The owner and an executive of a chain of assisted living communities and nursing homes have been charged with fraud for allegedly orchestrating a Ponzi scheme that defrauded at least 75 investors out of at least $22 million, the Department of Justice announced late Monday.
Zvi Feiner, the former owner and CEO of Skokie, IL-based FNR Healthcare, and Erez Baver, 40, FNR’s executive vice president and bookkeeper, are accused of misappropriating funds raised between 2012 and 2017 through the sale of membership interest in companies Feiner created under the FNR umbrella to buy and sell assisted living communities and nursing homes, according to an indictment.
Feiner, an Orthodox Jewish rabbi, is charged with 10 counts of wire fraud, and Vaver is charged with one count of wife fraud. Feiner pleaded not guilty to all counts. Baver is scheduled to be arraigned this morning before U.S. District Judge Martha M. Pacold. Each count carries a maximum sentence of 20 years in prison.
Feiner’s attorney, Ariel Weissberg of Chicago-based Weissberg and Associates Ltd., declined to comment to McKnight’s Senior Living on the new charges, saying there are “no allegations of a Ponzi scheme.”
The indictment accuses Feiner and Baver of intentionally misleading investors about the financial condition of the companies to fraudulently raise funds. The indictment claims that the payments to investors were funded through a Ponzi scheme, with Feiner and Baver paying early investors with money raised from later investors. The indictment further alleges that the two used the funds for their own personal benefit, including diverting funds to other facilities and entities they controlled.
The indictment seeks a forfeiture of $13.56 million from Feiner and $3.76 million from Baver.
In June, Feiner settled a case with the Securities and Exchange Commission agreeing to pay $2.25 million. Baver also settled a case with the SEC. The SEC alleged that Feiner and Baver “falsely told investors the investments were low-risk and would generate high returns.” The two were accused of misappropriating investor funds for personal use, to support other struggling properties, to pay back loans taken out on other properties and to make distributions to earlier investors.
Feiner also is the former owner of Rosewood Care Centers, which defaulted on a record $146 million in mortgages for its assisted living communities and nursing homes in Illinois and Missouri in August 2018.