A "first of its kind lawsuit" has been filed against the owners of the Lexington Square specialized nursing facility in Keokuk, the Iowa Attorney General's office confirmed Thursday in a news release.
The lawsuit was filed in Lee County District Court and alleges that owner Alan Israel took part in a money laundering operation through the Lexington Square facility.
Israel's son, Jason, is also named in the suit as a minority owner.
"We allege that the defendants defrauded our state's Medicaid system in a significant way," Attorney General Tom Miller said in a statement. "That's why we filed this lawsuit under the Iowa False Claims Act, which allows us to seek very substantial penalties."
Miller added, "We intend to hold these people fully accountable for the Medicaid fraud and money laundering that we allege in this civil law enforcement action."
The lawsuit alleges that Alan and Jason Israel made false statements and false claims.
"Alan Israel directed the Lexington Square controller to have Lexington Square pay for personal expenses that were not connected with the operation of Lexington Square," according to the petition.
The Israel's allegedly submitted expenses to the Iowa Medicaid Program that included airline and train travel, hotel rooms, payments for an employee's camper and other fraudulent financial transactions and expenses.
Alan and Jason Israel both reside in Phoenix and also own the nursing facility's real estate holding company and Lexington Place (formerly known as Dave's Place). Miller said the state can seek damages worth as much as three times the worth of the property's company's, which is allegedly $17.4 million.
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