Maya McFadden photo
Happier days, before the collapse: site director Jarel Gallman, public relations director Jackie James, CEO Peter Schorr, Alder (and former facility employee) Ron Hurt, Mayor Justin Elicker at New Haven facility's 2020 ribbon-cutting.
A drug rehab company that shuttered its two New Haven facilities amid two executive suicides over the last week is nearly $230,000 behind in local real estate taxes — with its next $103,000-plus city tax bill due next week.
That’s among the revelations that are emerging about years of financial woes and “corporate anarchy” that plagued for-profit Retreat Behavioral Health before its sudden collapse this past week throwing hundreds of patients and workers into the cold in three different states.
According to New Haven Tax Collector Karen Gauthier, Coal New Haven LLC owes $226,397 in back taxes and interest for unpaid real estate tax bills that were due on July 1, 2023 and Jan. 1, 2024 for the Retreat in-patient facility it owns at 915 Ella T. Grasso Blvd. that abruptly closed last weekend.
Starting on July 1 — i.e., Monday — Coal New Haven LLC will owe another $103,209, which constitutes the first half of a $206,418.14 city real estate tax bill for that same property. The second half of that bill is due in January.
Translation: Coal New Haven currently owes more than $226,000 in back taxes to the city. That aggregate tax bill number will jump to $329,000 by next week. And then, assuming the debt isn’t paid by then, to $432,000 by January.
Gauthier, who is only four days into her new job as the city’s tax collector, declined to comment on if or when the city would initiate a tax foreclosure lawsuit for the property.
Coal New Haven LLC is controlled by Brooklyn-based investor David Silberstein. He could not be reached for comment by the publication time of this article.
The Ella T. Grasso Boulevard property itself is the site of the now-closed 80-bed in-patient drug rehab facility that was run by Retreat Behavioral Health. Coal New Haven LLC purchased the 2.7‑acre nursing home site in 2012 for $2.3 million; the city last appraised it for tax purposes as worth $7.6 million in 2023. Retreat opened its 80-bed in-patient facility at that site in January 2020.
As the Independent first reported, the company abruptly closed its Boulevard facility last Friday and its Long Wharf outpatient clinic on Monday. The company has also shuttered similar facilities in Florida and Pennsylvania over the past week — stiffing employees on their last two-week paychecks and discharging patients en masse who now need to seek out substance use disorder and mental health care elsewhere.
The company’s CEO Peter Schorr and then its chief administrative officer, meanwhile, have both died by suicide – the former last Friday, the latter on Wednesday. Silberstein’s company owned the Retreat’s real estate and provided the financing for the three-state enterprise; Schorr ran the medical/therapeutic operation.
Reporting by local news outlets in Florida and Pennsylvania in recent days have increasingly shined a light on the company’s financial disarray.
Financial trouble at Retreat did not begin this week, as evidenced by last year’s unpaid $230,000-plus New Haven tax bill. And so much more.
2022 New Haven Foreclosure Case
Thomas Breen file photo
State court records show that, in September 2022, Fulton Bank filed a foreclosure lawsuit against Coal New Haven LLC, Coal’s Brooklyn-based manager Silberstein, and the now-deceased Retreat CEO Schorr, among others, regarding an overdue $9.2 million mortgage loan secured by the property at 915 Ella T. Grasso Blvd.
A July 2023 affidavit by Silberstein details the relationship between his company and Retreat, about the big money they borrowed, and about how they handled various debts.
That affidavit refers to Fulton’s $9.2 million mortgage loan from 2016, as well as that same bank’s $5.5 million mortgage loan from 2012, its $1.5 million “working capital loan” from 2016, and its $1.5 million “time loan” from 2018. That was all part “of a larger group of loans extended by Fulton to CNH and certain of its affiliates … all of which are engaged in the business of acquiring and developing real properties that are used to provide drug rehabilitation and mental health treatment, under the name Retreat Behavioral Health.”
In aggregate, he continued, Fulton advanced loans to Coal New Haven worth $17.7 million, with a current remaining balance of $13.5 million as of July 2023. He also wrote that Fulton Bank provided additional loans to other Coal-related companies worth an aggregate principal of $21.3 million, of which $15.1 million remained due as of July 2023.
A month later, on Aug. 25, 2023, Fulton Bank withdrew its foreclosure lawsuit against Coal New Haven LLC and the other defendants for the overdue mortgage loan at 915 Ella T. Grasso — thus ending that state court case.
2024 Florida Foreclosure Case
In a separate case in a separate state revealing a separate and more recent set of Retreat’s financial woes, in late April of this year, Lapis Advisers LP filed a foreclosure lawsuit in Palm Beach County Circuit Court against another one of Silberstein’s companies — Coal Lake Worth LLC – among others for a separate overdue loan.
That lawsuit alleges an outstanding balance of $17.2 million on a $21 million mortgage loan related to Retreat’s drug rehab complex on Lake Worth Road in Palm Springs, Florida.
Silberstein’s companies have filed legal responses in mid-June seeking to dismiss the foreclosure lawsuit. The court has yet to rule on those motions.
The court did, however, enter a default on June 20 against another defendant in the case — NR Florida Associates LLC D/B/A Retreat Behavioral Health. That default was entered “for failure to serve or file any pleading or document as required by law.”
Florida’s online business registry lists Peter Schorr and David Silberstein as the managers of NR Florida Associates LLC, and Scott Korogodsky as the company’s registered agent.
Schorr died by suicide on the same day that the court entered the default against his company in this case. Korogodsky died by suicide less than a week later.
2021 New York Arbitration Fight
A third court case in a third state reveals even more about the Retreat’s recent history of financial troubles.
This lawsuit was filed by one business partner against another.
In December 2021, Silberstein filed a lawsuit in Kings County Supreme Court against Schorr. That lawsuit sought an injunction in connection with a pending arbitration related to Silberstein’s and Schorr’s management of Retreat.
The lawsuit identifies Silberstein and his companies as the “petitioners” and Schorr and his companies, including NR Connecticut LLC (NRCT) and NR Florida Associates LLC (NRFL), as the “respondents.”
“Petitioners and respondents are the developers, owners and operators of a multistate business involving substance addiction treatment facilities,” that lawsuit reads in part.
“The development of the business turned out to require substantially greater financial resources than the amounts projected by respondents and, as a result of these difficulties, petitioners and their affiliated entities provided millions of dollars of advances and other financial accommodations to Retreat, most notably by advancing more than $8 million dollars to NRCT above the $4.6 million one of petitioners’ affiliated entities had initially agreed to finance and by forbearing from the enforcements and collection of millions of dollars of rent from NRFL.”
The petition continues: “By mid-2020, Retreat did in fact overcome its financial difficulties and began to accumulate significant cash balances. Rather than abiding the terms of the agreements, e.g., paying its long overdue expenses and making the required distributions, however, respondents embarked on scheme to coerce petitioners into relinquishing their management rights, and reduce their equity interests in Retreat by more than 60% and otherwise benefit respondents at the expense of petitioners and its affiliated entities.
“More fulsomely, in the exercise of respondents’ responsibilities for the day-to-day operation of the facilities, they failed to report to or submit to oversight and direction of the duly appointed managers, failed to pay (and in significant part, denied the existence) of Retreat’s legal obligations to petitioners affiliates, refusing to make required distributions from Retreat, all the while paying of nearly $3 million in management fees (80% of which was paid to respondents) that were not due and payable at such time, making intra-Retreat entity advances in violation of the Retreat Agreements, and excluding petitioners from discussions with prospective financing parties in violation of the Retreat Agreements. Indeed, these violations and breaches will be a primary subject of the arbitration. This application is to preserve the status quo and prevent further manifest abuses and misappropriation of funds.”
The petition states that Silberstein and his companies have operated “with great restraint so as to prevent the situation from evolving into corporate anarchy, which would risk exacerbating the significant harm respondents have already imposed on Retreat.”
“It has now become apparent to petitioners that restraint is no longer prudent and it is imperative to seek immediate judicial intervention, given that respondents actions have now risen to new levels of complete disregard of the Retreat Agreements. Respondents have recently usurped the role of negotiating with a critical Retreat creditor, have caused Retreat to enter into an unauthorized arrangement and also caused Retreat to pay a substantial amount of funds in connection with such unauthorized arrangement in violation of the Agreements.”
In January 2022, Schorr filed a five-page affidavit in support of his opposition to Silberstein’s application for a preliminary injunction.
In that affidavit, Schorr identifies himself as president and CEO of Retreat Behavioral Health, and as the manager of various related LLCs.
Since 2011, he wrote, his company has worked with Silberstein and his companies to open and operate drug and alcohol treatment facilities under the name “Retreat Behavioral Health” in Palm Beach County, Florida; Lancaster County, Pennsylvania; and New Haven, Conn.
Schorr wrote that his companies’ agreements with Silberstein’s companies state that he is responsible for the “operational and therapeutic” matters of Retreat and its affiliates, while Silberstein and Coal are responsible the physical facilities and the necessary banking and financing behind that real estate.
“For the entirety of the parties’ relationship, I have maintained control over Retreat’s operating accounts, as provided by the delegation of operating responsibility to me and DRPS in the Retreat Agreements for each of the Retreat entities,” Schorr wrote. “Since the opening of the Retreat facilities in Florida and Connecticut, Mr. Silberstein had never written a check or made a withdrawal from Retreat’s operating accounts, nor had he ever questioned any checks written from the operating accounts, until he ran into personal financial problems.”
He continued: “There has never been a dispute between the parties that I and DRPS, not Mr. Silberstein, would operate the facilities, in accordance with the Retreat Agreements, and therefore control the operating accounts.”
The final section of that affidavit is entitled: “Mr. Silberstein’s Financial Troubles and Sale Discussions.”
“Coal is experiencing financial distress as a result of excessive debt and mismanagement by Mr. Silberstein,” that section reads.
“That financial distress has now progressed into a full-blown crisis. As just one example, on or around May 15, 2021, the Coal entity that owns the New Haven Retreat facility defaulted on a term loan with Fulton Bank that was secured by a mortgage on the New Haven property.
“I have had discussions with Mr. Silberstein about his selling his interest in the Retreat real estate to a third-party. Due to disagreements over price and other terms, no deal has been reached.”
In January 2022, Silberstein and Schorr and their related companies agreed to a stipulation that resulted in the withdrawal of Silberstein’s original lawsuit.
Previous coverage:
• 2nd Drug Rehab Exec Dies; Employees, Patients Left Scrambling For Answers
• Drug Rehab Center Closes 2nd Site
• Drug Rehab Center Shuts Down