This past Monday, June 10th, North Carolina state insurance regulators extended their financial watch over the local Charlotte retirement community Aldersgate, continuing state supervision that started in August of 2023. The North Carolina Department of Insurance stated the reason for this was that Aldersgate was “insolvent or in imminent danger of becoming insolvent.” This comes amid an allegation from Kenneth McElwee, a former resident of the retirement community, who claims that Aldersgate involved itself in a “unlawful racketeering enterprise” while handling residents’ entry fees.
So, what exactly is Aldersgate being accused of? What is racketeering? Racketeering is “a set of illegal activities aimed at commercial profit that may be disguised as legitimate business deals.” Racketeering can include fraud, extortion, bribery, or any other illegal business practice used to illegally gain a profit. In this case, McElwee alleges Aldersgate took money from residents and placed it under a parent company to avoid state regulations. Additionally, McElwee alleges that the retirement community misrepresented what the entrance fee would be used for by not telling residents that a portion of the funds would be escrowed.
Last week, the attorneys for Aldersgate responded to the complaint with a motion to dismiss the case with prejudice, stating that the plaintiff is “converting what is, at best, a contractual dispute into something nefarious” and “lacks standing.” Additionally, Aldersgate states that McElwee’s allegations are “insufficient to state a claim” due to their vague, nondescript nature. Aldersgate argues that the plaintiffs have not properly alleged any kind of fraudulent activity. The outcome of the case has yet to be decided, but regardless, Aldersgate still has a long way to go to rectify the financial “problems and deficiencies” identified by the N.C. Department of Insurance.
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