October 22, 2019
Two Chicago men are being charged for running a Ponzi scheme that was funded by primarily Orthodox Jewish investors. Zvi Feiner and Erez Baver operated FNR Healthcare that was founded by Feiner in 2007. Investors were told that the company was focused on quality healthcare assets throughout the United States.
Instead, FNR was creating an LLC for each of the nursing home facilities that were purchased. Private placement memorandums were issued to the investors for their interest in each LLC, and they were told that they could expect to earn around 15% annual returns on their investment. It was also promised to be a safe investment with little room for loss. The Complaint explains that funds were being used by multiple LLCs and being passed around quite frequently. Without the knowledge of the investors, certain struggling LLCs received funds from others and even received funds to pass along to investors to make it seem as if they were successful.
Also included in the private placement memorandums was a promise that investors would share a portion of the proceeds included in the sale of a nursing home or LLC. This was falsified as the proceeds in most cases were misappropriated and used to pay back loans at other LLCs. Eventually, the scheme collapsed under the weight of increasing loans and obligations and investors became skeptical when they were not receiving payments.
All-in, the two men raised over $11.5 million from more than 62 investors. Baver has agreed to pay back $2.25 million as a civil penalty.
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