U.S. securities regulators have charged an Orthodox rabbi from Chicago with dishonest traders out of not less than $10 million since 2014, a few of it allegedly used to pay earlier traders within the method of a Ponzi scheme.
In bringing the costs towards Zvi Feiner, 49, the Securities and Exchange Commission mentioned it has settled associated expenses towards one among his enterprise associates, Erez Baver. The SEC mentioned Baver, 39, and an organization he owns have agreed to pay $2.25 million in disgorgement and prejudgment curiosity, plus a civil penalty to be decided, with out admitting or denying the allegations.
The expenses contain Feiner’s creation of 20 restricted legal responsibility firms to buy nursing properties and assisted dwelling facilities. The SEC mentioned Feiner, with Baver’s assist, raised cash from contacts within the Orthodox Jewish neighborhood, a Holocaust survivor being amongst them.
He promised the investments could be low-risk and generate excessive returns, when in actuality he used the cash to pay earlier traders, assist different properties or for private use, the SEC mentioned.
Ariel Weissberg, Feiner’s legal professional, mentioned his shopper’s troubles grew from the monetary collapse of one among his investments, Rosewood Care Centers, senior care services in Illinois and Missouri. Weissberg mentioned an operator triggered the failure. “Mr. Feiner didn’t have any role in causing the demise of the Rosewood facilities,” Weissberg mentioned.
He mentioned Feiner has been discussing a settlement with the SEC. “He recognizes he has an obligation to third parties and if at some time in the future he can make further payments he will diligently attempt to do that,” Weissberg mentioned.
Rosewood defaulted on $146 million in mortgages assured by the U.S. Department of Housing and Urban Development. The New York Times reported it was the most important default ever for a HUD program that backs loans to nursing properties.
Weissberg mentioned Feiner has settled two civil fits traders introduced towards him.
The SEC filed its expenses Thursday in federal court docket right here.