A Chicago rabbi is facing federal charges alleging that he defrauded at least 75 people out of a reported $23 million. One of the people, federal officials noted, was a survivor of the holocaust. The fraud involved the purchasing of nursing homes and assisted living facilities.
Zvi Feiner will face charges related to 10 counts of wire fraud, federal officials say.
Feiner will face 10 counts of wire fraud related to activities between 2012 and 2017. Feiner and a codefendant, Erez Baver, are accused of fraudulently soliciting investments related to assisted living and nursing homes.
Feiner is accused of misleading investors concerning the financial health of some of the facilities his hedge fund purchased. He is also accused of diverting funds from the hedge fund to pay off investors in a Ponzi-style scheme. Feiner is further accused of using some of that money on personal expenditures. Feiner also apparently told investors that he had committed some of his own money to the venture. That turned out to be a lie.
In some cases, Feiner was still making money on companies that he had already sold off. Some investors were paid off using diverted funds and Feiner created fake tax documents to help sell the fraud.
Feiner has pleaded not guilty to the charges.
The Civil Complaint
SEC violations like this often have attached civil complaints seeking the restoration of funds fraudulently extracted from investors. The indictment seeks the forfeiture of over $13 million from Feiner and another $4 million from Baver. The civil complaint has since been settled, but neither Feiner nor Baver was required to admit guilt.
Ponzi Scheme Prosecutions
A Ponzi scheme is essentially a kind of pyramid scheme with an added layer of deception. In a pyramid scheme, newbies issue payments to older members, and the older members collect these payments. The newbies are told that if they hang around long enough, they are the ones who will be getting money from newbies.
A Ponzi scheme is similar, but the actors do not know it is a pyramid scheme. When the fund issues investor reports, they hide how the top investors got their money (from new investors).
This is illegal for two reasons. First, there is an element of fraud involved. The Ponzi scheme operator lies to investors to obtain a constant influx of cash into the fund. Inevitably, however, the scheme operator either runs out of investors or the investors demand their money back. When it becomes apparent that the money is gone, the scheme falls apart.
Talk to a Chicago Criminal Defense Attorney Today
If you have been operating a Ponzi scheme or otherwise charged with defrauding investors, you should discuss the matter with a Chicago criminal defense attorney as early in the investigation as possible. We can help minimize the legal consequences and defend you against aggressive prosecutions. Call David Freidberg today at (312) 560-7100 and we can begin preparing your defense immediately.