Legal Ethics

Troutman Sanders Real-Estate Chief Accused in Kickback Scheme

The chair of the real estate group at Troutman Sanders has been accused of participating in a scheme to accept $50 million in kickbacks from a pharmaceutical vendor serving a nursing home company in which he was a principal.

Troutman Sanders partner Leonard Grunstein was a lawyer at the now-defunct law firm Jenkens & Gilchrist at the time of the alleged wrongdoing, according to the American Lawyer. Crain’s New York Business also covered the accusations, detailed in a complaint (PDF posted by the American Law Daily) unsealed on Tuesday.

Grunstein is accused of participating in the scheme along with a client, Rubin Schron, who was facing a $40 million shortfall after buying nursing-home company Mariner Health Care. The civil complaint alleges Grunstein, Schron and investment banker Murray Forman threatened to cancel a contract for pharmacy services with pharmaceutical vendor Omnicare unless it paid kickbacks.

The kickbacks were allegedly disguised through the sale of a Mariner subsidiary to Omnicare for $50 million, prosecutors allege. The subsidiary had only two employees and fewer than $3 million in assets.

The allegations were unveiled at the same time that Omnicare agreed to pay $98 million to resolve charges in the kickback scheme, according to the American Lawyer and a Justice Department press release.

Troutman Sanders hired Grunstein in 2005 when it acquired a group of 89 Jenkins lawyers, the Atlanta Journal-Constitution reports. He is on a leave of absence from the firm until the matter is resolved.

Troutman Sanders spokesman Mark Braykovich issued this statement to the Journal-Constitution: “The firm is confident there will be a successful resolution to the case and that Mr. Grunstein will return to work.”

Updated on Nov. 6 to include information from the Atlanta Journal-Constitution.

Updated coverage: “Troutman Sanders: Confident Its Accused Real Estate-Chief Will Return to Work”

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