Ex-Owner in $146 Million Elder Care Default Is Charged in Ponzi Case

A Chicago-area rabbi, who formerly owned a nursing home chain at the heart of the biggest default in the history of a federal mortgage-guarantee program, was indicted by federal authorities on charges he bilked millions of dollars from investors.

The indictment against Zvi Feiner and a business partner, Erez Baver, is the latest chapter in the yearslong saga involving the Rosewood Care Centers chain of nursing homes, located mainly in the Chicago suburbs.

The $146 million default in 2018 was the worst ever for a program that insures mortgages on roughly 15 percent of the nation’s nursing homes. In the aftermath of the default, the Department of Housing and Urban Development, which administers the mortgage guarantee program, tightened some of its underwriting and review processes.

The Rosewood chain — which have since be renamed by the new owners — was part of a network of nursing homes that Mr. Feiner, 50, and Mr. Baver purchased after raising money from investors in the Orthodox Jewish communities around Chicago and New York.

Federal authorities said the two men misled investors about the financial health of the nursing homes and ran them as a Ponzi scheme, using money from new investors to pay earlier ones and skim cash for themselves. The accusations are similar to those contained in a fraud lawsuit filed last year by the Securities and Exchange Commission and in investor lawsuits previously reported by The New York Times.

In addition to the wire fraud charges, federal authorities seek to recoup $13.56 million from Mr. Feiner and $3.76 million from Mr. Baver.

Mr. Feiner was arrested by

Keep reading this article on Andrew Ross Sorkin - DealBook Section Business New York Times.

Leave a Reply