From the U.S. Attorney’s Office:
Chicago Nursing Home Executives Charged with Operating Ponzi Scheme
CHICAGO — The owner of a chain of nursing homes and the company’s executive vice president have been charged with fraud for allegedly orchestrating a Ponzi scheme that raised millions of dollars from investors.
ZVI FEINER was the owner and Chief Executive Officer of Skokie-based FNR Healthcare LLC, and EREZ BAVER served as FNR’s Executive Vice President and bookkeeper.
From 2012 to 2017, Feiner and Baver operated a fraud scheme involving the misappropriation of funds raised through the sale of membership interests in companies that Feiner created under the FNR umbrella to purchase and sell nursing homes and assisted living facilities, according to an indictment returned in U.S. District Court in Chicago.
The indictment accuses Feiner and Baver of intentionally misleading investors about the financial condition of the companies in order to fraudulently raise funds.
In reality, the payments of returns to investors were funded through a Ponzi scheme, with Feiner and Baver paying early investors with money raised from later investors, the charges allege.
Feiner and Baver also used investor funds for purposes unrelated to the purchase or acquisition of the healthcare facilities, including for Feiner’s and Baver’s own personal benefit, the indictment states.
The indictment seeks forfeiture from Feiner of $13.56 million, and from Baver of $3.76 million.
The indictment charges Feiner, 50, of Chicago, with ten counts of wire fraud, and Baver, 40, of Chicago, with one count of wire fraud. Feiner has pleaded not guilty to all counts. Arraignment for Baver is set for Sept. 16, 2020, at 10:00 a.m., before U.S. District Judge Martha M. Pacold.
The indictment was announced by John R. Lausch, Jr., United States Attorney for the Northern District of Illinois; and Emmerson Buie, Jr., Special Agent-in-Charge of the Chicago office of the FBI. The U.S. Securities and Exchange Commission in Chicago provided valuable assistance. The government is represented by Assistant U.S. Attorney Kathryn Malizia.
Each count of wire fraud carries a maximum sentence of 20 years in prison. If convicted, the Court must impose a reasonable sentence under federal statutes and the advisory U.S. Sentencing Guidelines. The public is reminded that an indictment is not evidence of guilt. The defendants are presumed innocent and entitled to a fair trial at which the government has the burden of proving guilt beyond a reasonable doubt.