The second defendant in a scheme to defraud investors in the Orthodox Jewish community who invested in assisted living communities and nursing homes throughout the Midwest has settled his case with the Securities and Exchange Commission, agreeing to pay $2.25 million.
Chicago businessman Zvi Feiner, president, CEO and owner of FNR Healthcare LLC, did not admit or deny guilt in the settlement, which also requires him to pay a civil penalty to be determined by the court. The consent judgment mirrors a settlement with his business partner, Erez Baver, who previously settled the SEC’s charges. Baver owns Cedarbrook Management Inc. and is former executive vice president of FNR Healthcare.
The SEC alleged that Feiner and FNR began soliciting funds from investors in 2010, including more than $10 million from at least 62 investors since 2014. Baver was alleged to have assisted Feiner with raising funds for some of the limited liability corporations that were invested in beginning in 2014.
According to the complaint, Feiner and Baver “falsely told investors the investments were low-risk and would generate high returns.” They also were alleged to have misappropriated 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’s company Netzach Investments LLC and Baver’s company Cedarbrook Management also were named as relief defendants.
The SEC complaint alleged that investor funds were pooled together in about 20 limited liability companies that would buy and sell assisted living communities and nursing homes. Investors began questioning the two men in 2015, when their payments began arriving late or stopped, according to the original 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 — Cedarbrook’s reported gains from the alleged fraud.
Feiner 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. Feiner agreed to pay $965,000 in civil penalties in August 2019 for not submitting the company’s annual financial reports for fiscal years 2015, 2016 and 2017 — a requirement for the Housing and Urban Development mortgage program he used.
The latest settlement was signed June 24 and announced Monday by the SEC.