A Chicago businessman and his company have agreed to pay more than $2.25 million to settle charges against him without admitting or denying that he defrauded investors in the Orthodox Jewish community who invested in assisted living communities and nursing homes throughout the Midwest, according to the Securities and Exchange Commission.
Erez Baver was named in an SEC complaint filed Sept. 19, and his company, Cedarbrook Management, was named as a relief defendant to recover investor funds.
Baver is a former executive vice president of FNR Healthcare, also named in the complaint along with Zvi Feiner, who was president, CEO and owner of FNR.
The SEC alleges that Feiner and FNR began soliciting funds from investors in 2010, including more than $10 million from at least 62 investors since 2014. Baver is alleged to have assisted Feiner with raising funds for some of the limited liability corporations that were invested in beginning in 2014.
“Feiner is an ordained Orthodox Jewish rabbi and was a well-regarded figure in the Orthodox Jewish community on Chicago’s north side and near north suburbs,” the complaint stated. “As such, he exploited those relationships by soliciting members of the Orthodox Jewish community to invest in his scheme. Baver also solicited investors from this community.”
The complaint alleges that investor funds were pooled together in approximately 20 limited liability companies that would buy and sell assisted living communities and nursing homes.
“While the Defendants used some of the investor funds to purchase the facilities at issue, they frequently misappropriated investor funds upon receipt for various purposes, including to pay promised distributions to investors in other LLCs, to support other struggling facilities, to pay back loans taken out on other facilities, and for their own personal use,” the SEC alleged.
Investors began questioning Feiner and Baver in 2015 when their payments began arriving late or stopped, according to the complaint.
Baver agreed to pay $360,776 and a civil penalty to be determined by the court. He and Cedarbrook also agreed to pay almost $1.9 million, reportedly reflecting Cedarbrook’s gains from the fraud. The settlement is subject to court approval.
The complaint also names Feiner’s company, Netzach Investments, as a relief defendant to recover investor funds. Feiner’s attorney told the Chicago Sun-Times that Feiner is discussing a settlement with the SEC.
Feiner, the former owner of Rosewood Care Centers, agreed to pay $965,000 in civil penalties in August for not submitting the company’s annual audited financial reports for fiscal years 2015, 2016 and 2017, which was a requirement for the Housing and Urban Development mortgage program he used.
Rosewood Care Centers defaulted on a record $146 million in mortgages for its assisted living communities and nursing home in Illinois and Missouri in August 2018.