Legal Ethics

Troutman Sanders: Confident Its Accused Real Estate Chief Will Return to Work

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The Troutman Sanders law firm has released a statement expressing confidence that a kickbacks case involving the chair of its real estate practice will be successfully resolved.

Troutman Sanders partner Leonard Grunstein is accused of helping a client who bought a nursing home company obtain $50 million in kickbacks from a pharmaceutical vendor supplying patients with medications. Grunstein was a lawyer at the now-defunct law firm Jenkens & Gilchrist at the time of the alleged wrongdoing, and was also a principal in the nursing home company, prosecutors say.

Troutman Sanders hired Grunstein in 2005 when it acquired a group of 89 Jenkins lawyers, the Atlanta Journal-Constitution reports. He was named in a March 4 civil complaint filed by the Justice Department and unsealed this week. 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.”

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 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. 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.

A public relations company for Shron released a statement to the Journal-Constitution. It read: “The civil claims relate to an arms-length transaction in 2004 that was, as the government’s own pleadings show, thoroughly reviewed and approved by various experienced lawyers and investment advisers. Mr. Rubin Schron believes he acted lawfully and in good faith under the direction of competent professionals in the bona fide sale of a business for fair value.”

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