Zvi Feiner, the former owner and CEO of a chain of Chicago-area and Missouri nursing homes, was charged with 10 counts of fraud for running an alleged Ponzi scheme worth millions of dollars, federal prosecutors said Tuesday.

Also charged with one count of fraud was Erez Bayer, the executive vice president and bookkeeper of umbrella company FNR Healthcare. The pair are accused of misleading investors about the health of the company, which comprised skilled nursing and assisted living facilities. From 2012 to 2017, authorities allege, the accused used funds from new investors to pay off earlier investors. The charges became widely known Tuesday when authorities distributed a statement dated Monday.

Each count of wire fraud carries a maximum sentence of 20 years in prison, although authorities emphasized that upon conviction, the U.S. District Court would have to “impose a reasonable sentence under federal statutes” and sentencing guidelines.

Also, Feiner ($13.6 million) and Baver ($3.8 million) would forfeit more than $17 million, according to the indictment. Feiner pleaded not guilty to all counts, while Baver was set to be arraigned today at 10 a.m.

Feiner’s attorney, Ariel Weissberg of Chicago-based Weissberg and Associates Ltd., declined to comment on McKnight’s inquiry Tuesday, saying there are “no allegations of a Ponzi scheme,” despite federal authorities’ use of the term in announcing the indictment. 

Previously, Feiner, a noted Chicago-area rabbi, was at the center of a $146 million default that sent shockwaves that are still causing ripples through the lending community. When his Rosewood Care Centers portfolio collapsed, it was the worst default in the history of the Department of Housing and Urban Development’s healthcare facilities loan program.

In addition, Feiner was hit with $965,000 in civil monetary penalties in Aug. 2019, when an administrative law judge determined that he had neglected to file multiple years’ worth of HUD legal filings. 

The SEC, which sued Feiner, said late last fall that none of the investors in his Mountain Crest, NVP, Rosewood Care Centers, or North Capital had recovered their principal. The SEC accused Feiner of exploiting investors from Chicago’s Orthodox Jewish community in particular.