Several people associated with or related to Retreat Behavioral Health’s late CEO may have been paid for services they never provided, according to the receiver appointed by a Lancaster County judge to supervise the unwinding of the shuttered company’s assets.
In an affidavit filed Thursday, the receiver, James Young, said he would hold off on processing the final paychecks for the individuals who may have been receiving improper payments. The affidavit was filed as part of a motion seeking a court order to pay employees of Retreat’s Lancaster and Akron facilities, who did not receive paychecks for the final two weeks of operations.
Reached by phone on Friday, Young declined to name the people he said were connected to Peter Schorr, the Retreat founder and CEO who killed himself on June 21, triggering the company’s rapid shuttering.
Young declined to say how many individuals there were or whether the matter was or would be referred to other agencies for further investigation. These individuals were due to be paid about $234,000 for the missed payroll, court documents show.
Meanwhile, the court ordered $663,000 to be released from frozen Fulton Bank accounts to pay most of the former Akron and Ephrata employees for the June 3-16 pay period. Fulton has two business days to release the money.
Retreat employed approximately a combined 300 at the in-patient location at 1170 S. State St. in Ephrata Borough and the out-patient location at 333 S. 7th St. in Akron. Retreat was founded in Lancaster County in 2011.
The two locations were part of a for-profit addiction and mental health treatment company operating in three states until closing in the last week of June after Schorr’s death in Palm Beach County, Florida, where Retreat had offices and a clinic. Scott Korogodsky, the company’s chief administrative officer, also died by suicide five days later, also in Palm Beach County.
The company has at least $30 million in debt and is the subject of multiple lawsuits involving a complicated ownership structure and unpaid debts. Retreat had been financially struggling for months or longer, court documents revealed, to the point that Schorr in early June told the court he paid three bi-weekly payrolls out of his own pocket.
Young was appointed temporary receiver on June 28, following the two executives’ deaths. Lapis Advisors, a Denver, Colorado-based investment firm, won a judgment of more than $4.8 million against Retreat’s owner, NR Pennsylvania Associates, in New York’s Supreme Court.
A hearing to appoint a permanent receiver is set for Aug. 14. Receivership is a court-appointed process that allows a neutral third party to manage a company's assets and operations while litigation is pending.
On Monday, a Florida judge is expected to convene a hearing on Lapis’ request that Young be appointed receiver for Retreat’s operations in that state.
This aerial view shows Retreat at Lancaster County, 1170 S. State St. in Ephrata Borough Thursday, June 27, 2024.
Employees to be paid
Typically, outstanding payroll would be paid only after creditors recouped their share of the company’s assets. But Young gained the consent of creditor Lapis to pay the employees. He calculated that there would be enough funds to pay Lapis $2.88 million plus interest, fees and costs.
Young said the money would be distributed to employees through their accounts with ADP, the third-party payroll processor that Retreat used.
The court also released $76,426 to pay Young for his services, which includes paying former Retreat employees as independent contractors to process payments due to Retreat by insurers and government programs.
Young’s affidavit states that all employees were terminated no later than June 26. The exact day of termination had been questioned by employees who received emails after Schorr’s death informing them that they had not been terminated.
But after Korogodsky’s death, workers received an unsigned email from the human resources department saying their last day was June 21. Several employees have said they continued to work after Schorr’s death to make sure patients were discharged.
