September 11, 2015 • www.myvalleynews.com • Valley News
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Blotter AAC Holdings, Inc. faces class action lawsuit for not disclosing murder investigation at treatment center Shelli DeRobertis Writer A federal securities class action lawsuit was filed Aug. 24, 2015 in a Tennessee court against AAC Holdings, Inc., after recent news of a grand jury indictment for murder charges against company president Jerrod N. Menz, his corporations and three former employees sent the rehab centers’ stock price tumbling. AAC (American Addiction Centers) operates treatment facilities that provide inpatient substance abuse for people with drug and alcohol addiction and have 467 beds at their locations that span nationwide. The company runs A Better Tomorrow Treatment Centers, Forterus, Inc., and Forterus Health Care Services, including several homes in Murrieta – of which the Irongate Way home is reported to have had four patient deaths occur between 2008 and 2010. The 17-page complaint filed by Bramlett Law Offices in Nashville and Block & Leviton LLP, of Boston, (Plaintiff Dr. Joseph F. Kasper) is on behalf of all investors who purchased or acquired AAC common stock between Oct. 2, 2014 and Aug. 3, 2015, according to the complaint. AAC went public Oct. 1, 2014 by selling 5 million shares of its common stock at $15 a share to public investors. The stock began to trade the next day on the New York Stock Exchange, and the complaint alleges that AAC disclosed in its S-1 Registration Statement that it “was not aware of any legal proceedings the ultimate outcome of which, in our judgment based on information currently available, would have a material adverse effect on our business, financial condition or results
of operations.” It also states that defendants Menz, Michael T. Cartwright and Kathryn Sevier-Phillips, all of Tennessee, did not disclose that the California Department of Justice was investigating the death of a patient at a Forterus treatment facility in Murrieta. On July 21, a Riverside County Grand Jury accused Menz, Kristofer Michael McCausland, James Andrew Fent, Mignon Hernandez Dean, Forterus, Inc., Forterus Health Care Services, Inc. and ABTTC of the murder of Gary Benefield, 53. The above named defendants, along with Tami Dawn Scarcella, were also accused of dependent adult abuse against Benefield. All were employees of ABTTC, which was not a medically supervised treatment center. Benefield died at a Murrieta facility July 26, 2010, according to the indictment. A 2012 civil suit filed by Benefield’s widow, states Benefield had suffered from congestive heart failure and a recent battle of pneumonia when he was admitted into the center for alcohol detox. He was allegedly admitted without his oxygen or prescription medications, and his medical state was not checked on during the night of his admittance. The next morning he was found dead by a rehabilitation center employee. The class action alleges that AAC knew about the possibility of criminal charges before they went public because an assistant California Attorney General filed an affidavit in the Benefield civil action in 2013 stating that criminal charges will be filed. In response to the Valley News, ABTTC provided this statement: “We believe this lawsuit is without
Two arrested in connection with burglary ring Kim Harris Managing Editor Two people were arrested in connection with a burglary ring in Temecula on Thursday, Sept. 2 following a long-term investigation, according to a Riverside County Sheriff’s Department press release. Gabriel Trujillo, 18, of the unincorporated area of Temecula and Isaac Sosa, 22, of Temecula were arrested and booked on various crimes in connection with the thefts. The press release reported that there was an increase in thefts and residential burglaries in the early months of 2015 so Temecula police launched an expansive investigation in response. The department’s Detective Bureau, Special Enforcement Team, Problem Oriented Policing Team and the Riverside County Gang Task Force were all utilized in the investigation, Lt. Matthew Aveling wrote in the release. “During these crimes the suspect(s) took items of value which included guns and jewelry,” Aveling wrote. “Through investigative means, several subjects were identified as being responsible for these crimes. As the investigation progressed, many stolen items were recovered and numerous arrests made in connection with the associated crimes.” Due to the efforts of those involved in the investigation, Temecula police identified the persons responsible for 31 separate incidents of theft or burglary, made 23 arrests and recovered 14 stolen firearms. On Thursday, members of the Riverside County Gang Task Force, the Temecula Police Department’s Detective Bureau, Special Enforcement Team and Problem Oriented Policing Team, as well as several other specialized task forces served 14 search warrants at locations in and around the city of Temecula related to the previously indicated criminal acts. As a result, large quantities of illegal narcotics, numerous firearms and large amounts of U.S. currency
On Aug. 3, 2015, the class action alleges, AAC disclosed in its 10-Q SEC that the four said individuals had been indicted for seconddegree murder and dependent adult abuse, and that “if the defendants were to be convicted, however, the
loss could be material.” AAC’s stock plunged on Aug. 4, 2015, falling by 39 percent after at least two websites reported on the murder charges, according to the complaint.
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were seized, and both Trujillo and Sosa were arrested. The investigation is ongoing and additional arrests are anticipated. Anyone with additional information regarding this investigation, should contact TFO Deputy Gonzalez or TFO Officer Valdez of the Riverside County Gang Task Force Officer at (951) 461-6348. Information can be provided anonymously through “We Tip” at (800) 78-CRIME. Citizens may also submit a tip using the Sheriff’s Crime Tips online form at riversidesheriff.org/ crimetips.
Vehicles collide at freeway off-ramp WILDOMAR – A motorist was injured in a head-on crash at an exit ramp from Interstate 15 in Wildomar on Monday, Sept. 7. The wreck happened shortly before 1 p.m. at the Baxter Road/I-15 interchange, according to the California Highway Patrol. A Toyota Tacoma pickup truck and a sedan were involved, leaving an occupant of one of the vehicles
merit, and we intend to defend against it vigorously. As stated on our publicly available August 20th conference call, we did not disclose the existence of a possible government investigation in our securities filings prior to July 29 because we did not then believe we were the target of any active investigation. We contacted the Attorney General’s office through counsel on multiple occasions in an attempt to confirm the existence and scope of any inquiry. We believed that an inquiry by the Attorney General’s office was related to a medical professional who was formerly engaged by our predecessor company.” July 29, 2015, after the close of trading day, AAC issued a press released that disclosed the grand jury indictment against its founder, Menz, and the three former employees. That same day, AAC reported its 2015 second quarter financial results had increased revenues by 85 percent and increased client admissions by 62 percent.
with minor injuries, the CHP said. According to the agency, the crash also left the roadway partially blocked. Riverside County Fire Department paramedics were called to the location, but it wasn’t immediately clear whether the injured party required hospitalization. The CHP was investigating the cause of the crash.
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