Former Rosewood Owner Indicted on 10 Fraud Counts in Nursing Home ‘Ponzi Scheme’

The federal government this week announced a multiple-count indictment against a former Chicago-area nursing home owner, alleging that he and a top executive ran a “Ponzi scheme” that defrauded investors out of $22.8 million.

Zvi Feiner, formerly the owner and CEO of the Skokie, Ill.-based FNR Healthcare LLC, stands accused of misleading investors about the financial health of various sub-companies that he formed to facilitate the buying and selling of nursing homes and assisted living properties.

Feiner recruited investors by promising a portion of each facility’s net income on an ongoing basis, as well as the ability to recoup the initial investment plus profit once the buildings sold, according to a federal indictment.


But the Department of Justice alleges that from 2012 to 2017, Feiner and former FNR executive vice president Erez Baver paid “returns” to early investors with cash received from later benefactors, while also using some of the money raised to cover personal expenses unrelated to senior care facility transactions.

Feiner also told investors that he himself had money riding on the fate of the buildings when he actually had not put any personal money toward the facilities, the government alleged in the indictment.

A federal grand jury indicted Feiner on 10 counts of wire fraud and Baver of a single count; each count comes with a maximum sentence of 20 years, though the DOJ noted that the court must hand down “a reasonable sentence under federal statutes” in the event of convictions.


The government is also seeking a forfeiture of $13.5 million from Feiner and $3.76 million from Baver.

Feiner pleaded not guilty on all counts. Baver is set to be arraigned Wednesday morning. Attorneys for Feiner and Baver did not return requests for comment as of press time, though this story will be updated with any response.

The indictment represents the latest instance of legal trouble for Feiner, whose ownership of the Rosewood Care Centers portfolio resulted in the worst default — $146 million — in the history of the Department of Housing and Urban Development’s (HUD) loan program for health care facilities.

An administrative law judge last summer approved a nearly $1 million penalty against Feiner to resolve claims that the businessman and rabbi failed to file three years’ worth of necessary HUD paperwork associated with the portfolio.

The Securities and Exchange Commission (SEC) last September sued Feiner and Baver for defrauding investors; in that case, the government accused Feiner of using his position as a Chicagoland religious leader to advance the scheme.

“As such, he exploited those relationships by soliciting members of the Orthodox Jewish community to invest in his scheme,” the SEC wrote. “Baver also solicited investors from this community.”

Mark Yampol, who managed the portfolio of Rosewood locations in Illinois and Missouri, was indicted earlier this summer on a single count of equity skimming related to the portfolio.

The Rosewood default sent shockwaves through the health care lending industry when the New York Times first publicized the incident in June 2019.

Speaking at an industry event held this past winter, Joshua Rosen of HUD lender Walker & Dunlop said the fallout from the high-profile loan failure completely changed HUD’s approval calculus.

“What Rosewood did, in HUD’s mind — it’s a 180. Anything that was a gray area, or not as heavily investigated — those days are long gone,” Rosen said in February. “If you’re a one-star building, if you have survey issues, if the abuse tag is up — a bridge lender may not put the stop sign on you. [With HUD] I don’t want to say it’s a non-starter, but it’s a very difficult, comprehensive process to get those deals done today.”

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