A judge appointed a receiver over a troubled health center on Cleveland’s East Side that could give the third party wide authority over its finances and properties.
Northeast Ohio Neighborhood Health Services, commonly known as NEON, is a nonprofit that offers medical services to patients regardless of their ability to pay. Several years ago, the nonprofit borrowed $11 million from a New Jersey-based private equity real estate company.
The company, All Pro Capital, filed a lawsuit in federal court in May alleging NEON failed to pay back the loan. It asked the judge to appoint a receiver over NEON and its properties, including most of its health clinics, in order to collect the money it’s owed. Receivers can have wide latitude to make decisions over staffing and properties. In this case, the judge hasn’t signed off on the specific duties the third party it appointed will have.
NEON has until Monday evening to request a temporary halt of the receivership.
NEON previously argued that medical services provided to thousands of Cleveland patients would be at risk if the court let a third party take over. The number of patients the nonprofit sees has dropped drastically in recent years – falling in half between 2023 and 2024. A spokesperson for All Pro Capital told Signal Cleveland in July that it is “aware of the important services that NEON provides in its neighborhoods and will be supportive of solutions that will allow such services to continue.”
In a court order detailing the decision, U.S. District Court Judge Christopher Boyko wrote that the money NEON owed All Pro – and several other lenders – outweighed the nonprofit’s concern about the community losing health services. NEON still owes All Pro $8.6 million and has failed to come up with an explanation for how it will pay those dollars back, the court filing said. NEON has said it’s looking for new loans to repay its debt – but if it found them, it hasn’t told the court.
The court also said that NEON had pre-emptively consented to a receivership in loan documents it signed. And the judge noted a recent county court filing from the Ohio Attorney General’s office, which alleges NEON failed to produce business records when requested by the office.
The court appointed John Lane, the CEO of business consulting firm Inglewood Associates, as the receiver. Lane has previously served as a receiver for a number of industries, including trucking and fashion design. NEON expressed concern that he did not have sufficient experience in health care. Lane’s associate does, the court pointed out.
It’s not yet clear exactly what powers Lane will have. All Pro Capital asked the court to give him a broad set of powers, including changing the locks on NEON’s property, employing NEON’s staff and selling NEON’s properties with the consent of All Pro and approval of the court. The judge has not yet signed off on those powers.
Signal Cleveland reached out to Lane and Willie Austin, NEON’s CEO and chair, but did not hear back. The story will be updated with any comments.
NEON provides health care access to Cleveland’s East Side but has seen fewer patients in recent years
Northeast Ohio Neighborhood Health Services has operated nonprofit community health centers dating back more than 50 years, starting in the Hough neighborhood and expanding over the decades to at least seven East Side locations.
The clinic uses federal money to provide outpatient health care to low-income families on Cleveland’s East Side.
It primarily serves African American patients. Between 2019 and 2024, about 95% of its patients were Black, according to data from the U.S. Health Resources & Services Administration (HRSA)
The past five years have been turbulent for NEON. The number of patients NEON serves has steadily declined, from 27,619 in 2019 to 8,052 in 2024, according to data from the U.S. Health Resources and Services Administration. In that time period, the clinic’s Hough Health Center burned down. It has not reopened.
The nonprofit has been embroiled in other legal trouble: A partner in a project to open a fresh food market was convicted in federal court in 2023 of embezzling more than $800,000. A former Cleveland City Council member who championed restoring the Hough facility was sentenced to prison for stealing from the organization.
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NEON’s ability to provide health care to Clevelanders would be at risk if a judge puts receiver in charge, nonprofit says
NEON admitted in court filings that its debt mounted due to a series of “calamitous events” but blamed lender for some of its financial woes.
Loan meant to rebuild Hough Health Center
The $11 million loan NEON received from All Pro Capital was meant to be used for “business purposes,” including restoring the Hough Health Center, court documents said. Austin signed onto the loan with All Pro Capital in May 2022, about a year after the fire.
In order to get the loan, NEON granted All Pro Capital a mortgage on much of the nonprofit’s property – including five of its operating health clinics, the temporarily closed Miles Broadway Health Center, the temporarily closed Hough Health Center and the group’s corporate headquarters.
The mortgage gave All Pro Capital the ability to take over property and sell it if NEON defaults on the loan.
Interest started building on the loan almost immediately after Austin signed onto it. NEON began making payments on the interest but didn’t touch the $11 million originally owed.
In September 2024, NEON didn’t make any payment – not on the interest or the $11 million originally owed, All Pro Capital alleged.
At the end of the month, All Pro notified NEON that it was going into default, telling the health care center that it hadn’t kept up with interest payments and hadn’t paid off the principal of the loan.
All Pro said in court filings that NEON “has failed to even acknowledge” the notice of default and that the nonprofit has not made any more payments toward the loan since August 2024.
Charles Lytle, a NEON board member, has written in court filings that NEON experienced a cyberattack by a ransomware group in 2024. The attack restricted NEON’s access to its computer systems and billing software, Lytle wrote.
“As an unfortunate consequence of the cyberattack, NEON temporarily stopped making monthly payments to All Pro,” Lytle wrote. “When NEON tried to negotiate in good faith with All Pro, All Pro responded with even more onerous interest rates and fees.”