Rabbi accused of nursing home Ponzi scheme ordered to pay $13M to investor
A North Shore rabbi has been ordered to pay $13 million in his ongoing legal battle over an alleged real estate Ponzi scheme that bilked investors out of more than $35 million.
Zvi Feiner, rabbi of an Orthodox Jewish Congregation in Skokie and head of the Feiner Investment Corporation, stands accused of using his status in the Jewish community to entice investment into nursing homes, which he would acquire and ultimately sell without paying back investors.
His alleged victims include a 90-year-old Holocaust survivor, a group of Jewish day school teachers that lost their life savings in the scheme, and a fellow Orthodox Jewish rabbi and businessman.
Rabbi Sidney Glenner invested more than $25 million in six loans to Feiner’s real estate companies between 2013 and 2015. The money was to be used to invest in nursing and retirement homes, with Feiner offering up as collateral his existing real estate holdings, according to court records.
At the same time Glenner made the loans, Feiner’s businesses began to falter. By 2014, a lien was placed on all of Feiner’s assets by a different investor, complicating Glenner’s investments and his efforts to be repaid.
When Glenner’s loan payments came due, Feiner said he could not pay due to “financial stress,” court documents show. Instead, he offered up various properties. But he already had sold some of the properties, and the value of the collateral is disputed by the two parties, according to court documents.
For example, Glenner in 2013 made a $3.8 million loan to Feiner for a nursing home investment in Downstate Decatur. The Decatur venture is also the subject of other lawsuits against Feiner, in which investors claimed the rabbi would make regular disbursements to investors before abruptly stopping.
Feiner told investors the nursing home’s operator was not paying rent and so he was forced to turn the property over to a lender. Local news reports, however, allege Feiner stopped paying the bills for the facility, causing its operator to close its doors. While the nursing home was open, Feiner borrowed from the facility and never paid it back, according to a previous lawsuit.
Eventually, the building that housed the nursing home was turned over to Glenner. The property was valued at $500,000, but Glenner had to pay $450,000 in unpaid real estate and payroll taxes, court records claim, leaving an the outstanding loan payment at $3.75 million.
In another case, Glenner loaned Feiner $7 million, and Feiner offered up four properties as collateral. When Feiner didn’t make payments on the loan, Glenner sought to take over the properties used as collateral — except Feiner had already sold two of them, according to court records.
In 2017, Glenner sought arbitration against Feiner in the Jewish Ecclesiastical Court of the Chicago Rabbinical Council. The court ordered Feiner to pay $13.2 million in the case. Now, lawyers for Glenner are asking the Cook County Circuit Court to confirm the Rabbinical Court’s ruling.
Feiner could not immediately be reached for comment.
This is at least the fourth lawsuit filed against Feiner involving his nursing home investment enterprise.
In November, the Cohen family of Chicago sued Feiner in federal court, saying he took more than $2 million in investments and never repaid them. One of those investments involves the Decatur nursing home. The family also invested in a South Holland retirement home that Feiner eventually sold for a profit of $3.6 million, which he did not share with investors, the suit alleges.
Earlier this year, a group of investors sued Feiner, saying they invested $15.5 million in his nursing home companies and were never repaid. In September 2017, a federal suit was filed against Feiner, with investors saying the rabbi’s failure to pay them for joint ventures he sold constituted a violation of the RICO Act.
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