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ANALYSIS: Turner stood to lose big in Statehouse fight

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A top Indiana lawmaker, his family and investors in their company risked losing millions in future profits if a proposed ban on construction of new nursing homes in Indiana had become law this year, an Associated Press review has found.

Instead, the bill died after intense private lobbying by Republican House Speaker Pro Tem Eric Turner, who now faces scrutiny over his actions on legislation that would have directly affected his family.

Public and private financial documents show Turner and other direct investors in Mainstreet Property Group rely on building new nursing homes to make money, generating returns of up to 600 percent in some cases. Each deal for a new home that Mainstreet completes with HealthLease Properties in Canada, an affiliated company in which Turner and his family are also investors, can net investors a collective $2 million or more.

Turner, R-Cicero, maintains that business model would have survived the proposed moratorium, and a ban simply would have led them to do business in other states.

Financial analysts who reviewed a private Mainstreet financial document for The Associated Press disagreed, concluding that the Indiana ban would have drastically cut into the company's profits by placing the state — where many of its facilities are located and others are planned — off limits.

Turner's private lobbying against the ban in the final two days of the legislative session has drawn scrutiny from Statehouse leaders, with fellow Republican House Speaker Brian Bosma ordering the House Ethics Committee to investigate Turner's actions.

Supporters of the moratorium, which would have halted new construction for five years, argued it was needed to keep the market from being flooded and prevent older facilities from going out of business. But opponents of the ban, including Turner and his children, argued it violated free market principles.

The bill died after Turner's push during private meetings of the House Republican Caucus, where decisions are frequently made before lawmakers return to public debate.

"It looks like he stood to benefit the most from this bill dying," said Tim Sadler, a business consultant and president of the Fairfax Group, which operates nursing homes in Indiana.

Turner, who declined to be interviewed, acknowledged in a statement that he has an ownership stake in Mainstreet Capital Partners, which has an interest in Mainstreet Property Group. His son, Zeke Turner, is CEO of Mainstreet Property, and his daughter, Jessaca Turner Stults, is Mainstreet's registered lobbyist.

The lawmaker also said he has an investment in HealthLease Properties in Canada, a real estate investment trust started by Zeke Turner.

He declined to disclose the amount of his investment in the companies. State financial disclosure laws don't require him to provide that information.

Zeke Turner did not respond to multiple requests for comment to AP, but he told IBJ late last month that he doubted his father had enough influence to change lawmakers' mind in a last-minute, back-room debate.

In a statement, Eric Turner said the construction ban would have had "no significant effect" on Mainstreet's business model.

"If a moratorium had passed, investment dollars in new facilities would have likely gone to other states and Indiana would have missed out on new jobs, new investments, and a better living experience for seniors," he said in the statement.

The Turners could have still made money elsewhere; they had already planned to begin constructing new homes in Kansas and Ohio. But leaving Indiana would have meant giving up deals — including taxpayer-backed loans — that have in many cases come from Eric Turner's political ties in Indiana. The cities of Marion, Wabash and Westfield all made loans to Mainstreet for projects.

Zeke Turner and Mainstreet officials testified before lawmakers that at least five of the company's projects in Indiana would be canceled if the ban was approved, and many others would be at risk.

One of Mainstreet's private documents used to lure private investors details at length their investment strategy and the profits they have made on previous deals.

Under its business model, Mainstreet arranges the financing for its facilities, then leases the completed buildings to a private operator. The buildings are then sold to Zeke Turner's HealthLease at a hefty profit. The private investors are paid back their initial investment, plus returns of anywhere from 14 percent to 18 percent, according to financial documents.

In the case of Wellbrooke of Westfield, a new home that opened last year, investors put in $750,000. They made a $4.5 million profit. For eight nursing home sales to HealthLease detailed in the Mainstreet document, Mainstreet investors made $34 million on an investment of $14 million, for a $20 million net profit.

According to the document, Mainstreet was looking to raise $60 million to build 12 new nursing homes at a cost of $199 million combined. In the case of three nursing homes it planned, Mainstreet expected to sell each one for roughly $20 million, collecting between $3.3 million and $5.3 million on each sale.

The document does not include expected sale prices for the other nine facilities.

At least two of those projects are now under construction.

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  • Missed Problem!?
    While everyone is debating/screaming about corruption and that what Mr. Turner did is wrong in some way, look back at what initiated the "intense private lobbying" as it was characterized. The existing retirement homes had done their own intense lobbying, and somehow had legislation in place to put a moratorium on new facility construction for 5 years. So, how did this happen? Who wrote this legislation? How much in campaign funds/lobbying was paid to get legislation that violates the basic market principles of supply and demand. And, we have all seen how well industries do after the government steps in to artificially regulate them, see the airline and trucking industry failures.
  • Re-Read the Article
    Frank, You may want to re-read the article, as he was not promoting a bill that would make him millions, but blocking one that would take away a large chunk of potential/planned money earned in a business he has spent years building, while allowing existing nursing home businesses to not need to worry about newer competition. Conflict of interest can be challenging to decide, as you have to consider that any lawmaker is likely to have a business interest that he has worked hard in and you can't expect him to just back out the conversation. You could most definitely expect him not to vote on it (which I believe was the case here). I can't say whether he broke any laws or not without knowing more of the facts. If he did break laws then he should be held accountable. On the flip side, I don't know any lawmaker (or business owner) at this time who would simply sit back and take no action when other lawmakers and business owners tried to take away the opportunity to continue building a business that they and their family have worked hard over a number of years to create.
    • No Confidence In Legislators
      I have absolutely no confidence in the state legislature, both House and Senate, that fair, open, and honest dealings will lead to good public policy. I believe almost all of these legislators come to the state house with very narrow interests and looking for opportunities to use the position to their advantage. My fear is that Eric Turner is just the tip of the iceberg. I will vote against both of my representatives--Bosma and Merritt--in the next election.
    • As the world TURNer
      If I remember, many dictators in foreign lands became wealthy with all their inside posturing. No they have fled their lands.
    • Legislators
      I worked as staff for the legislature 40 years ago. There is no question that today's legislator - Republican or Democrat - is much different than legislators from years ago. Most legislators in both parties today have their hands out from the minute they arrive. Their are either looking to protect their business or union or are looking for a state job or lobbyist job. Very, very few do not fit this model.
    • Again?
      Wow, Indiana is leading the country in corporate FRAUD since the GOP took over the Governor's office. Reep what you Sew!!! Hahahaha, you voted for it
    • Government breeds corruption
      Anyone who is surprised by this needs their head examined. Politics is big money in the state and federal government. Just look at how the new worth of these criminals skyrockets once they enter political office. Government breeds corruption; it must be drastically downsized and limited in its power and influence.
    • wow
      Seems like a clear conflict of interest - amazing that politician was able to take a front seat in promoting a bill that will make his family millions. I'm curious, were any laws broken?

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