Doheny Meats buyer Shlomo Rechnitz on business, philanthropy

Fifteen years ago, Shlomo Rechnitz co-founded TwinMed, a wholesaler of medical supplies serving nursing homes. Since then, Rechnitz has founded, or bought, and grown a number of other businesses, including Brius Healthcare, now the largest operator of nursing homes in California. 

Along the way, Rechnitz, 41, also became a major philanthropist, giving away millions of dollars  — to Jewish charities and also directly to people in need. On more than one occasion he’s come to the aid of a major Orthodox organization, offering gifts or loans in times of crisis. 

It was a combination of these two attributes — business expertise and an expansive view of philanthropy — that led Rechnitz to buy Doheny Glatt Kosher Meat Market, the scandal-ridden Los Angeles kosher meat distributor and retailer that closed its doors last month. 

“The Rabbinical Council of California [RCC] approached me and said, ‘Shlomo, could this be one of your charity things?’ ” Rechnitz recalled in an interview with the Journal earlier this month. “Kosher meat is expensive enough.”

Rechnitz took less than a week to close the deal with Doheny’s former owner, Mike Engelman, who was caught on video bringing unidentified meat products into his store at a time when the RCC’s supervisor had left the scene. Then he only held onto the purchase agreement for about a week before arranging to transfer it to a third party, David Kagan, the owner of the glatt kosher retailer Western Kosher, which also does some distribution to local businesses. Doheny Meats hadn’t reopened as of press time earlier this week, and Kagan declined to be interviewed for this article, saying then that the deal had not yet been finalized. 

“I love the rush of a deal. It’s like a coke addiction,” Rechnitz, said, a tall glass of caffeine-free Coca-Cola on the coffee table in front of him. “Not that I know what coke addiction is.” 

Whether he’s in the hunt to acquire a new long-term care facility — through Brius, Rechnitz owns 62 across the state — or some other business or property, he enjoys the challenge of outsmarting, outbidding or outmaneuvering the competition. 

“That is salesmanship,” said Rechnitz, a native Angeleno who said he inherited a peddler’s instinct from his grandfather, who sold women’s apparel, and his father, a closeout salesman. “You’re selling your business, you’re selling your service. You’re telling them why you should be the one that should be chosen.”

In his first big venture, Rechnitz and his twin brother, Steve, founded TwinMed, which offered nursing homes the ability to buy supplies not on an item-by-item basis — ordering this many boxes of latex gloves or that many cases of gauze — but by paying TwinMed a set daily rate for all supplies for each patient in their care. 

This “per patient day” system helped TwinMed grow to become one of the largest distributors of medical supplies to nursing homes in the country, and has attracted attention and accolades within the business world. 

In each of the past two years, the brothers have presented their business as a case study for students in the MBA program at Stanford, and, in 2011, Ernst & Young named Steve Rechnitz “Entrepreneur of the Year” in the health care category.

The Rechnitz twins have some clear business advantages. They can stand in for one another in a way that only identical twins can; their employees, associates and even their 5-year-old sons occasionally get them confused. 

And the Rechnitzes are, in a word, big. 

“It never hurts when you have two 6-foot-8, 300-plus-pound people walking into your office and strongly suggesting that you buy their product,” Steve Rechnitz said in accepting the entrepreneur award in 2011.

“His business is a front for his charity. Because he lives his charity.” — Rabbi Chaim Cunin, CEO of Chabad of California

Steve is the active CEO of TwinMed, while Shlomo has moved into other businesses. He started by buying nursing homes and then began to get involved in businesses that nursing homes contract to, including a pharmacy, a pest control firm and an ambulance company. 

Shlomo Rechnitz pursues similarly varied interests in his philanthropic work. 

Within Orthodox circles, he is almost always called by his first and middle names, Shlomo Yehuda, and he has become known for his aid to prominent nonprofits at times of crisis. 

In November 2011, when the head of the Mir Yeshiva in Jerusalem died suddenly, leaving the 7,500-student institution $15 million in debt, Rechnitz, who had spent nearly five years studying there, donated $5 million. Others followed, Rechnitz said, and Mir’s debt was paid in full within three months. 

In December of that year, Rechnitz purchased a creditor’s note against Chabad of California’s headquarters in Westwood for $2.35 million, helping the organization avoid foreclosure. Rechnitz, who also donates to Chabad in more conventional ways, said he still holds the note, adding that he’s hoping to be paid back “one day.” 

And after Hurricane Sandy wreaked havoc on the East Coast, Rechnitz gave $1 million to aid in the rebuilding of Orthodox Jewish day schools and to assist the families whose children attend those schools. 

“His business is a front for his charity,” said Rabbi Chaim Cunin, CEO of Chabad of California, who went to school with Rechnitz for a few years when they were boys growing up in Los Angeles. “Because he lives his charity.” 

Many people seek Rechnitz’s help these days. Over the course of an hour-long conversation, his cellphone rang a dozen times and three people knocked on his door. 

Rechnitz hasn’t maintained an office for many years, preferring to do business either from his home or over the phone while driving around the neighborhood around La Brea Avenue, so it’s possible those calls were business-related. But it’s equally plausible that Rechnitz was ignoring, temporarily, people soliciting his assistance. 

Rechnitz calls himself “a nondenominational giver”  and said that at times he reaches out to those who aren’t coming to him. Last year, Diana Aulger, a pregnant woman in Texas, decided to have her doctors induce labor so that her husband, Mark, who was dying of cancer, could meet their child. Mark got to hold their daughter, Savannah, for 45 minutes before he died. 

Rechnitz saw the story online and sent Aulger a check for $20,000. 

He also sends $10,000 checks to the families of police officers who are shot while on duty in Southern California. Those gifts are inspired in part by an urge to assist individuals who put themselves into harm’s way for the public good, but Rechnitz said he’s also driven by another motive. 

“I don’t think that [non-Jews] should ever look back at the Jewish people and say, ‘You only care about your own,’ ” he said. 

New Doheny Meats owner explains his purchase of scandal-ridden store

Shlomo Rechnitz, a prominent local businessman and philanthropist, has purchased Doheny Glatt Kosher Meat Market, the scandal-plagued kosher meat retailer and distributor.

Rechnitz, who co-founded TwinMed, a large medical supply firm, and owns a number of other businesses, purchased the store and its distribution arm for an undisclosed sum from its former owner, Mike Engelman.

The sale closed late in the day on Sunday, March 31, just one week after its former kosher certifier, the Rabbinical Council of California (RCC), revoked the store’s certification and hours before the beginning of a two-day holy period celebrating the end of Passover.

Starting on March 25, the day after the revocation, rabbis from the RCC reached out to Rechnitz, urging him to buy Doheny, and in an interview with The Jewish Journal on April 3, Rechnitz said he initially considered making the purchase as “a favor to the community.”

[Related: After Doheny Kosher scandal, what does the future hold for L.A.’s meat market?]

“Before I came out with the announcement that I was going to purchase [Doheny],” Rechnitz said, “there were already stores calling up different distributors, even being quoted prices 35 to 40 percent higher than their current prices.”

Doheny is believed to supply as much as 50 percent of the kosher meat and poultry in Los Angeles; its disappearance would have significantly reduced competition in the marketplace, which, Rechnitz said, “would have destroyed the kosher market in Los Angeles.”

RCC President Rabbi Meyer H. May said Wednesday morning that he was one of those who personally urged Rechnitz to buy Doheny Meats, and he was cheered by news of the sale.

“It’s really extraordinary,” May said. “He’s going to preserve the richness of the meat supply and preserve the price structure for consumers.”

Rechnitz was involved in the response to the Doheny scandal from its earliest hours. He was one of a handful of non-rabbis who attended a hastily organized meeting on Sunday, March 24, when Engelman spoke to the RCC’s leadership and rabbis from synagogues around the Pico-Robertson neighborhood about what he had done at his store.

Engelman, who had owned the shop for 28 years, was videotaped by a private investigator last month bringing unidentified products into his store at a time when its rabbinic overseer was absent. Engelman did not return repeated calls requesting comment, and has not spoken on the record since the scandal began.

At the March 24 meeting, Engelman reportedly told Rechnitz, May, and the other laypeople and rabbis present, that he had, on two or three occasions, brought unsupervised meat into the store.

According to multiple people who attended the meeting, Engelman claimed all the meat he had brought to Doheny was kosher, but he admitted some was not up to the RCC’s higher “glatt kosher” standard. Glatt kosher meat is more expensive than kosher meat, which itself carries a higher price tag than equivalent non-kosher products.

Rechnitz said that he believes Engelman with “99 percent” confidence.

Rechnitz did add a caveat.  “You can’t rely on someone like me, who got my information from someone who unfortunately has made mistakes, who wasn’t always as truthful as he should have been,” Rechnitz said.

Over the course of a week of negotiations, Rechnitz spent between eight and 10 hours with Engelman; he said he does not believe Engelman brought the unsupervised products into Doheny to respond to specific customers’ requests, as some have suggested.

Rechnitz said Engelman himself couldn’t fully explain why he brought the unsupervised meat into the store, but Rechnitz speculated that it may have been due to anger Engelman felt towards his main supplier, Agri Star, the large kosher meat processor based in Postville, Iowa. In 2009, Agri Star bought the Postville plant from the bankrupt Rubashkin-owned firm AgriProcessors, which had been shut down in the aftermath of the largest immigration raid in American history.

Money may not have been the motivating factor, Rechnitz said, “because it wasn’t that much of a difference, based on the quantity.”

In the private investigator’s video, a Doheny employee was seen unloading eight boxes from Engelman’s SUV and bringing them into the store. Based on additional videos received from the investigator, the May said the RCC estimates Engelman brought a total of approximately 1,200 pounds of animal products into the store over the weeks he was under surveillance.

Although Rechnitz’s initial reason to purchase Doheny was to maintain competing distributors for the city’s kosher-observant community, over the course of the week of negotiations he became a bit more optimistic about the business prospects for the company.

“I didn’t have time to send in a forensic accounting team,” he said, but Engelman told him that Doheny’s gross sales on the retail and distribution sides added up to approximately $8 million a year.

That said, Rechnitz said he hopes to remain a mostly silent investor in Doheny, and won’t aim to build its market share at the expense of other distributors.

Engelman won’t have any role in the business – Rechnitz said the agreement required the former owner to make a “complete” break, and included a non-compete clause – but the rest of the operation should remain mostly the same.

The RCC will once again certify Doheny’s retail and distribution operations, the name will remain the same and every current employee, Rechnitz said, has been offered his job.

The store, which is currently closed, could reopen as early as next Monday; Rechnitz said that the store, the utensils and dishes used there were being kashered — ritually cleansed — “just in case there was non-kosher meat being used.”

Rechnitz is currently Doheny’s sole owner; he said he is in negotiations with another investor who might buy into the business. The deal with Engelman included a non-disclosure agreement about the price, Rechnitz said, but he described the negotiations as “amicable” and described the final selling price as “sizable,” but not as big as it might have been prior to the scandal.

“It definitely came at a major discount due to the fact of what [Engelman] did, or what he tried to get away with,” Rechnitz said. “He definitely was not rewarded for his actions.”

Rechnitz has experience working with organizations at times of crisis. In his role as CEO of one of his companies, Brius Management Co., which manages multiple nursing homes across California, Rechnitz told a reporter in 2011 that his company looked mostly for “distressed facilities.”

In his philanthropic work, Rechnitz has also come to the aid of embattled organizations. Last year, in the wake of Hurricane Sandy, Rechnitz donated $1 million to an organization that supports Jewish day schools in the New York area. In 2011, Rechnitz donated $5 million to the Mir Yeshiva in Jerusalem, which was struggling under millions in debt following the death of its chief rabbi and fundraiser. That same year, Rechnitz also helped save Chabad of California’s headquarters from foreclosure.

But Rechnitz is also known for charitable giving of a very different sort. Every Saturday night, Jews line up outside his family’s home. Until six months ago, those who came walked away with checks; now they leave with gift cards to one of two kosher markets in the area near Fairfax and La Brea.

Rechnitz announced his purchase of Doheny at his synagogue on Sunday evening, March 31, just hours after the deal closed. He said the reaction there was muted – “It was kind of almost expected,” Rechnitz said, adding that his goal in making the announcement was to change the conversations that observant Jews in Los Angeles were bound to have over the two days that followed, the last two days of Passover, during which work and the use of any electronics is prohibited.

“I wanted to stave off two days of people creating rumors and completely defaming the place,” Rechnitz said.

In that regard, Rechnitz appears to have succeeded already. Just hours after Passover ended on Tuesday, April 2, after sundown, at least one person had reported the news in a comment on Facebook.