Controversial land deal raises new questions about Rep. Turner's nursing home interests
No one paid much attention when, in 2006, state Rep. Eric Turner stopped listing an obscure limited liability company on the financial disclosure forms lawmakers are required to file each year.
But then, few people knew the company was at the center of a lawsuit that accused the Turner family of enriching itself through a fraudulent land deal that helped win $3 million in state tax credits and grants for a nursing home project.
The lawsuit, filed in Ripley Superior Court, alleged that a company controlled by the powerful Indiana lawmaker and his son secretly transferred a piece of land to another family member's nonprofit group without the knowledge of their fellow investors.
Turner's company denied the accusation and the case was later settled out of court. But the lawsuit's accusation of fraud raises questions about how Turner and his family operated the nursing home business.
Turner didn't respond to questions this week about the lawsuit, but his spokesman emphasized that the case was dismissed after it was resolved through mediation.
The land transfer allowed the Turners and another relative to collect $3 million in state tax credits and grants — including a $650,000 "development fee" — that are set aside for nonprofit groups, without benefiting the company's other investors, according to a 2010 complaint filed as part of the lawsuit.
The timing of the controversial land deal also coincides with the year Turner stopped listing the company on his annual House disclosure form in 2006 — an omission that could become the subject of an upcoming House Ethics Committee hearing.
Turner, the House's second highest ranking member, is already under fire for working behind the scenes to kill a measure that would have temporarily halted new nursing home construction. Some Republican lawmakers said they felt Turner's efforts represented a conflict of interest because his son and daughter led opposition to the measure.
Turner has denied any wrongdoing.
The dispute
At the center of the disputed land deal is a company called Main & Batesville LLC. The Turners held a 44 percent stake in the company through two other entities: T3 Investments Corp. and Mainstreet Capital Partners. Mainstreet Capital Partners, whose only members were Turner and his son Zeke, managed the company, according to court records.
In a 2010 complaint, other investors in Main & Batesville, accused Mainstreet of transferring 3½ acres of land owned by Main & Batesville to a nonprofit group operated by Zeke Turner's father-in-law, Charles Riggle — without telling the company's other investors.
To facilitate the transfer, the complaint alleges that Zeke Turner signed the names of nine Main & Batesville investors on an operating agreement without their authority. That agreement gave Mainstreet "sole authority to manage the business and affairs of the Company," though it required a vote by members owning 75 percent of the company to sell "substantially all of the assets of the company."
Zeke Turner and Mainstreet indicate in court documents that a previous "Formation Agreement" granted him the power to sign the names of other investors by proxy. That agreement says each of the parties agree to the operating agreement and appoint Mainstreet proxy to execute the operating agreement on their behalf.
The investors who filed the lawsuit, however, say that provision violated Indiana law, which only allows someone to sign an operating agreement on behalf of another through power of attorney.
After the land transfer, the nonprofit operated by Zeke Turner's father-in-law, Emmanuel Nursery School & Day Care, used its nonprofit status to seek $3 million in state tax credits to construct a 33-unit, $4.2 million affordable senior housing and skilled nursing development on the property, according to the lawsuit.
Emmanuel's nonprofit status allowed the project to qualify for tax credits the state sets aside each year for nonprofit developers.
Under the deal, Mainstreet and Emmanuel were authorized to share a $650,000 development fee, "without any benefits flowing" to the other Main & Batesville investors, the lawsuit says.
Batesville Investors LLC, a nursing home investment company managed by Fishers resident John Bartle and his wife, Rebecca, brought the lawsuit. Their company had a 24 percent stake in Main & Batesville and sought $3 million in damages.
In its response to the lawsuit, Mainstreet Capital Partners denied the allegations of fraud.
The company acknowledged that Eric and Zeke Turner were Mainstreet's sole members and that both men participated in meetings with Bartle and another investor, Robert Rynard, to discuss the development in August 2006. Mainstreet also said it and Emmanuel only received $50,000 each to pay for their overhead. The rest of the development fee was deferred to help finance the project, the company said.
Lawsuit settled
The complaint was later dismissed as part of a private settlement agreement regarding the lawsuit and several other business disputes. As part of that deal, Bartle and his affiliated businesses were given the opportunity to purchase a different nursing home property from Mainstreet for $3.1 million, minus any debt on the facility, according to a mediation agreement obtained by The Star.
Riggle and Mainstreet officials did not return messages seeking comment for this story.
Roger Harvey, a spokesman for Eric Turner, didn't address specific questions about the allegations.
"All allegations in this complaint were dismissed," he said. "This was a dispute with former business partners that happened several years ago and was resolved through mediation in a confidential agreement."
The disputed land transfer took place the same year Turner stopped including Main & Batesville on his annual Statement of Economic Interest. Those forms are intended to inform the public about potential conflicts of interest.
Turner listed the company on his 2004 and 2005 disclosure forms as investments he held through T3 Investments Corporation, of which he is president.
But in 2006, Turner stopped listing companies in which T3 Investments held a stake — including Main & Batesville.
House ethics hearing
These latest revelations come at a time when the House Ethics Committee is set to probe Turner's role in killing legislation last month that would have temporarily halted new nursing home construction.
Proponents believed the moratorium was necessary because of low occupancy rates and concerns about the quality of care for Medicaid patients.
Turner's son and daughter, a Statehouse lobbyist, led opposition to the measure, arguing it would cost the state jobs.
In public, Turner, R-Cicero, abstained from voting on the measure. But during closed-door Republican caucus meetings, he used his position as House speaker pro tempore to successfully urge its defeat, according to Republicans who spoke to The Star on the condition of anonymity.
That prompted House Speaker Brian Bosma, R-Indianapolis, to ask the ethics committee to look into the issue. Turner has said he broke no ethics rules.
On Saturday, The Star reported that Turner has ties to half a dozen companies in the nursing home development business. Since 1997, he has been involved in at least 15 nursing home-related companies.
But several of those companies — including, at times, Main & Batesville — do not appear on his annual Statement of Economic Interest.
Julia Vaughn, policy director for Common Cause Indiana, a government accountability group, says they should. "The fact is this is an economic interest that should have been disclosed, especially given the controversy surrounding the nursing home moratorium," she said.
Rep. Greg Steuerwald, R-Avon, chairman of the House ethics committee, said last week that the six-member, bipartisan panel would meet sometime this week. But no firm date has been set.
Call Star reporter Tony Cook at (317) 444-6081. Follow him on Twitter: @indystartony.