The founder of the Catonsville-based retirement community company that pioneered campus-style continuing-care facilities nationwide faces a $100 million lawsuit brought on by a trustee this month.
John C. Erickson, who founded the Baltimore County Erickson Retirement Communities in 1983, is accused, along with his family members and other former board members, of approving company assets for private use. The company has since been bought by a local entrepreneur and operates under new leadership as Erickson Living.
The suit, filed last week in federal court in Texas by trustee Dan Lain and reported Saturday by The Washington Post, alleges that the family's "'major strategy' for the company was to 'transfer as much value of the future to [themselves].'"
The family used company assets towards extravagant purchases, such as a home and yacht, as well as the creation of a new television network, the suit claims.
Before it was sold, Erickson filed for bankruptcy in 2009, which "could have been avoided if the debtors' management had acted in the best interests of the debtors' and its creditors instead of acceding to the control and domination of John Erickson, his family, and friends," the suit said. It alleges the company was losing money since 2003, but Erickson and the board members continued to rack up the debt until the company was forced to file for bankruptcy.
Among the approved expenses claimed in the suit were a $10 million yacht, a $4.6 million Erickson mansion in Baltimore, as well as a second smaller yacht and a $400,000 Baltimore condo.
Erickson created RLTV, a television network that focused programming towards seniors in 2006. That venture was owned by the Erickson family but Erickson Retirement Communities directly paid for expenses, the suit says.
Erickson Retirement Communities was bought for $365 million in May of last year by Jim Davis' Redwood Capital Investments LLC, just months after Erickson emerged from bankruptcy.
Now called Erickson Living, the company continues to operate 16 facilities throughout the country, including three in Maryland: Oak Crest in Parkville, Riderwood in Silver Spring, and Charlestown in Catonsville, where Gov. William Donald Schaffer was living before his death.
John C. Erickson had planned to step down as chairman after the company exited bankruptcy. He and five top managers, including the chief executive and chief financial officers and Erickson's two sons, were to be replaced by a team chosen by Redwood.
Neither Erickson nor several of his family members listed as defendants in the suit returned calls seeking comment Saturday. His wife and four children, Erickson's brother and a number of close friends have all been listed as defendants.
Retired Johns Hopkins University President William R. Brody was also a board member with the company and is listed in the suit. He could not be reached for comment Saturday.
Lain's lawyer, Kristin A. McLaurin, also did not respond Saturday.