, Notary Public 1

in and for the State of Florida at Large, in the 2

above cause. 3

--- 4

Thereupon, 5

AVI KLEIN 6

has been first duly sworn or affirmed, was 7

examined and testified as follows: 8

DIRECT EXAMINATION 9

BY MR. WHIPPLE: 10

Q Sir, will you please state your full name 11

for the record? 12

A Avi Klein. 13

Q Klein is spelled K-L-E-I-N? 14

A That's correct. 15

Q What is your home address? 16

A 1680 Michigan Avenue, Miami Beach, Florida 17

33140. 18

Q That's your home or work address? 19

A That's my work address. 20

MR. BERNSTEIN: For the record, since this 21

witness is appearing in the corporate capacity of 22

the named Defendant, we are going to at this point 23

provide his office address. 24

MR. WHIPPLE: You are instructing him not to25


5

give his home address? 1

MR. BERNSTEIN: I am not instructing him not to 2

give his home address. I am saying I believe it 3

is sufficient for him to give an office address, 4

due to the fact that he is here as a corporate 5

representative and not in his individual capacity. 6

MR. WHIPPLE: You know, in Ohio, it's customary 7

that we can obtain a home address as well. I 8

don't know if he will still be here a month from 9

now. 10

MR. BERNSTEIN: I'll say on the record that in 11

the event he is no longer at that office address, 12

and you need an updated address for this case 13

against this Defendant, you can see me at that 14

time, and for whatever reason he is not a party 15

that we are not producing him, at that time, we 16

can revisit the issue, and I can give you his home 17

address. 18

MR. WHIPPLE: I am going to go ask for it now. 19

If you instruct him not to answer, then we will 20

proceed. 21

THE WITNESS: I prefer that my home address is 22

not on the record, since it's public record. 23

MR. WHIPPLE: Are you instructing him not to 24

answer, Mr. Bernstein?25


6

MR. BERNSTEIN: It seems that the witness 1

himself is not going to volunteer the information. 2

So if you want to leave a space for a ruling, we 3

can address that at a later point. 4

I am not specifically instructing him not 5

to answer. I am merely objecting for the record, 6

saying that I do not believe it's necessary. It's 7

been my practice in these type of situations that 8

the office address is sufficient. 9

If it comes a time that it's insufficient 10

or we require a ruling from the judge, I am happy 11

to address the issue at that point. 12

Q Mr. Klein, what is your present 13

employment? 14

A 1680 Michigan Avenue. 15

Q For whom do you work? 16

A I do back-office support for nursing 17

homes. 18

Q But do you do this on your own or do you 19

work with a company? 20

A I am usually the president of the company. 21

Q What is the name of the company? 22

A Tri-State Health Investors is still the 23

name of the company. 24

Q Tri-State, is that hyphenated?25


7

A I believe, Tri-State Health Investors. 1

Q Tri-State Health Investors, LLC; is that 2

correct? 3

A That's correct. 4

Q What is the telephone number of Tri-State 5

Health Investors? 6

A (305)892-1790. 7

Q Do you have a direct dial number? 8

A No. 9

Q What is the Web site for Tri-State Health 10

Investors? 11

A There is none. 12

Q Have you been with Tri-State Health 13

Investors, LLC continuously from January 1st of 14

'04 to the present? 15

A Yes. 16

Q If you said it before, I apologize. What 17

is your formal title with Tri-State Health 18

Investors, LLC? 19

A Manager. 20

Q Have you any other titles? 21

A President. 22

Q So you are an officer; is that correct? 23


Q Are you a director?25


8

A I believe, yes. 1

MR. BERNSTEIN: Object to the extent that these 2

are asking for legal conclusions as to capacities 3

in a legal entity that the witness may not 4

understand the terminology. 5

MR. WHIPPLE: Understand. 6

Q Mr. Klein, do you have any role or 7

position with the entity Tri-State Healthcare of 8

West Carrolton, LLC? 9

A No. 10

Q Are you a manager of that entity? 11

A No. 12

Q Have you any role with the entity 13

Tri-State Healthcare of New London, LLC? 14

A No. 15

Q Have you any role or title with the entity 16

Tri-State Healthcare of Huber Heights, LLC? 17

A No. 18

Q Did you ever have a role or a title with 19

any of these entities? 20

A No. 21

Q There are ten premarked exhibits. I am 22

going to ask you to look at Plaintiff's Exhibit 23

Number 2. 24

MR. BERNSTEIN: That's over here. Exhibit 1.25


9

Let me just -- 1

Q Eight-page document. 2

MR. BERNSTEIN: The witness has the document. 3

MR. WHIPPLE: Thank you. 4

Q Mr. Klein, will you please look at the 5

last page of Plaintiff's Exhibit 2? 6

A The last page, page eight? 7

Q Correct. Is that your notarized 8

signature? 9

A Yes. 10

Q Okay. Now, I am going to ask you to 11

please turn to page two. At the top of that page, 12

you were giving an answer to a multi-part question 13

having to do with three nursing home facilities in 14

the State of Ohio. I am going to call your 15

attention to the last sentence of that answer. 16

It says as follows: quote, "The 17

back-office support services provided by 18

Defendant, related to the facilities referred to 19

in this action and "the relevant time period" 20

thereto included payroll and accounts payable 21

services for each facility pursuant to protocol 22

established between Defendant and each facility 23

via its administrator." 24

Mr. Klein, when you used the phrase25


10

"back-office support services" in that answer, 1

tell me in your words what you mean by that 2

phrase. 3

A We help support nursing home facilities in 4

any back-office needs that they may need. 5

Q For example, if the nursing home facility 6

had a vendor who sent them an invoice, the 7

facility would forward the invoice to Tri-State 8

Health Investors; is that correct? 9

MR. BERNSTEIN: Objection, predicate. I'll 10

object to the form of the question. 11

You can answer. 12

A They would forward -- you want to know the 13

accounts payable procedure; is that what it is you 14

are asking? 15

Q Yes, please. 16

A The facility would get an invoice. The 17

invoice would be sent to our back office, and it 18

will be processed for processing and for payment. 19

Q And when you say our back office, you are 20

referring to the back office of Tri-State Health 21

Investors, correct? 22

A Referring to 1680 Michigan Avenue, 23

correct. 24

Q Now, when you provided these back-office25


11

services -- I am going to strike that question. 1

Before I get to that question, I want to ask you a 2

different question. 3

Please turn to page six. Do you see 4

interrogatory 16? 5

A Yes. 6

Q And you see your answer, at the beginning 7

of subpart C, it says, quote, "Defendant had a 8

contractual relationship with Tri-State Healthcare 9

of West Carrolton, LLC; Tri-State Healthcare of 10

New London, LLC; Tri-State Healthcare of Huber 11

Heights, LLC." 12

Before I proceed with that, was that one 13

contract or three separate contracts? 14

A I don't -- I don't know. It's an oral 15

contract would be one, three. I don't know. 16

MR. BERNSTEIN: Object to the extent it asks 17

for a legal conclusion. 18

Q Are you telling me that this contract or 19

these contracts were not in writing? 20

A These contracts were month to month. 21

Q Were they in writing or verbal? 22

A No, were not in the writing. 23

Q They were verbal? 24

A Correct.25


12

Q All right. And -- 1

A Well, I can give you a little background 2

as to why, if you are just confused, if you want 3

to know. 4

Q That would be great. 5

A Okay. Originally these facilities were 6

supposed to be CHOW'd to these entities: To the 7

Tri-State Healthcare West Carrolton, New London 8

and Huber Heights, but the landlord did not give 9

the necessary approvals to do the change of 10

ownership. 11

So we were in a limbo period, in a limbo 12

operational period and a limbo back-office support 13

period until the landlord gives such approval, 14

which never happened. So it was always just 15

another week, another week, another month. And it 16

never happened until the landlord came and took 17

possession of the facilities. 18

Q Was it the same landlord for all three 19

facilities? 20

A Yes, sir. 21

Q What's the name of the landlord? 22

A At the time, it was Medi Trust. I don't 23

know if they go by Health Bridge, now, but I 24

believe it was Medi Trust.25


13

Q Spell that, please. 1

A M-E-D-I, T-R-U-S-T, and I believe now they 2

are the same as the Health Bridge, I believe, 3

that's in the facility now, Health Bridge. 4

Q Health Bridge Management? 5

A I believe. I am not sure. It's just 6

speculation. 7

Q Where is the Medi Trust office located? 8

A I believe in New Jersey. 9

Q Do you know what city? 10

A I could look it up. I don't recall. 11

Engle -- I will look it up, if you need. 12

Q Well, let's take the entity Tri-State 13

Healthcare of New London, LLC as an example. Tell 14

me what that entity was. 15

A It was an entity formed to take over 16

operations of a specific nursing home in New 17

London. 18

Q Approximately when was it formed? 19

A The end of 2003. 20

Q It was supposed to take over operations 21

from whom? 22

A From IHS. 23

Q Integrated Health Systems? 24

A Correct.25


14

Q Do you know who it was who formed 1


A Some attorneys. I don't recall. 3

Q Were you involved in the formation of 4


A I did not form them. Some attorneys 6

formed them. 7

Q That wasn't my question. Do you want the 8

question read back? 9

A Yes. 10

(Thereupon, the requested portion was read back by 11

the court reporter. 12

A What do you mean by involved? 13

Q Did you participate in any way? Were you 14

involved in discussions, in meetings, in 15

decisions? 16

A Not as an officer or director. Just as 17

the Tri-State Health Investors will help 18

back-office support for these facilities. 19

Q And so when the agreement was entered into 20

to provide back-office support, were you the 21

representative from Tri-State Health Investors in 22

terms of that verbal contract? 23

A Yes. 24

Q And who was the representative?25


15

A I don't even know if it's a verbal 1

contract. It was verbal discussions that just 2

ended up being in a limbo period. I don't even 3

know if it was a contract. It just ended up that 4

we were doing back-office support for these 5

facilities until -- until change of ownership, 6

which never happened. It was just a whole limbo 7

period for two years or three years. 8

MR. WHIPPLE: Ma'am, could you please read the 9

first 20 or 30 words of that answer? 10


the court reporter.) 12

Q Mr. Klein, in your previous answer, you 13

used the phrase "verbal discussions." And with 14

whom did you have these verbal discussions? 15

A With IHS. 16

Q Who at IHS? 17

A There was a Uri Kaufman there. Whoever 18

the initial -- whoever the operators on the ground 19

were, which is hard for me to remember right now. 20

To help with the transition. All the field -- the 21

field -- the field operators that IHS had, so that 22

we can -- the facilities could be transitioned to 23

a new back-office support system. 24

Q You mentioned Kaufman, K-A-U-F-M-A-N?25


16

A I don't recall the spelling. 1

Q Do you remember his first name? 2

A I don't remember. Ira or something like 3

that. 4

Q Where was he located? 5

A I believe IHS was in -- was in Baltimore. 6

Q Maryland? 7

A Maryland. 8

Q When you say the operators on the ground, 9

are you referring to the executive directors of 10

the three facilities? 11

A I am referring more to regional people 12

that IHS had at the time. 13

Q Regional people, would that include 14

someone like Dan Grant? 15

A No, no. Dan Grant was an administrator in 16

one of the facilities. He wasn't a regional. I 17

am trying to recall who the regional was. Can't 18

recall. 19

Q Where were these regional people located? 20

A I don't know. 21

Q Were any of them located in Ohio? 22

A I couldn't say. 23

Q Please look at that same page of Exhibit 24

2, page six, interrogatories number 15. You see25


17

there are five individuals whose names are listed 1

there? 2

A Yes. 3

Q I want to start by asking you about 4

Charley, C-H-A-R-L-E-Y, Menton, M-E-N-T-O-N. Was 5

he an employee of Tri-State Health Investors? 6

A Yes. 7

Q What was his title or role? 8

A He does accounts payables. 9

Q Does he do accounts payables for Tri-State 10

Health Investors or for other entities? 11

A He is the back-office accounts payables 12

expert. 13

Q So you are telling me that he only does 14

accounts payable for other entities, or does he 15

also do it for Tri-State Health Investors 16

themselves? 17

MR. BERNSTEIN: Objection to form. 18

A He would mostly do it on a contract basis 19

to other entities. 20

Q Now, what role, if any, did Charley Menton 21

have with Tri-State Healthcare of New London, LLC? 22

A What do you mean by role? 23

Q Was he an employee? 24

A No.25


18

Q Was he a vendor? 1

A No. Well, Tri-State Health Investors may 2

be a vendor, and he worked for Tri-State Health 3

Investors. 4

Q All right. 5

A I don't know. 6

Q So Tri-State Healthcare of New London, 7

LLC, essentially was a -- had a verbal contract 8

with Tri-State Health Investors? 9

A Right. 10

Q And Charley Menton provided services under 11

that verbal contract? 12

A Correct. 13

Q Okay. Ted Duay, D-U-A-Y. What was his 14

role or title with Tri-State Health Investors? 15

A He would make sure that the facility is 16

doing their accounts receivables properly. He 17

would help with putting budgets together for the 18

facility. That kind of aspect. 19

Q Was Ted Duay, for the years '04, '05 and 20

'06, an officer of Tri-State Health Investors? 21

A No. 22

Q Was he the CFO or the accountant or the 23

bookkeeper? 24

A His title was CFO.25


19

Q For Tri-State Health Investors? 1

A Correct. 2

Q What was the role or title of Lucas Velez, 3

V-E-L-E-Z? 4

A He was also in the accounts payable 5

department. 6

Q How would you compare his role to the role 7

of Charley Menton? 8

A Lucas is an accounts payable processor, 9

and Charley is more in a supervisory role to 10

Lucas. 11

Q What was the role or title of Karen 12

Osario, O-S-A-R-I-O? 13

A Office assistant, maybe scanning, whatever 14

needs to be done in the office. Answering 15

telephones, office assistant. 16

Q Was Karen Osario an office assistant for 17

Charley Menton? 18

A She is, I guess you call Gal Friday. She 19

is the office assistant. She was answering the 20

phones and the go-to girl for everybody, I guess. 21

She wasn't specifically Charley Menton's 22

assistant, no. 23

Q Okay. So the answer is yes for Charley 24

Menton, but also yes for Ted Duay and yes for25


20

Lucas Velez, correct? 1

A Or I will say no to all. However you want 2

to define it. 3

Q She provided office assistance to all of 4

them? 5

A Right, but she is not specific to one. 6

Q Is Karen Osario still with the company? 7

A Yes. 8

Q Is Lucas Velez? 9

A Yes. 10

Q In the years '04 through '06, to whom did 11

Charley Menton report on the table of authority? 12

A To me. 13

Q To whom did Ted Duay report? 14

A To me. 15

Q To whom did Lucas Velez report? 16

A I guess to Charley. 17

Q To whom did Karen Osario report? 18

A I guess to me. 19

Q To whom did you report? 20

A To God. 21

Q Did you have a board? 22

A No. 23

Q Were you acquainted with the entity 24

Transition Healthcare Associates, Inc.?25


21

A Yes. 1

Q And you are aware that Transition 2

Healthcare provided therapy services in three 3

facilities, nursing home facilities, in the State 4

of Ohio in '04 through '06? 5

MR. BERNSTEIN: Objection to form. Objection, 6

predicate. 7

A So I am told. 8

Q Now, can you explain to me what the 9

process would be in the event that Transition 10

Healthcare provided therapy services, and then 11

submitted an invoice to these three nursing home 12

facilities in Ohio? Do you know how the process 13

would work thereafter? 14

MR. BERNSTEIN: I am going to object to the 15

form. I am going to object to the hypothetical. 16

A I could give the general accounts payable 17

process to my understanding. Again, that's not my 18

expertise, but I could give a general process, 19

which I believe I said before. Facility would get 20

an invoice, forward it to the back office, so the 21

back office can process it on behalf of the 22

facility. 23

Q Would the invoice go directly to Charley 24

Menton or to someone else?25


22

A The invoice should go directly to the 1

facility. The facility administrator should look 2

at it, review it, and then send it up to Charley 3

or to Lucas, if Lucas was handling that facility. 4

Q Okay. So then would it be Charley or 5

Lucas' responsibility to review the materials to 6

make sure that the facility had approved the 7

payment of the invoice? 8

A It would be their responsibility to make 9

sure that there is a proper paperwork attached to 10

the invoice before processing. 11

Q And then assuming that Charley or Lucas 12

observed that the facility administrator had 13

approved the invoice for payment, where would 14

Charley or Lucas get the money to pay the invoice? 15

A Facility account. 16

Q Okay. Now, was the facility account kept 17

in a Florida bank? 18

A The facility account was kept in a Florida 19

bank, yes, I guess. 20

Q Who had signature authority on these 21

facility accounts? 22

A I had signature authority. 23

Q Who else? 24

A Barry Shisgul, I believe.25


23

Q How do you spell that? 1

A B-A-R-R-Y, S-H-I-S-G-A-L (sic). 2

Q Who else what signature authority? 3

A Ted may have had or may not. I don't 4

recall. 5

Q Ted Duay, D-U-A-Y? 6

A Yes. 7

Q Anybody else? 8

A Not to my recollection. 9

Q Okay. Now, where would you get the money 10

to fund those bank accounts? 11

A From the facility, facility operation. 12

Q How would that happen? 13

A Via facility deposits or direct deposit. 14

Q Facility deposit means someone at the 15

nursing home would send the money to fund the 16

checking account, correct? 17

A Either make the deposits, or if they did 18

not want to make the deposits, mail it to the back 19

office so we can make the deposits. 20

Q Okay. Now, how do the facilities know 21

that you have the authority to receive their 22

money? 23

MR. BERNSTEIN: Objection to the form, and I am 24

going to object, predicate.25


24

A I guess during the transition period of 1

'03, they were instructed by IHS that the 2

Tri-State Healthcare facilities -- Tri-State 3

Healthcare would be taking over the IHS 4

facilities, Tri-State Healthcare of New London, et 5

cetera, et cetera, will be taking over the IHS 6

facilities. So I guess that's how they knew. 7

Q Do you know who it was at IHS that passed 8

on this information to the facilities? 9

A I guess it must have been their regional. 10

Q And you don't remember the person's name? 11

A I don't remember the person's name. 12

Q You weren't part of instructing the 13

facilities as to what protocol would be? 14

A I don't believe I did. I had a conference 15

call with them once in '03 to introduce myself, 16

and that we are there to provide back-office 17

support and services, whatever they may need. 18

I don't recall specifically. I probably 19

wouldn't specifically say that, because on a 20

conference call, it would be way too long to give 21

them protocol on that conference call. 22

Q Was this a separate conference call with 23

each facility or were all the facilities combined? 24

A I believe they were all combined.25


25

Q Now, was Tri-State Health Investors 1

compensated for these back-office services that 2

were being provided to the three facilities in 3

Ohio? 4

A Yes. 5

Q How was Tri-State Health Investors 6

compensated? 7

A The facility would issue a check to 8

Tri-State Health Investors. 9

Q You wouldn't just pay yourself out of the 10

facility's bank account? 11

A The facility would issue a check to 12


Q Okay. When you say the facility issued a 14

check, you are not talking about your offices 15

issuing the check on their behalf, are you? 16

A Charley would process the check as 17

accounts payable, like all the other checks. 18

Q Oh, okay. So you didn't get a separate 19

check from some other bank account in Ohio, for 20

example? 21

A No, no. 22

Q All right. I am going to ask you to take 23

a look at Exhibits 7, 8 and 9. Each exhibit is 24

three pages in length.25


26

A Okay. 1

Q Mr. Klein, these exhibits are copies of 2

checks that were issued by your office as part of 3

back-office support for these nursing facilities 4

in Ohio; isn't that correct? 5

A Apparently these are checks from the 6

facility-specific accounts. 7

Q And most, if not all, of these checks were 8

signed by you; isn't that correct? 9


Q I want to call your attention, please, to 11

Plaintiff's Exhibit 8. The first page of 12

Plaintiff's Exhibit 8 depicts checks dating back 13

to September of 2004. And it indicates at the top 14

of the page Union Planters Bank. Is Union 15

Planters Bank a Florida bank? 16

A I don't know if they are considered a 17

Florida bank, but there is a branch in Florida, 18

yes. 19

Q And Tri-State Health Investors opened up 20

that account; isn't that correct? 21

MR. BERNSTEIN: Objection, form. 22

A Tri-State Healthcare of New London would 23

have opened this account. 24

Q Who at Tri-State Healthcare of New London25


27

opened the account? 1

A I would have opened it for them or someone 2

in my office would have opened it for them. 3

Q Okay. So you or someone in your office 4

opened up this bank account and gave you signature 5

authority; isn't that correct? 6

A That's correct. 7

Q And you did this on behalf of Tri-State 8

Healthcare of New London, LLC; is that correct? 9


Q And who at Tri-State Healthcare of New 11

London, LLC did you do that for? Who gave you 12

authority from that entity to do that? 13

A Barry Shisgul. 14

Q What is his relationship to Tri-State 15

Healthcare of New London, LLC? 16

A He would be the manager of that company. 17

Q Is he also a lawyer who represents them? 18

A Not that I know of. 19

Q Does he have a law degree, do you know? 20

A I don't think so. 21

Q Okay. Please turn to the third page of 22

Plaintiff's Exhibit 8. You see where it shows at 23

the top Regions Bank? The third page of 24

Plaintiff's Exhibit 8, at the top of the page.25


28

A Yes. 1

Q Did Union Planters Bank have a name 2

change? 3

A I believe so. 4

Q So to the best your recollection, the 5

Regions Bank that appears on the third page of 6

Plaintiff's Exhibit 8 is really the same bank as 7

what was on the first page; is that correct? 8

A That's correct. 9

Q To the best of your knowledge, the account 10

number did not change, did it? 11

MR. BERNSTEIN: I will just object to the 12

extent the document speaks for itself. 13

A I wouldn't know. 14

Q You don't remember a change in the account 15

numbers, do you? 16

A I really don't follow it that closely. I 17

wouldn't know. 18

Q But with respect to these checks that 19

appear on the third page of Plaintiff's Exhibit 8 20

for Regions Bank, those are all your signatures, 21

aren't they? 22

A Yes, sir. 23

Q Okay. Do you see towards the top of that 24

page where they indicate that the name on this25


29

account is, quote, Tri-State Healthcare of New 1

London, LLC, d/b/a New London Health Care Center, 2

d/b/a IHS of New London at Fireland, closed quote? 3

Do you see that there? 4

A Yes. 5

Q And it shows the address of 1680 Michigan 6

Avenue, right? 7

A Yes. 8

Q That's your business address, isn't it? 9

A That's Tri-State Health Investors' 10

business address, yes. 11

Q Suite 736, is that Tri-State Health 12

Investors? 13

A Yes. 14

Q What do you know about IHS of New London 15

at Fireland? 16

A That is the facility in New London, the 17

IHS facility in New London. 18

Q Is that the same or different from 19



form of the question. 22

A Tri-State Healthcare of New London was 23

going to take over IHS of New London. 24

Q Did you or someone from your office have25


30

this checking account at Regions Bank opened in 1

this name? 2

A Most likely someone in my office, yes. 3

Q Did anyone at IHS of New London or 4

Fireland know that your office had opened a 5

checking account that had their name on the 6

account? 7

A I am sure they -- I am sure they did. 8

Q And give me the name of the person or 9

persons who knew that. 10

A I would think the administrators would 11

know. They were instructed to make the deposits 12

in these accounts. 13

Q I asked you for the name or names of the 14

persons at IHS of New London at Fireland. 15

MR. BERNSTEIN: Object to the extent it was 16

asked and answered. 17

MR. WHIPPLE: I asked for names. He didn't 18

give me names. 19

A I don't recall specific names. I don't 20

recall. Perhaps a name was Susan. I don't 21

recall. I could be wrong. 22

Q Understanding that it may or may not be 23

Susan, do you remember her last name? 24

A Ruskin, Rutkin.25


31

Q Rusnack (phonetic)? 1

A I believe so. 2

Q Susan Rusnack? 3

A If that was an administrator at the time. 4

Who were the business office managers, one of the 5

two, would have -- 6

Q Well, if I represent to you that Susan 7

Rusnack was the administrator the nursing home in 8

New London, is it your testimony that she was 9

affiliated with IHS of New London at Fireland? 10

A Yes. 11

Q Was it your belief that she was an 12

employee of IHS of New London at Fireland? 13

A Yes. 14

Q And did she approve of this account being 15

opened in the name IHS of New London at Fireland? 16

MR. BERNSTEIN: Object to the form of the 17

question. I'll object to predicate. 18

A I would think so, because that was the 19

structure that was set up and the deposits were 20

being made. So I would think so. 21

Q When Tri-State Healthcare Investors was 22

compensated for the services that it provided for 23

the nursing home in New London, did she sign off 24

on that compensation?25


32

MR. BERNSTEIN: Objection, predicate. 1

A She would -- she would have known about 2

it, because it would have been in the financials. 3

Q Who was it who decided how much 4

compensation Tri-State Healthcare Investors would 5

receive? 6

A It was original discussions with IHS and 7

Barry in '03. 8

Q And who at IHS, if you know? 9

A Most likely Kaufman or someone in that 10

capacity. 11

Q Was the agreement for compensation, for 12

the amount of compensation, to Tri-State 13

Healthcare Investors ever reduced to writing? 14

A No. Because of the transition that it was 15

supposed to be with change of ownership, it just 16

never happened. 17

Q Well, then how much would Charley Menton 18

know how much was the appropriate compensation? 19

Was there a formula or something? 20

A It was established from the start that it 21

would be -- I believe it was two and a half 22

percent of gross revenue. 23

Q On what? A monthly basis? 24

A Correct.25


33

Q So that if the nursing home at New London 1

had a certain amount of revenue in, for example, 2

June of 2004, that two and a half percent of that 3

gross revenue would be payable to Tri-State 4

Healthcare Investors as compensation, correct? 5

MR. BERNSTEIN: Objection. 6

A As Tri-State Health Investors as 7

back-office support, correct. 8

Q What sort of documentation did the nursing 9

homes in Ohio send to Tri-State Healthcare 10

Investors that would document their gross revenue? 11

MR. BERNSTEIN: I think there is going to be a 12

lot of confusion if you keep using the name 13

Tri-State Healthcare Investors. The name is 14


The other entities are Tri-State 16

Healthcare of New London, Tri-State Healthcare of 17

West Carrolton and Tri-State Healthcare of Huber 18

Heights. But the name of the entity that's here 19

as the defendant is Tri-State Health Investors. 20

There is no "Healthcare" in the name. 21

MR. WHIPPLE: Thank you. I appreciate your 22

comment. I am going to rephrase the question. 23

Q What documentation would the nursing homes 24

in Ohio provide to Tri-State Health Investors to25


34

document their gross revenue so that Tri-State 1

Health Investors would know how much compensation 2

it was entitled to? 3

A The facilities have a billing system 4

called Achieve that Janice Klugman, who is a 5

billing expert, would help support the facility in 6

any billing needs that they may have, and she 7

would be able to pull the amount of their gross 8

charges on a monthly basis, and the facility 9

itself could pull it if they knew how and most of 10

them knew how. 11

Q Was Janice Klugman an employee of 12

Tri-State Health Investors? 13

A No. She was an employee of a different 14

Tri-State facility that was the most expert of 15

back-office -- of back-office billing. So she was 16

used for support for the other facilities. 17

Q And what facility was that? 18

A I don't recall. 19

Q Was it an Ohio facility? 20

A I don't think so, but I don't recall. 21

Q What state was it in, if you know? 22

A No, I don't recall. 23

Q Now, during this period of time that 24

Tri-State Health Investors was receiving25


35

compensation, a percentage of the gross revenue of 1

the nursing homes, what compensation, if any, was 2

Tri-State Healthcare of New London, LLC receiving? 3

A I don't understand the question. 4

Q Did Tri-State Healthcare of New London get 5

anything out of this? 6

A No. Tri-State Healthcare of New London 7

was waiting for a change of ownership that never 8

happened. So they were in limbo, waiting. 9

Q They were in limbo for the whole time, 10

weren't they? 11

A Correct. 12

Q Until the landlord regained possession of 13

the facilities; isn't that correct? 14

A Correct. 15

Q I am going to ask you to please look at 16

Plaintiff's Exhibit 3. This is a three-page 17

document. 18

A Yes. 19

Q Let's start on the last page, if you 20

would, please. 21

A Yes. 22

Q The signature of the authorized 23

representative, that's your signature, isn't it? 24

A No.25


36

Q Do you know who signed that name, Avi 1

Klein, on the third page of Exhibit 3? 2

A No. 3

Q Did someone sign your name with your 4

authorization? 5

A Not that I know of. 6

Q Are you familiar with the address 1111 7

Kane, K-A-N-E, Concourse, Suite 301, Bay Harbor, 8

Florida 33154? 9

A Yes. 10

Q What's that address? 11

A That's an old office of mine. 12

Q When your office was at 1111 Kane 13

Concourse, what company were you affiliated with? 14

A At this time, Tri-State Health Investors. 15

Q When you say at this time, you are 16

referring to September of 2003, correct? 17

A Correct. 18

Q When did your office change to 1680 19

Michigan Avenue, Miami Beach? 20

A Probably -- it says September 3rd. I 21

would have thought September 1st, but maybe I am 22

wrong. Maybe October 1st. But during that 23

period, during that month. 24

Q Now, if you look just above that, it25


37

states that the name and the complete address for 1

the agent for Tri-State Health Investors, LLC is 2

Avi Klein at 5440 Charles Gate Road, Huber 3

Heights, Ohio 45424. 4

Did you yourself ever have an office in 5

Huber Heights, Ohio? 6

A No. 7

Q Did you know that you were the statutory 8

agent for Tri-State Health Investors in Ohio? 9

A No. 10

Q Did you know that your name was on this 11

document claiming that you were the statutory 12

agent? 13

A No. 14

Q Please turn to the first page. Do you see 15

at the top it makes reference to an entity by the 16

name of Spiegel & Utrera, S-P-I-E-G-E-L and 17

U-T-R-E-R-A, P.A., Miami, Florida. 18

You are acquainted with that organization, 19

aren't you? 20


A I believe they're attorneys that formed 22

corporations. 23

Q And did Spiegel & Utrera provide services 24

of that nature for Tri-State Health Investors?25


38

A Yes. They would have been called to form 1

Tri-State Health Investors, and that would have 2

given them a brief background of what Tri-State 3

Health Investors was attempting to do as a 4

corporation, and then I guess they incorporated 5

what they think is fit. 6

Q All right. And I am not going to ask you 7

the specifics of what was said, but I am going to 8

ask you the names of the attorney or attorneys who 9

you spoke with in terms of the incorporating of 10


A I really don't recall. It's been awhile. 12

Q Do you remember meeting with attorneys 13

from that firm in September of '03? 14


Q Or August of '03? 16


A I never met with the attorneys at the 18

firm. 19

Q Do you remember having conversations with 20

the attorneys from that firm in the year 2003? 21

A Yes, I remember calling them in 2003. 22

Q Did Tri-State Health Investors ever pay 23

legal fees to that law firm? 24

A I am sure they sent a bill for their25


39

services. I can't say if I recall. 1

Q Please look at Plaintiff's Exhibit 4, 2

which is also a three-page document. 3

A Yes. 4

Q Again, looking at the last page, is that 5

your signature as the authorized representative? 6

A Yes. 7

Q And did you sign that on or about June 26, 8

2007? 9

A Yes. 10

Q I would like you to please look at 11

Plaintiff's Exhibit 5. 12

A Yes. 13

Q Please look at the third page of that. 14

A Yes. 15

Q That indicates an individual by the name 16

of Barry Shisgul, S-H-I-S-G-U-L. Is that the 17

individual about whom you testified earlier today? 18

A Yes. 19

Q And it shows the same address, 1111 Kane 20

Concourse. Was Barry Shisgul in the same office 21

as you back in September of '03? 22

A No. 23

Q Was he ever at 1111 Kane Concourse? 24

A No.25


40

Q Do you know why that address appears under 1

his name on this exhibit? 2

A I guess the attorneys was just as 3

competent as the other thing that they filed. 4

Q Would you recognize Barry Shisgul's 5

signature if you saw it? 6

A I believe so. Maybe. 7

Q Let's look at that third page of Exhibit 8

5. Does that appear to you to be Barry Shisgul's 9

signature? 10

A I can't for certain say. 11

Q You are not saying that it is and you are 12

not saying that it's not; is that correct? 13


Q In September of 2003, was Berry Shisgul an 15

employee of Tri-State Health Investors? 16

A No. 17

Q What connection, if any, did he have with 18

Tri-State Health Investors in September of '03? 19

A None. 20

Q What dealings did you have with him at 21

that period of time? 22

A I was being contracted to help in the 23

back-office services of these facilities. 24

Q I apologize. I couldn't hear. Did you25


41

say he was being contracted? 1

A No. Tri-State Health Investors was being 2

contracted for back-office support for these nine 3

IHS facilities that are being sold or transferred 4

to Tri-State Healthcare facilities. 5

Q Okay. So Barry Shisgul was someone 6

involved in that contracting? 7

A Barry Shisgul was someone involved in this 8

whole -- yes. 9

Q What company was he affiliated with? 10

A He was going to be the new operator, which 11

never happened. 12

Q Right. And before -- I know that never 13

happened, but what was he at the time? Was he 14

just unemployed or did he have some affiliation of 15

some sort with someone? 16

A I don't know. 17

Q Do you remember where his office was? 18

A No. 19

Q Was it in Florida? 20

A No. 21

Q What state was it in? 22

A New York somewhere. 23

Q Do you have in your business records his 24

last-known address and phone number?25


42

A I could look for it. 1

Q If you wanted to find out why Spiegel & 2

Utrera had your name on it as the document Exhibit 3

4, and while they had Barry Shisgul's name on the 4

document Exhibit 6, who at Spiegel & Utrera would 5

you contact? 6

A I really don't recall. I mean, I could 7

give you speculation as to why, if that's what you 8

want. But I really -- I would just call -- I 9

don't remember. 10

MR. BERNSTEIN: I would caution against 11

speculation. 12

Q Even though I don't want speculation, this 13

is discovery. So yes, I would like you to answer 14

it. 15

I am going to correct that previous 16

question. When I said Exhibit 4, I meant to say 17

Exhibit 3. Having corrected that and 18

understanding it's speculation, tell me what your 19

speculation is. 20

A I would have told them that Tri-State 21

Health Investors was going to be back-office 22

support and help in the management of these 23

facilities upon CHOW, upon change of ownership, 24

and they may have thought that Tri-State Health25


43

Investors will actually work in that state in come 1

capacity. That's my speculation. 2

Q And to the best of your knowledge or 3

speculation, who at Spiegel & Utrera would have 4

been in on this conversation? 5

MR. BERNSTEIN: Objection to the extent it was 6

asked and answered. 7

A I really don't recall. I never met anyone 8

at Spiegel & Utrera. I just picked up the phone 9

and called their generic company that incorporates 10

corporations. Probably cheapest company out there 11

to call. 12

Q Did you have any notes or records that 13

would disclose, memorialize, the name of whoever 14

it is you talked to? 15

A I wouldn't have that. It's been so long. 16

Q Did Spiegel & Utrera ever send documents 17

to Tri-State Health Investors other than bills? 18

A I remember at some point they sent 19

something, probably a year later, to be named as a 20

registered agent or something like that. We may 21

have seen something like a year after or 22

thereafter. 23

Q Okay. That document to name a registered 24

agent, was that for someone at your company to be25


44

named a registered agent or someone from Spiegel & 1

Utrera to be named as registered agent? 2

MR. BERNSTEIN: Objection to the form. 3

A For someone at Spiegel & Utrera to be 4

named a registered agent for a fee. 5

Q Did Tri-State Health Investors proceed to 6

appoint them as registered agent or did you elect 7

not to? 8

A I don't recall. I don't recall. 9

MR. WHIPPLE: This is a good time to take a 10

break. 11

(Whereupon, a break was taken.) 12

Q Mr. Klein, when Tri-State Health Investors 13

would receive invoices and vouchers from the 14

nursing home facilities that were approved for 15

payment, did Tri-State Health Investors make any 16

independent determination itself on whether to pay 17

or not pay, or was it merely an administerial 18

function of cutting the check? 19


form of the question. I am going to object to 21

predicate. 22

A Charley and an administrator would go 23

through their invoices together. Charley has 24

nursing experience, and that's why he was good for25


45

the job, and together they would go through the 1

invoices and determine the validity or not. 2

Q All right. So from time to time Charley 3

Menton might decide not to pay an invoice; is that 4

correct? 5


A Well, it wouldn't be his decision, but he 7

would help the facility come up with their 8

decision. 9

Q To your knowledge, were invoices submitted 10

from Transition Healthcare Associates from these 11

Ohio facilities to Tri-State Health Investors that 12

were never paid? 13

A I don't understand the question. 14

Q Isn't it true that there are some 15

Transition invoices that have never been paid? 16


predicate. 18

A Well, it's my understanding. I guess 19

that's why we are here. More than that, I don't 20

know. 21

Q You are not denying that there are 22

invoices that are not paid, are you? 23


A I wouldn't know specifically the answer.25


46

I don't get involved in that specific level. So I 1

assume we are here because there are invoices that 2

weren't paid, if that's the question. 3

Q Have you ever had conversations with 4

Charley Menton about unpaid Transition invoices? 5

A Most likely. More in general terms when 6

the facility went back to the landlord, in 7

general, what do we do with invoices that the 8

facility doesn't have money for? So it wasn't 9

specific to this Transition. 10

Q So you are saying the general 11

conversations with Charley Menton would not have 12

been conversations specific to Transition 13

Healthcare; is that your testimony? 14

MR. BERNSTEIN: Objection to the extent the 15

witness' testimony speaks for itself. 16

A Yes. 17

Q I am going to represent to you that Susan 18

Rusnack testified a few days ago that there were 19

Transition Healthcare invoices that she approved 20

for payment that Charley Menton did not process 21

for payment. Do you have any knowledge of those 22

circumstances? 23

A Not specifically. I could speculate if 24

that happened as to why, but not specifically.25


47

Q Are you aware of there being situations 1

where Charley Menton did not process invoices that 2

had been approved by the local nursing home 3

facility? 4


A I said in general terms, when these 6

facilities went back to Medi Trust or Health 7

Bridge, the facilities in question did not have 8

enough funds to pay all of its accounts payables, 9

and Charley and an administrator would figure out 10

which one is valid, pay them first, and then 11

determine other invoices. So I can't say I was 12

involved in every minute aspect of it, but that's 13

the general gist. 14

Q So if there wasn't enough money, Charley 15

would decide who got paid, who didn't? 16

MR. BERNSTEIN: Objection, form. Objection, 17

predicate. 18

A Not necessarily decide. The facility 19

administrator's job was to choose the most 20

important invoices first. They were always 21

instructed to pay payroll, to pay the food bills, 22

electric and all those things first. 23

Q Assuming hypothetically that the nursing 24

home administrator approved a Transition25


48

Healthcare invoice for payment, and then Charley 1

Menton made the decision not to pay it, you 2

wouldn't know one way or the other whether that 3

scenario ever occurred, would you? 4

A It could have gone both ways. They were 5

supposed to work together. I don't know. 6

Q I am talking about your own knowledge, 7

what you know about Charley Menton. Did that ever 8

happen? 9

A I don't know. 10

Q Have you ever talked to Charley Menton 11

about if he ever refused to pay a bill that was 12

approved by the nursing home? 13

A Charley is very good at his job, and I 14

trust that he knew how to help the facility work 15

through their accounts payables. 16

Q So what's the answer to my question? 17

MR. BERNSTEIN: Objection to the form. 18

A Charley was doing his job, and he would be 19

able to work through the accounts payables with 20

the facilities, and he wouldn't really need my 21

interaction. 22

Q I didn't ask you if he needed it. I 23

didn't ask you if he was good at his job. I am 24

going to invite the court reporter to read my25


49

question back to you, and I would ask you to 1

listen to it carefully and then answer it. 2



A I don't know any specific conversation. 5

Q Do you recall generally? 6


A In general, many things are brought to my 8

attention, but I don't recall any specific 9

conversation. 10

Q Isn't it true that towards the end of when 11

Transition Health Investors was providing these 12

back-office services, that there were a whole 13

bunch of invoices that Charley Menton wasn't 14

processing for payment? Isn't that true? 15


predicate. 17

A No, sir, that's not true. 18

Q Isn't it true that you had knowledge that 19

there were a large number of creditors of these 20

nursing homes who weren't getting paid? 21

A I was aware of that, yes. 22

Q That came out in the lawsuit involving 23

Integrated Health Services and THCI Company in 24

Delaware Federal Court; isn't that correct?25


50


Q And -- 2

MR. BERNSTEIN: One second. Objection to the 3

form. Objection, predicate. And object to 4

mischaracterization of facts. 5

Q Your company entered into a settlement 6

agreement in that lawsuit that included, among 7

other things, listing of accounts payable; is that 8

right? 9

MR. BERNSTEIN: Objection, mischaracterization 10

of facts. Objection, predicate. Objection to 11

form. 12

A I don't recall every document that was in 13

that case. 14

Q I didn't ask you if you recall every 15

document. That case did involve preparing a list 16

of accounts payable? 17

MR. BERNSTEIN: Objection to the extent that 18

any documents in that case speak for themselves, 19

and objection to the extent that this Defendant is 20

not a named entity in that litigation. 21

MR. WHIPPLE: I am going to remind you, 22

Mr. Bernstein, speaking objections are prohibited 23

in the State of Ohio, and so is prompting of the 24

witness.25


51

Now, you are supposed to just say 1

"objection" and move on. I am giving you quite a 2

bit of latitude. I am going to ask you just to 3

speak your objection and move on, so we don't get 4

in a situation where you are signaling the witness 5

as to what his testimony might be. 6

Q I am asking you, Mr. Klein, about your 7

knowledge. You knew about the lawsuit, didn't 8

you? 9

A Which lawsuit? 10

Q The one in Delaware Federal Court 11

involving THCI Company. 12

A Yes. 13

Q And you know that it involved the 14

preparing of a list of accounts payable, didn't 15

you? 16

A I am -- I don't specifically recall that. 17

Q Weren't you involved in preparing such a 18

list? 19

A I don't recall. I never prepared that 20

list, if that list was prepared. 21

Q Have you ever talked to Mike Freeman of 22

Transition Healthcare? 23

A No. 24

Q You don't remember him talking to you25


52

about the fact that he wasn't paid? 1

MR. BERNSTEIN: Objection, asked and answered. 2

A I don't recall. 3

Q Do you remember having conversations with 4

any of the administrators in the three Ohio 5

facilities about Transition Healthcare not being 6

paid? 7

A No, never had that conversation. 8

Q Are you saying you never had it or you 9

just don't remember one way or the other? 10

A I am saying, I wouldn't be speaking to the 11

administrators on a day-to-day basis. That wasn't 12

part of my duties. I could say I probably 13

never -- 14

Q Isn't it true that from time to time, 15

representatives of the three Ohio facilities would 16

call you because they were frustrated that Charley 17

Menton wasn't paying invoices? 18


predicate. 20

A I don't recall. I don't recall that 21

conversation ever happening. 22

Q That's not just specific to Transition? 23

You are saying that with respect to all of them, 24

correct?25


53


A That wouldn't be the process. So that's 2

not -- that's why I probably don't recall it ever 3

happening, because it wouldn't be the process. 4

Q I am not asking you what was the process. 5

I am asking you what you remember. Your testimony 6

is you don't remember any such conversations; is 7

that correct? 8

A Correct. 9

Q Whether it was Transition or some other 10

vendor; is that correct? 11


A Correct. 13

Q I would like you to please take a look at 14

Plaintiff's Exhibit 10. This is two pages from 15

the Web www.manta.com. 16

A Yes. 17

Q Do you see that the first page, it refers 18

to, in bold, Tri-State Health Investors (Elm Creek 19

Nursing Center)? 20

A Yes. 21

Q Do you have any idea how that information 22

got to manta.com? 23

A Nope. 24

Q Do you see farther down where it talks25


54

about detailed Tri-State Health Investors company 1

profile? 2

A Where is that? 3

Q Middle of the page, bold, detailed 4

Tri-State Health Investors company profile? 5

A Yes. 6

Q Where they indicate that you have a branch 7

located in Dayton, Ohio? 8

A It appears to indicate that, yes. 9

Q Do you dispute that information? 10

A Did I receive that? What's the question? 11

Q Do you dispute that information? 12

A I have never seen this before. Yes, I do 13

dispute. We don't -- Tri-State Health Investors 14

does not have an office in Dayton, Ohio. 15

Q Do you have any idea how manta.com got 16

that information? 17

MR. BERNSTEIN: Objection to the extent asked 18

and answered. 19

A You would have to ask them. 20

Q I am asking you if you have any knowledge. 21

A I have no knowledge. 22

Q Do you see the second page from the same 23

Web site, that does accurately set out the address 24

and phone number for Tri-State Health Investors,25


55

doesn't it? 1

A It does have the correct address, yes. 2

Q It indicates that your SIC for Tri-State 3

Health Investors is management services. Do you 4

agree that that's the proper SIC? 5

A Where is that? 6

Q Right beneath that name and address. 7

Right beneath the phone number. 8

A Management services is very broad, so -- 9

Q Is it a proper SIC code or not? 10

A I don't even know what SIC code means. 11

Q Do you see below that where it says line 12

of business, healthcare management? 13

A Yes. 14

Q Do you dispute that? 15

A No. 16

Q With respect to these bank accounts that 17

we were talking about earlier that had been marked 18

as exhibits in this case, Exhibits 7, 8 and 9, 19

those bank statements were mailed to the address 20

of Tri-State Health Investors, weren't they? 21

A It appears so. 22

Q They were not mailed to the local nursing 23

home facility, were they? 24

A I wouldn't know. I don't open the mail.25


56

Q Who is Peter Lavalette, L-A-V-A-L-E-T-T-E? 1

A I don't know. 2

Q If any of these nursing homes provided 3

services or had contractors who provided services 4

that were covered by Medicare or Medicaid, do you 5

know what the procedure was for applying for 6

reimbursement? 7

A The way I -- 8


A The way I understand the skilled nursing 10

facilities setting is that they will bill on a day 11

of stay for that day of stay. So the business 12

office would bill based on the length of stay and 13

not specifically for any services provided. 14

Q The business office at the nursing home 15

itself, correct? 16

A Correct. 17

Q Did Tri-State Health Investors provide any 18

services with respect to billing or obtaining 19

reimbursement for Medicare or Medicaid? 20

A The billing is done at the facility itself 21

by a business office manager at the facility. 22

Q So the answer to my question is no? 23

A Correct. 24

MR. WHIPPLE: Michael, as long you have that in25


57

front of, could you please extract Plaintiff's 1

Exhibit 11? Should be a six-page document, with 2

an additional page on the back. 3

MR. BERNSTEIN: Okay. 4

Q Okay. Just drawing your attention to the 5

first page of that document. In the middle of the 6

page on the right side, is that your signature? 7

A Yes. 8

Q Okay. It makes reference to West 9

Carrolton, LLC, a Florida corporation. What is 10

West Carrolton, LLC? 11

A I don't know. 12

Q If you wanted to find out what West 13

Carrolton, LLC was, who would you ask? 14

A I would ask the Florida Department of 15

State. 16

Q Are you an officer or director of West 17

Carrolton, LLC? 18

A No. 19

Q Beneath your signature, it indicates that 20

you are the owner. Are you the owner of West 21

Carrolton, LLC? 22

A West Carrolton, LLC does not exist. These 23

contracts were made by PharMerica, and they wanted 24

to get my business, and they were sitting down --25


58

and they wanted to get the facility business, and 1

they were sitting down and negotiating contracts, 2

and trying to provide pharmacy services to the 3

facility. 4

They presented this contract. When it was 5

brought to their attention that it named the wrong 6

name, they said just sign it like this and they 7

will change it. 8

Q So you signed it as is? 9

A Yes. Or else the facility wouldn't have 10

pharmacy services, and the nursing home residents 11

would not have pharmacy. 12

Q Your testimony is you are not and never 13

were the owner of West Carrolton, LLC; is that 14

correct? 15

A Correct. And I did not prepare this 16

contract or have any involvement in preparing it. 17

Q Do you see where it says the name and 18

address of the facility is Tri-State of West 19

Carrolton, d/b/a Elm Creek Nursing Center? 20

A Yes. 21

Q Elm Creek Nursing Center was, in fact, the 22

name of the nursing home in West Carrolton, Ohio; 23

isn't it? 24

A I sometimes don't recall specific names,25


59

but it sounds right. 1

Q Do you see where it says below that, 2

licensed owner's address for notice was Tri-State 3

Health Investors, Inc., 1680 Michigan Avenue, 4

suite 736, South Beach, Miami, Florida? 5

A I see where it says that, but like I said, 6

this contract was prepared by PharMerica and not 7

by myself. 8

Q Okay. But this information here on the 9

first page of Plaintiff's Exhibit 11, that is how 10

it read the day you signed it; isn't it? 11

A Yes. 12

Q You signed it on June 30, 2004; isn't that 13

correct? 14

A Yes. 15

Q I am going to ask you, would your answers 16

also be the same with respect to Plaintiff's 17

Exhibit 12, which relates to the nursing home in 18

New London, Ohio? 19

A All the pharmacy contracts were wrong, but 20

the facility needed pharmacy services. So I went 21

along with it until they made the changes. I 22

believe -- I think they made changes at a later 23

date, but I am not sure. 24

Q So the answer to my question is yes, and25


60

all your answers as to Plaintiff's Exhibit 11 1

would also be the same as Plaintiff's Exhibit 12; 2

is that correct? 3

A Yes. 4

Q Would Plaintiff's Exhibit 13, if I asked 5

you the same question as I did for Plaintiff's 6

Exhibit 11, your answers would be the same, 7

wouldn't it? 8

A Yes. 9

Q Do you have in your possession subsequent 10

versions of these pharmacy services agreement 11

where the information has been corrected? 12

A I can -- I can look for it. I know they 13

were notified that it's wrong. 14

Q Are you telling me that you specifically 15

remember signing versions of these agreements that 16

were corrected, or you are not sure one way or the 17

other? 18


A I don't recall signing anything, but I do 20

recall notifying them that the names were wrong. 21

Q Do you believe that that notification was 22

in writing? 23

A I don't recall. 24

Q When you send business communications on25


61

behalf of Tri-State Health Investors, do you use 1

word processing? 2

A On occasion. 3

Q Did you use word processing back in 2004, 4

2005? 5

A On occasion. I mostly like doing most of 6

my business the old fashioned way, with a 7

telephone or face to face. But from time to time. 8

Q Let's take Exhibits 11, 12 and 13 as an 9

example. If you signed a document such as this, 10

would it be your custom and practice to keep 11

photocopies in your files? 12

A No. I would have called Jim Allen and 13

tell him -- and actually, at the time, I told him 14

this is wrong. And he said, listen, if you want 15

this done, this is how it has to be done. We will 16

change it at a later date. There was definitely 17

subsequent conversations to that to get them 18

right. 19

Q When you sign written agreements, you 20

would not necessarily keep copies in your files; 21

is that what you are saying? 22

A A pharmacy service agreement, there may 23

have been a pharmacy services book in the back 24

office referencing the pharmacy services, yes.25


62

Q And do you have a procedure in place where 1

you destroy those documents after so many years or 2

do you keep them indefinitely? 3

A There is no formal procedure, but as 4

paperwork fills up the office and as they get 5

stale, they are disposed of. 6

Q Not by a formal records destruction 7

policy; is that correct? 8

A That's correct. 9

Q Did you ever have written communication to 10

or from the nursing home facilities in Ohio? 11

A No, no. 12

Q Did you ever have e-mail communications to 13

or from the nursing home facilities in Ohio? 14

A If an administrator would e-mail me, I 15

would respond. 16

Q And either that incoming e-mail or the 17

outgoing e-mail, would those be saved anywhere in 18

the computer system? 19

A No. They automatically -- I guess when 20

the computer gets -- hits its memory, just delete 21

the old ones. 22

Q Did you ever print out hard copies of 23

those e-mail messages? 24

A No.25


63

Q In years '04, '05 and '06, what was your 1

e-mail address? 2

A I believe [email protected], I 3

believe. Something like that. 4

Q Is that your e-mail address today? 5

A No. 6

Q What's your e-mail address today? 7

A Klein-avi@yahoo. 8

Q Dot com? 9

A Dot com. 10

Q Klein_avi, are those all lower case? 11

A I don't think it matters. 12

MR. BERNSTEIN: Mr. Bernstein, would you mind 13

handing him Exhibit 14? 14

Q Again, let's start at the last page. Is 15

this an affidavit that you either signed or you 16

approved for a signature? 17

A I don't see that it's signed, but. 18

Q You don't dispute that you authorized your 19

signature -- your typed signature to be placed on 20

this affidavit, do you? 21

A Most likely, if this was signed, then I 22

authorized it. I don't see that it's signed here. 23

Q Well, as a matter of fact, it shows that 24

Mr. Bernstein, who is sitting in the room with25


64

you, notarized your signature. Now, you don't 1

deny that you authorized this document on 2

April 18, 2007? 3

A Oh, is this an electronic signature? I am 4

not sure. 5

Q My question is: Do you authenticate this 6

affidavit? 7

A And my answer is I sign a lot of things 8

from day to day, and if this is an electronic 9

signature, then I would give approval. If it is 10

not an electronic signature, then I did not give 11

approval. So I don't know. I don't see a 12

physical signature on it. 13

Q We are going to go through this, and if 14

there is any point in time where you decide this 15

is not authentic, I would like you to please let 16

me know that. 17

A Okay. 18

Q Now, it mentions at the beginning of this 19

affidavit on the first page, it says that Avi 20

Klein -- of course, that's you -- declares, one, I 21

am the manager of the Tri-State Health Investors, 22

LLC. Do you see that? 23

A Yes. 24

Q That's accurate, isn't it?25


65

A Yes. 1

Q Then it says, manager for Tri-State 2

Healthcare of Erie, LLC. Then is says Tri-State 3

Healthcare of New London, LLC. Is it true that 4

you are the manager of Tri-State Healthcare of New 5

London, LLC? 6

A No, sir, it's not true. 7

MR. BERNSTEIN: Objection. Objection to form. 8

Objection to predicate. 9

Q Go on to the next page. 10

MR. BERNSTEIN: Objection to the extent the 11

document speaks for itself. 12

Q It says here you are the manager of 13

Tri-State Healthcare of Huber Heights, LLC. Is 14

that a true statement or is that a false 15

statement? 16

MR. BERNSTEIN: Objection to form. Objection 17

to the extent the document speaks for itself. 18

Objection, predicate. 19

A No, I'm not the manager of Tri-State 20

Healthcare of Huber Heights, LLC. 21

Q Do you remember reading this language when 22

Mr. Bernstein presented this to you for your 23

notarization? 24

A Yes, I believe I do.25


66

Q You didn't ask to him correct those, did 1

you? 2

A No. I don't think it's a mistake. 3

Q At the beginning -- 4

A I don't think it's a mistake. I don't 5

think it needs correction. 6

Q Why do you say it's not a mistake? 7

A I don't know. Maybe you should read it 8

again. 9

Q It says, Avi Klein declares, one, I am the 10

manager of Tri-State Health Investors, LLC, 11

manager for Tri-State Healthcare of Erie, LLC, 12

Tri-State Healthcare of New London, LLC, Tri-State 13

Healthcare of Alabastor, LLC, Tri-State Healthcare 14

of Grand Blanc, LLC, Tri-State Healthcare of 15

Greensburg, LLC, Tri-State Healthcare of Huber 16

Heights, LLC and Tri-State Healthcare of Sound 17

Brook, LLC. 18

A My understanding is that Tri-State Health 19

Investors were managing these specific facilities. 20

Q Oh. So your interpretation was that 21

Tri-State Health Investors was the manager of 22

those entities, not you personally? 23

A That Tri-State Health Investors had an 24

agreement to manage these limbo facilities25


67

until -- until IHS would actually be CHOW, change 1

of ownership, or transferred to these facilities. 2

Q And who at Tri-State Health Investors had 3

the responsibility to perform those management 4

services? 5

A Tri-State Health -- 6

Q For Tri-State Healthcare of New London and 7

Tri-State Healthcare of Huber Heights? 8

A Tri-State Health Investors had the 9

responsibility to manage the Tri-State Healthcare 10

entities, until such time that we have a formal 11

change of ownership and a formal agreement. 12

Q And which employee of Tri-State Health 13

Investors was assigned those management 14

responsibilities? 15

A No one specifically. But I guess I 16

assumed those. It's not like there is one person 17

who has responsibility. It's, again, whoever is 18

in the office responsible for specific tasks 19

related to whatever needs to be done. 20

MR. BERNSTEIN: Objection to the extent that it 21

asks for a legal conclusion. 22

Q You and other employees of Tri-State 23

Health Investors shared that management 24

responsibility; is that correct?25


68


predicate. 2

A Well, Tri-State Health Investors would 3

have the management responsibility to help manage 4

these facilities. And I think we described before 5

how the responsibilities were broken up. 6

Q The first page refers to Abe Briarwood 7

Corporation. What do you know about that entity? 8

A Abe Briarwood Corporation, I believe, 9

bought IHS out of bankruptcy. 10

Q Did you yourself ever have any connection 11

or relationship with Abe Briarwood Corporation? 12

A No. 13

Q Does Tri-State Health Investors have any 14

connection or affiliation with Abe Briarwood 15

Corporation? 16

A No. 17

Q Who are the owners, shareholders or 18

members of Tri-State Health Investors, LLC? 19

MR. BERNSTEIN: Object to the form. 20

A Myself. 21

Q Anybody else? 22

A No. 23

Q Who were the owners, shareholders or 24

members of Tri-State Healthcare of West Carrolton,25


69

LLC, if you know? 1

A Barry. 2

Q Barry Shisgul? 3

A Yes. 4

Q Tri-State Healthcare of New London, LLC? 5

A Would be the same. 6

Q Barry Shisgul? 7

A Yes. 8

Q Tri-State Healthcare of Huber Heights, 9

LLC? Same? 10

A Yes. 11

Q As to those three entities, Tri-State 12

Healthcare of West Carrolton, New London and Huber 13

Heights, do you know the directors of any of those 14

entities? 15

A I would think it would be the same, Barry. 16

MR. BERNSTEIN: Objection to the extent it 17

calls for a legal conclusion. 18

Q Do you know the officers of any of those 19

entities? 20

MR. BERNSTEIN: Objection. There is a running 21

objection to predicate to all these questions. 22

A I would think the same, Barry. 23

Q Are you an officer or director of any of 24

those three entities?25


70

A No. 1

Q Have you ever been? 2

A No. 3

Q If there are members, officers or 4

directors other than Barry Shisgul, do you know 5

who they would be? 6

A No. 7

Q Is Barry Shisgul an officer, director or 8

member of Tri-State Health Investors, LLC? 9

A No. 10

Q When was the last time you talked to Barry 11

Shisgul? 12

A I can't recall. 13

Q Approximately. 14

MR. BERNSTEIN: Objection to the extent asked 15

and answered. 16

A I definitely spoke to him at the time when 17

these facilities were going back to Medi Trust, 18

which I guess the legal name is THCI, advising him 19

that we are never going to get approval for change 20

of ownership now. 21

Q Did you talk to Barry Shisgul in the year 22

2007? 23

A Perhaps. Maybe once, yes, once or twice 24

maybe.25


71

Q And at that time, where was he located? 1

A I don't know. The conversation was is 2

there any other nursing homes out there, and I 3

said I will keep him posted. Call me later, 4

but -- 5

Q It would have been a phone conversation, a 6

telephone conversation? 7

A Yes. 8

Q Do you have a current telephone number for 9

Barry Shisgul? 10

A If I could find it, yes. 11

Q Do you have a current e-mail address for 12

Barry Shisgul? 13

A I don't know. I don't know. I don't 14

communicate by e-mail that much. 15

Q The notice of deposition to you today, 16

Exhibit 1, asks you to bring with you the 17

Tri-State Health Investors corporate record book. 18

First, does such a corporate record book exist? 19

A Define corporate record book. 20

Q Articles of incorporation, bylaws. 21

A Spiegel & Utrera must have made it. So I 22

am sure they existed at some point. 23

Q Have you ever seen it? 24

A I definitely saw -- saw whatever they25


72

prepared for Tri-State Health Investors, or a book 1

to that form, in '03, '04 time, yes. 2

Q Do you know where it is today? 3

A I could look for it. 4

Q Do you believe that it is in the 5

possession of Tri-State Health Investors? 6

A Yes. 7

Q Do you have somebody in your office that 8

is generally responsible for hanging onto things 9

of that nature? 10

A No. 11

Q If you wanted to put your hands on it, 12

where would you look or who would you ask? 13

A I would look in the offices on some of the 14

shelves. I didn't have need for it, so I don't -- 15

Q You said the offices. Whose office? 16

A I would look at 1680 Michigan Avenue on 17

one of the shelves. 18

Q Does Tri-State Healthcare Investors have 19

meetings of the shareholders or members? 20


A No. 22

Q Does it have meetings of directors? 23

A No. 24

MR. BERNSTEIN: Objection, predicate.25


73

Q Do you from time to time sign a document 1

in lieu of a meeting, like a resolution, something 2

of that nature? 3


A No. 5

Q With respect to the invoices that were 6

transmitted to Tri-State Health Investors from the 7

nursing home facilities -- and I am referring to 8

the Transition Healthcare invoices -- would hard 9

copies of those invoices still exist today? 10

A You would have to ask Charley. I don't 11

know. 12

Q With respect to the checks for which we 13

have photocopies, Exhibits 7, 8 and 9, does 14

Tri-State Health Investors maintain a ledger, like 15

a checking account log or a ledger or some other 16

accounting of receipts and disbursements? 17

MR. BERNSTEIN: Objection to form. Can you 18

repeat the question? I didn't hear that question. 19

MR. WHIPPLE: Please read it back. 20




A Well, 8 or 9, Tri-State Healthcare of West 24

Carrolton and Tri-State Healthcare of New London,25


74

there would be some sort of financials put 1

together for these facilities, if that's what you 2

are asking. 3

Q Do those financials still exist today? 4

A I could -- I could look for them. It's 5

been awhile. 6

Q Well, when Charley would cut checks on a 7

day-to-day basis, did he have a ledger or a log or 8

something of that nature where he would record the 9

checks he had written out? 10

A No. He uses a computer system, and 11

everything is entered into the computer system, 12

and the checks are printed when they are due on a 13

timely -- on a timely basis, on a month-to-month 14

basis. 15

Q Does that computer system keep track of 16

the balance in the account? 17

A You would have to ask Charley. 18

Q You understand that it's something like 19

Quicken or QuickBooks or Microsoft Money? 20

A It's one of those systems. I don't know 21

which one. 22

Q To the best of your knowledge, the data 23

and that computer system still exist today, 24

correct?25


75

A I actually don't know, because it's been 1

awhile since we had any involvement with these 2

facilities, since they went back to THCI. 3

Q If you wanted to know the answer to that 4

question, who would you ask? 5

A Charley. 6

Q You mentioned earlier the name Dan Grant. 7

Is that someone who you had any dealings with on a 8

day-to-day basis? 9

A More often than other administrators, yes. 10

Q Okay. What did you understand Dan Grant's 11

role to be? 12

A He was an administrator in the facilities 13

in Greater Pittsburgh, and he was the most 14

experienced administrator in the area, and he 15

was -- other administrators used him as a resource 16

if they need any administrative help. 17

Q I am going to represent to you that 18

Ms. Rusnack referred to him as being a regional 19

director. Is that a term that's familiar to you 20

in context of Dan Grant? 21

A He was an administrator at Great Pitt, and 22

I guess he could -- he held himself out as the 23

regional -- so that the other administrators feel 24

like they have a security blanket.25


76

Q Okay. But did he report to you? 1

A Yes. 2

Q And was he an employee of Tri-State Health 3

Investors? 4

A No. 5

Q Who was he an employee of? 6

A Greater -- IHS of Greater Pitt, the 7

Greater Pitt facility. 8

Q In general, in the context of him 9

reporting to you, what sorts of things did he 10

report to you? 11

A He would probably have a conference call 12

on a monthly basis, and he was welcome to call any 13

time he liked for any type of advice or a shoulder 14

to cry on in his operations of his facility. Or 15

any type of other advice that he may have needed, 16

that other administrators call him for his help. 17

Q Did you ever have conversations with him 18

about facility vendors not being paid? 19

A We might have had that conversation, yes. 20

Q Do you remember the individual Samford 21

Mann, M-A-N-N? 22

A Yes. 23

Q What was his role? 24

A He also was administrative support for the25


77

administrators. 1

Q Where did he work out of? 2

A He worked out of one of the facilities. I 3

don't remember which facility. 4

Q Do you remember what state? 5

A I am thinking Alabama. I am not 100 6

percent sure. 7

Q Did he report to you? 8

A Yes. 9

Q Do you remember Reid Aaron? 10

A Yes. 11

Q Was that R-E-I-D? 12

A I believe so, yes. 13

Q What was his title or role? 14

A He was administrative support as well for 15

the administrators. 16

Q Where did he work out of? 17

A I am thinking either Michigan or Ohio. I 18

am not sure. 19

Q During the period of time that Tri-State 20

Health Investors was providing these back-office 21

services, did it ever make payments to IHS? 22

A No. 23

Q Did ever make payments to THCI? 24

A No.25


78

Q Did IHS or THCI ever make payments to 1

Tri-State Health Investors, other than the funds 2

you have told us about that came directly from the 3

facility? 4

A No. 5

Q So who, if anyone, realized the profits 6

from the nursing home facilities in '04, '05 and 7

'06? 8

MR. BERNSTEIN: Objection, relevance. 9

A I believe the facilities lost six million, 10

four million, seven million in those years. 11

Q And who got to -- 12

A I would think THCI realized the profits, 13

because their lease payment was exorbitant. That 14

was part of the issue. 15

Q Who got to claim those losses on their tax 16

returns, if you know? 17

A I would think IHS. 18

Q Did Tri-State Health Investors declare its 19

two and a half percent of gross revenues as 20

income? 21

A Yes. Or the net thereof. 22

Q What does that mean? 23

A People need to get paid. 24

Q What people are you referring to?25


79

A Charley, Lucas, Karen, Duay. 1

Q Tri-State Health Investors employees? 2

A Correct. 3

Q When Tri-State Health Investors ceased to 4

provide these back-office services, was there any 5

document in writing that formalized that event? 6

A Maybe only the paperwork that was filed in 7

connection to this case, but no. 8

Q In this case, you are referring to the one 9

in Delaware Federal Court? 10

A Correct. 11

Q Nothing else that you are aware of; is 12

that correct? 13

A Correct. 14

Q You didn't have any kind of a 15

communication to the nursing homes memorializing 16

the end of your services? 17

A Charley may have sent out to vendors. He 18

may have sent out that no longer send or 19

communicate with him if there is any issues. But 20

there shouldn't have been -- I don't recall of any 21

formal document. 22

Q But Charley did from time to time 23

communicate with the facilities in writing or by 24

e-mail?25


80

A I would think he would respond to e-mail 1

as well, if they would e-mail him. 2

Q And do you believe that copies of those 3

communications have been saved either in hard copy 4

or electronically? 5


predicate. 7

A I actually don't think they have been 8

saved, because I had difficulty finding e-mails 9

from three, four, five months ago. 10

Q Why is that? 11

A Because I don't think we have enough 12

capacity to keep all the e-mails. So they just -- 13

as they get old, they get -- unless you physically 14

save it on your own computer. 15

Q Well, someone can still save hard copy. 16

Do you know if anyone is saving hard copies of 17

these communications? 18

A No. 19

Q No, you don't know, or no, it's not saved? 20

A I don't know, and I don't think anybody 21

is. They were always instructing people, if they 22

need anything from their e-mail, download it and 23

save it on your hard drive. No one that I know 24

saved it.25


81

Q When Tri-State Health Investors needs 1

information, technology, assistance or advice, 2

does it have an employee that gives that? 3

A Yes. Not an employee, but there was a 4

company that we contracted to help us. 5

Q Okay. And who at the present time 6

provides that assistance and advice? 7

A No one. There is no one servicing 8

Tri-State Health Investors. It doesn't really do 9

much since the -- 10

Q In '04, '05, and '06, who provided 11

information, technology, assistance and advice? 12

A It would be a company ETE. 13

Q Where are they located? 14

A I believe in Broward somewhere. 15

Q Spell that. 16

A B-R-O-W-A-R-D. 17

Q Florida? 18

A Yes. 19

MR. WHIPPLE: Mr. Klein, I have no further 20

questions. Thank you for your time. 21

In Ohio, you can elect to read or you can 22

elect to waive. 23

MR. BERNSTEIN: We will read. We would read 24

anyway.25


82

MR. WHIPPLE: ASCII by Friday. 1

MR. BERNSTEIN: Copy in a Word document. 2

(Thereupon, the deposition was concluded at 12:00 3

p.m.) 4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25


83

STATE OF FLORIDA ) 1

COUNTY OF DADE ) 2

I, the undersigned authority, certify that witness 3

personally appeared before me and was duly sworn.

4

WITNESS my hand and official seal this 14th day of

December 2007. 5

______________________________________ 6

SARA GLAZER

Notary Public - State of Florida 7

My Commission No. 448437

My Commission expires August 21, 2009 8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25


84

C E R T I F I C A T E 1

2

The State of Florida )

3

County of Dade )

4

I, SARA GLAZER, Notary Public in and 5

for the State of Florida at Large, do hereby certify

that the aforementioned witness was by me first duly 6

sworn to testify the whole truth; that I was

authorized to and did report said deposition in 7

stenotype; and the foregoing pages are a true and

correct transcription of my shorthand notes of said 8

deposition.

9

I further certify that said deposition

was taken at the time and place hereinabove set 10

forth and that the taking of said deposition was

commenced and completed as hereinabove set out. 11

I further certify that I am not an 12

attorney or counsel of any of the parties, nor am I

a relative or employee of any attorney or counsel of 13

party connected with the action, nor am I

financially interested in the action. 14

The foregoing certification of this 15

transcript does not apply to any reproduction of the

same by any means unless under the direct control 16

and/or direction of the certifying reporter.

17

IN WITNESS WHEREOF, I have hereunto set my

hand this 14th day of December 2007. 18

19

______________________________________ 20

SARA GLAZER 21

Notary Public - State of Florida.

My Commission No. 448437. 22

My Commission expires August 21, 2009

23

24

25


85

I have read the foregoing transcript from page 1

1 through 82 and note the following corrections: 2

PAGE LINE REQUESTED CHANGE 3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

_________________ _________________________

Date Avi Klein 24

25


86

State of Ohio, ) 1

) SS:

County of Cuyahoga. ) 2

3

Subscribed and sworn to before me on this 4

_______day of ___________________, 200__. 5

6

7

_______________________

Notary Public 8

My Commission expires:________________________. 9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25


avi klein transcript

Documents

Transcript of avi klein transcript