Laurie Bebo, the former chief executive officer of Assisted Living Concepts, has been ordered to pay a $4.2 million fine for multiple violations of securities laws in an initial decision by the Securities and Exchange Commission.
The violations include making false statements in securities filings, falsifying the company's books and records, and lying to the company's auditor.
Bebo also was barred from being an officer or director of a public company in the initial decision by Cameron Elliot, an SEC administrative law judge.
During her five days on the witness stand, Bebo "had the breathtaking audacity to tell, under oath, what largely amounted to a fairy tale," Elliot wrote. "The simple truth is that Bebo concocted an elaborate fiction, started telling it over six years ago, and has never stopped."
The decision does not become final until the Securities and Exchange Commission enters the administrative law judge's order. Bebo has three weeks to ask for a review of the final decision. She also can appeal the decision in federal court.
Mark Cameli, Bebo's lawyer, said they plan to appeal the initial decision.
Bebo, who was fired by Assisted Living Concepts in May 2012, and John Buono, the former chief financial officer, were sued in 2014 by the SEC, which said they directed employees to report fraudulent occupancy rates at some of the company's assisted living centers to avoid violating lease agreements.
Buono settled his case with the SEC.
Assisted Living Concepts, previously based in Menomonee Falls, operated more than 200 assisted living centers and senior residences. The company, now based in Chicago, was bought by TPG, a private equity firm, in 2013. It changed its name to Enlivant last year.
In his decision, Elliot, the administrative law judge, found that Bebo "utterly failed to recognize the wrongfulness of her conduct" and that her behavior was "shamelessly egregious."
Bebo co-opted fellow employees and lied to the company's auditors, other employees and the company that owned the assisted living centers leased by Assisted Living Concepts, according to the decision.
Bebo became chief executive in 2006 when Assisted Living Concepts was spun off as a public company by Extendicare Inc., a Canadian company that operated nursing homes and assisted living centers in Canada and the United States. Bebo held a variety of positions at Extendicare Health Services Inc. from 1999 to 2006.
Assisted Living Concepts — which was controlled by Thornridge Holdings Ltd., a private Canadian company — soon drew attention for its decision to evict residents, many of them in their 80s, whose care was paid for by Medicaid.
One resident forced to leave was nearly blind and 103. Another was served with an eviction notice two days before her 99th birthday.
The company later clashed with regulators in several states over inadequate staffing, substandard care and other violations.
Ventas Inc., which owned the eight leased centers, sued Assisted Living Concepts in 2012, shortly before Bebo was fired, contending that the company violated the terms of the lease agreement by not meeting state regulations.
Assisted Living Concepts settled the lawsuit a few months later by paying about $100 million and buying the eight facilities.