Town Square

Residents claim financial abuse at Vi at Palo Alto

Original post made on Feb 20, 2014

A class action suit filed by residents of Vi at Palo Alto alleges its parent company, CC-Palo Alto, transferred millions of dollars in refundable entrance fees from the senior retirement community to its corporate parent in Chicago, jeopardizing the financial security of its clients.

Read the full story here Web Link posted Thursday, February 20, 2014, 9:52 AM


Posted by jared bernstein
a resident of Professorville
on Feb 20, 2014 at 10:44 am

Have these litigants asked Stanford for help with this?

Posted by Wondering?
a resident of Another Palo Alto neighborhood
on Feb 20, 2014 at 10:45 am

When this venture opened, it seemed like something that might not be on the up-and-up. Take the following two key points in this article—

> But instead of maintaining the reserves, as of December 2012,
> CC-Palo Alto allegedly transferred $190 million upstream
> to its corporate parent, CC-Chicago.

OK .. why did Vi transfer these funds to the parent company CC-Chicago?

> CC-Chicago has taken the position that CC-Palo Alto is solely
> responsible for the repayments of the refundable portion of
> the entrance fees, and CC-Chicago has no responsibility to
> return that money, according to the lawsuit.

And again, why were these funds transferred? And what gives the CC-Chicago the right to refuse to return the funds?

This pattern of a holding company buying up small companies, or creating a smaller company (as in this case) and then gutting them happens far too many time in the US.

Let’s hope that this case gets to court, and that the records are not sealed. Sadly, too many of these cases ending up being settled behind closed doors and the public never learns about how dirty these holding companies can be.

Posted by neighbor
a resident of Adobe-Meadow
on Feb 20, 2014 at 1:10 pm

In the meantime, check out Palo Also Commons new development, The Avant, where 44 beautiful new independent units will be available in April to rent on a monthly basis with no entrance fee!

Posted by musical
a resident of Palo Verde
on Feb 20, 2014 at 3:09 pm

Vi looked like a great investment opportunity, but I learned it's privately held.

Posted by Parent of 3
a resident of Midtown
on Feb 20, 2014 at 4:17 pm

To: Neighbor, a resident of Adobe-Meadows: The monthly fee for the Avant is approx 2 times the monthly for the average retirement community in the area that has an entrance fee model. If you plan on living there 5-10 years, you would end up paying more at the Avant in rent than if you paid a 90% returnable entry fee and a monthly fee at one of the other communities. The Avant's monthly rent is not returnable.

Posted by neighbor
a resident of Adobe-Meadow
on Feb 20, 2014 at 5:15 pm

To: Parent of 3,
Correct that the monthly fee at the Avant is not returnable and is higher than the monthly fee at the Vi. However, it is not double, maybe 125%. More importantly, the earnings given up by handing over $2,000,000 is easily $150,00 per year not to mention eliminating that liquidity. And, if I ever choose to move it's a 30 day notice at the Avant, no fee, as opposed to the $500,000 the CCRC keeps - likely the only ones getting 90% back from the Vi were the early entrants. The Vi is nice but there are significant differences.

Posted by Richard
a resident of Barron Park
on Feb 20, 2014 at 5:38 pm

When did the term embezzlement get replaced with “upstreaming”? The word seems more appropriate for a story about the lack of fish in San Francisquito creek running behind the Vi rather than what is happening here.

Posted by Parent of 3
a resident of Midtown
on Feb 20, 2014 at 6:35 pm

To: neighbor, a resident of Adobe-Meadows
You are correct - compared to the Vi, a place like the Avant would be a better deal. I wasn't thinking of the Vi in my cost comparison since their pricing is so much higher to start with, plus they may be off the table at the moment as a place someone might want to move into until things get straightened out. There are other CCRCs around that cost a lot less than the Vi and those were the ones I was thinking of. And their monthly fees are roughly half of what the Avant is charging. To be fair, the Vi is a lifecare community, and what you are doing there, besides moving into something akin to a 4 or 5 star hotel, is pre-paying for multiple levels of health care, whether you ever need them or not. The Avant, though located next door and associated with Palo Alto Commons (as I understand), does not provide any levels of care beyond independent living for the monthly rent.

Posted by The Fixer
a resident of Downtown North
on Feb 20, 2014 at 8:41 pm

Sam Singer, aka "the Fixer", a spokesman for the Vi!!!

Yikes, they must be scared; expensive dude.

Crisis Communications Consultant; below, from his website:

"Sam Singer has more than 20 years experience working with corporations, government agencies, non-profits, and trade associations in developing their public affairs, public relations, communications strategies. One of the nation’s leading corporate reputation and communications strategists, Mr. Singer is a former journalist and political campaign manager.

In 2008, Sam Singer has been dubbed "The Fixer" by the San Jose Mercury News, a "Top Gun for Hire" by the San Francisco Chronicle, and one of the most powerful people in San Francisco by 7X7 Magazine for his ability to turn the news around when things look dire for his clients.

Mr. Singer is nationally known for handling some of most significant public affairs and crisis communications issues of the day. His clients include Fortune 500 companies and other well-regarded corporations, including Chevron Corporation, the San Francisco 49ers, AIMCO, Lennar Corporation, Stanford University, Levi Strauss & Co., Ford Motor Co., the State of Nevada, Pabst Blue Ribbon Beer, the Anschutz Investment Corp., The San Francisco Examiner, Bay Area Rapid Transit District, Transbay Joint Powers Authority, and other prominent corporations, non-profits, political issues and candidates.

Most recently, his agency helped the San Francisco Zoo tell its story to the world and represented the Bar Pilots Association after the Cosco Busan struck the Bay Bridge."

Posted by Dennis
a resident of Downtown North
on Feb 20, 2014 at 9:10 pm

Upstreaming is often simple asset stripping as was the case with PG&E's bankruptcy where $10 Billion was upstreamed to the parent (aka holding company) company making it untouchable by creditors.

Posted by Nora Charles
a resident of Stanford
on Feb 21, 2014 at 12:05 am

Nora Charles is a registered user.

Yes, "upstreaming" seems a curious choice of words.

Best of luck to the residents.

Posted by Good Luck to the residents
a resident of Adobe-Meadow
on Feb 21, 2014 at 1:07 am

I recall reading about Vi back when we considered it for my mother-in-law (it had a different name at the time) that it was a brain child of Penny Pritzker Web Link and she is worth billions, not a penny. It is her family multi-billion dollar Chicago based company that is in charge of these parent and subsidiary companies that manage Vi. I recall feeling comfortable about the scenario specifically because this company was involved and not a flight by night operation --- I was very wrong as it appears now. I thought that as a Castilleja alum and a Stanford graduate and someone working for the Obama administration, Pritzker would care about the honor of this project and that this would be a safe funds holding place for my mother-in-law. My m-i-l chose to stay in LA. If my memory does not serve me right about Pritzker's involvement, then please remove my post.

Posted by businessdecision
a resident of Menlo Park
on Feb 21, 2014 at 7:04 am

Correct me if I'm wrong. Stanford had a committee charged with recommending a place. Vi wasn't at all what they went for.

Posted by anonymous
a resident of Duveneck/St. Francis
on Feb 21, 2014 at 9:05 am

Weekly, pls keep us posted on the developments in this case. I assume it will be stretched out as long as possible by lawyers and "fixers" (from above post).
All I know is this is a pretty costly, significant senior living establishment, apparently on Stanford land, and it will be informative for us all to understand their financial dealings. This seems like a confusing case and quite high stakes in terms of the $$$ involved!
Can any of the Vi residents comment?

Posted by Lauren
a resident of Crescent Park
on Feb 21, 2014 at 12:33 pm

Wow! This thing is designed like a pyramid scheme. Total Bullshit!

Posted by neighbor
a resident of another community
on Feb 21, 2014 at 12:44 pm

Very strange phrases used --- "Upstreaming" Sounds like a euphemism. "Financial Abuse" Really....Abuse? What's next -- "Financial Rape?"

How about just plain old "Fraud?" "Theft" is good too. These charges are pretty darn clear and are incendiary enough.
And, this case seems to show that victims of fraud can be smart and still be swindled.

(p.s. Note to "Business decision" -- VI, and its predecessor Hyatt Classic Retirement Communites, have had no affiliation whatsoever with Stanford

Posted by businessdecision
a resident of Menlo Park
on Feb 21, 2014 at 2:54 pm

neighbor, are you sure? I think the person I know who claimed to be on a committee making suggestions to Stanford [that Stanford set aside] is a completely honest person.

Posted by neighbor
a resident of another community
on Feb 21, 2014 at 4:12 pm

business decision: Vi's website says it is not affiliated with Stanford....
Web Link

Posted by old guy
a resident of Charleston Gardens
on Feb 21, 2014 at 10:35 pm

VI did the same thing in La Jolla a few years ago Web Link A quote from the article allegedly from VI Living "Vi said that under California law, it couldn't return the entrance fee for 10 years or until the unit was reoccupied. The company said that because of California's economic woes it was having a difficult time refilling units. "

I feel for the residents of Vi Palo Alto. Any new resident who does their due diligence will find this abuse on the part of Vi and live somewhere else.

Posted by Kate
a resident of Duveneck/St. Francis
on Feb 22, 2014 at 2:08 pm

Penny Pritzger lived here once, Atherton I think, and big in civic, social, business, and $$$$$ circles then moved to Chicago. The following is from Wikpedia and there is more there.
From Wikipedia, the free encyclopedia Penny Pritzker

38th United States Secretary of Commerce
Assumed office June 26, 2013
President Barack Obama
Preceded by Cameron Kerry (Acting)
Personal details
Born May 2, 1959 (age 54)
Chicago, Illinois, U.S.
Political party Democratic
Spouse(s) Bryan Traubert
Children 2 Alma mater Harvard University Stanford University
Penny Sue Pritzker (born May 2, 1959) is an American business executive, entrepreneur, civic leader, and philanthropist who is currently serving as the 38th United States Secretary of Commerce. She is the founder of PSP Capital Partners and Pritzker Realty Group.[1] She is also co-founder of Artemis Real Estate Partners.[2] She is a member of the Pritzker family.
In 2012, Chicago magazine named her one of the 100 most powerful Chicagoans.[3] In 2011 the Forbes 400 list of America's wealthiest showed her as the 263rd richest person in the U.S., estimated net worth of US $1.8511 billion,[4] and the world's 651st richest person. In 2009 Forbes named Pritzker as one of the 100 most powerful women in the world.

Posted by lindaloo
a resident of Mountain View
on Feb 23, 2014 at 12:19 pm

My parents moved into Classic Residence by Hyatt (now Vi)in 2005 with the full understanding that 90% of their entrance fee -- as I recall ca. $1M, would be returned to their heirs upon their deaths, i.e., when their apartment was vacated and resold. My parents are no fools; father is Stanford Professor Emeritus, mother holds advanced degrees from Columbia U., etc. Their attorney, I am sure, reviewed the Hyatt contract.

A couple of years ago I recall seeing the letter sent to all the Vi residents from a man in La Jolla whose aunt was a resident of Vi there. When she passed, as his sole heir, he tried to recover the 90% entry fee to which he knew he was entitled. When he got the run around and was told there were no funds available, he put all residents on alert. Good for him!

I dearly hope this class action suit is successful. The sad thing is, even if we win (residents/heirs) it will be the attorneys who will really be the winners. Yes, on behalf of my parents and myself, I certainly feel violated.

Posted by businessdecision
a resident of Menlo Park
on Feb 24, 2014 at 6:56 am

neighbor, Vi may say it's not affiliated with Stanford, but anything on Stanford's land...

Posted by neighbor
a resident of another community
on Feb 24, 2014 at 8:22 am

Anything on Stanford's Land? Like the Sheraton, Max's or Crate and Barrel, the Apple Store, or Hewlett-Packard, Varian.....or the City of Palo Alto? They are also tenants on Stanford land.

Is the University liable for their business practices? e.g., if one of Macy's policies turns out to be questionable, does Stanford get sued?

VI doesn't "just say" it is not affiliated with Stanford, it isn't. Not organizationally, and not through it's lease on the land. Their legal problems are their own mess.

Posted by businessdecision
a resident of Menlo Park
on Feb 24, 2014 at 8:58 am

wow, neighbor, wow

Posted by musical
a resident of Palo Verde
on Feb 24, 2014 at 1:24 pm

On that note, where is the divide between campus and just Stanford land? Curious how far they will go in banning the sale of tobacco products. Can Palo Alto be far behind?

Posted by Go Stanford
a resident of Downtown North
on Feb 24, 2014 at 11:57 pm

Fyi, Paly and Gunn are on Stanford land; why do you think they closed Cubberly? Not on Stanford land; if I remember right, $1 a year to lease the land for 99 years; don't quote me on it, somebody must know. So much of Pa and MP is Stanford land (leased); you just don't realize it.