A Chicago-area rabbi, who previously owned a nursing house chain on the coronary heart of the largest default within the historical past of a federal mortgage-guarantee program, was indicted by federal authorities on costs he bilked hundreds of thousands of dollars from buyers.
The indictment towards Zvi Feiner and a enterprise companion, Erez Baver, is the newest chapter within the yearslong saga involving the Rosewood Care Facilities chain of nursing properties, situated primarily within the Chicago suburbs.
The $146 million default in 2018 was the worst ever for a program that insures mortgages on roughly 15 % of the nation’s nursing properties. Within the aftermath of the default, the Division of Housing and City Growth, which administers the mortgage assure program, tightened a few of its underwriting and evaluation processes.
The Rosewood chain — which have since be renamed by the new house owners — was a part of a community of nursing properties that Mr. Feiner, 50, and Mr. Baver bought after elevating cash from buyers within the Orthodox Jewish communities round Chicago and New York.
Federal authorities mentioned the 2 males misled buyers concerning the monetary well being of the nursing properties and ran them as a Ponzi scheme, utilizing cash from new buyers to pay earlier ones and skim money for themselves. The accusations are just like these contained in a fraud lawsuit filed final 12 months by the Securities and Change Fee and in investor lawsuits beforehand reported by The New York Instances.
Along with the wire fraud costs, federal authorities search to recoup $13.56 million from Mr. Feiner and $three.76 million from Mr. Baver.
Mr. Feiner was arrested by the F.B.I. on Sept. eight, however the U.S. lawyer for the Northern District of Illinois didn’t concern an announcement of the indictment till late Monday. Mr. Feiner has pleaded not responsible and was launched after posting $four,500 bail. Mr. Baver was scheduled to be arraigned on Wednesday.
Legal professionals for the lads weren’t accessible for remark.
Mr. Feiner paid a $1 million penalty to HUD final 12 months for failing to file a number of years of audited monetary reviews required by the mortgage insurance coverage program. He has additionally reached an settlement in precept with the S.E.C. in its lawsuit.
The issues at Rosewood have been so dangerous that the federal authorities went to courtroom in 2019 to have a receiver appointed to run its dozen nursing properties and one assisted residing heart.
After the receiver was appointed, HUD needed to shell out $30 million in charges to pay for maintenance. Greystone, a nursing house lender and operator, bought the Rosewood services for $81 million in January.