A Platinum Vindication – Platinum Partners and Sufficient Evidence of Fraud

As the readers of this blog may remember, the Platinum Partners fraud was widely covered in and around 2016 and 2017. The coverage included years of research on the part of a small group of very dedicated people who collaboratively amassed a treasure trove of information regarding the Platinum Partners hedge fund, its activities, the defrauding of millions of dollars in investor money, bribery, securities fraud and the list goes on.

We attended hearings on the frauds related to Black Elk Energy in 2019 and, by all estimation and analyses, we had the partners dead-to-rights on, at the very least, the securities fraud. And then, in what we believed to be a shocking turn of events, Judge Cogan, an altogether brilliant member of the legal community, overturned a jury verdict and acquitted one of the partners and granted the other a new trial. Overturning a jury verdict is unusual. Acquitting a convicted man made our heads turn.

The Black Elk Energy deal, while complicated and nuanced, represented a clever, if not unimaginably creative manipulation of the rights of the unsecured bondholders against the secured bondholders, allowing the Platinum Partners (unsecured bondholders) to divest Black Elk of Millions and Millions of Dollars in valuable oil assets, thereby leaving the secured investors (those same voting shareholders) with nothing. You see, once the secured property is filtered out of any company, the secured holders of debt and financial obligations are left with nothing to secure. This can, if properly directed, reduce the secured bondholders to a position below the unsecured bondholders who, in the ordinary course, would have been paid out first. However, such a vote would have required the Platinum Partners responsible for that vote to have sat down and affirmatively orchestrated such a corporate action. This could not have lacked criminal intent, particularly when David Levy (who was acquitted on those grounds) was and continues to be, one of the largest beneficiaries of the Black Elk deal.

Taking a step back in time, the takeover of control of Black Elk, which began in 2007 when Platinum began investing in the Black Elk Energy company, was a corporate move that legends are made of, a slight of hand and a measure of serendipity. The slow bleed of that company of its assets and value, by the very partners who were supposed to be acting in the best interest of the company did not go unnoticed, at least by us. It was carefully orchestrated and it had a measure of well-honed finesse.

In simple terms convincing secured shareholders to vote on a measure which was framed to them as a vote in the best interest of the company, and ultimately paved the way for the Platinum Partners to drain assets, followed a pattern and practice of corporate behavior by Platinum’s Partners, at least for anyone keeping tabs of their activities.

And yet, at the end of it all Judge Cogan ruled that David Levy lacked criminal intent and Mark Nordlicht was entitled to a new trial. Sadly, we were left bereft by the miscarriage of justice. What occurred in the years leading up to that trial was more than criminally intentional, it was very dark. What has transpired since, is astounding.

The Partners have not starved, as one would think when a company goes from having $1.7 Billions of Assets under Management to nothing (at least nothing being reported). At the end of the day, the greatest beneficiaries of that vote, were the Platinum Partners, and despite contentions to the contrary, these men got very rich off their crimes.

And while Mark Nordlicht later filed for bankruptcy protection (in and around late 2019), anyone who looks hard enough will likely find that he siphoned off his personal assets to family members and offshore accounts and is really, not impoverished. Nor, might we add, is he entitled to bankruptcy protections.

On Thursday, November 5, 2021, a three panel U.S. Appeals Court, after 9 weeks of testimony, unanimously restored the convictions of Mark Nordlicht and David Levy. In a 102-page decision, they determined that the evidence supported the conviction of Mark Nordlicht and did not support a finding of David Levy’s lacking “criminal intent.”

A little vindication goes a long way. Murray Huberfeld’s dramatically reduced sentence remains a slap in the face for his victims in the Platinum Partners fraud. Hopefully David Levy and Mark Nordlicht and their high-priced legal team will not succeed in convincing a judge that they deserve a reduced sentence. They unequivocally do not.

See below for additional reading and a copy of he decision.

U.S. appeals court restores Platinum Partners executives’ fraud convictions

NEW YORK, Nov 5 (Reuters) – A U.S. appeals court on Friday restored the fraud convictions of two former top executives at the now-defunct Platinum Partners hedge fund, saying a trial judge erred in acquitting one defendant and granting the other a new trial.

In a 102-page decision, the 2nd U.S. Circuit Court of Appeals in Manhattan said sufficient evidence supported the July 2019 jury convictions of Platinum co-founder Mark Nordlicht and co-chief investment officer David Levy.

The appeals court returned the case to U.S. District Judge Brian Cogan in Brooklyn for sentencing. Platinum was based in Manhattan and once had about $1.7 billion of assets.

Appeals Court Reinstates Convictions of Platinum Partners Executives

Hedge fund founder Mark Nordlicht and co-chief investment officer David Levy were convicted in 2019 of securities fraud and other charges

Mark Nordlicht, the founder of defunct hedge fund Platinum Partners, leaving federal court in the Brooklyn borough of New York in 2019.

The U.S. attorney’s office for the Eastern District of New York, which prosecuted the case, appealed that decision.

In Friday’s ruling, U.S. Circuit Judge Robert Sack wrote that there had been sufficient evidence for a rational jury to convict the defendants, and neither an acquittal or new trial was warranted.

“It is accordingly only in exceptional circumstances, where there is ‘a real concern that an innocent person may have been convicted,’ that a court ‘may intrude upon the jury function of credibility assessment’ and grant a [motion for a new trial],” he wrote, quoting from another case.

Lawyers for Messrs. Nordlicht and Levy didn’t respond to requests for comment.  A spokesman for the U.S. attorney’s office declined to comment.

The Decision decided on November 5, 2021 by the 3 Member Appellate Panel

19-3207_opnDownload

The Not-so-Fine Rabbi Feiner, Baver and FNR Healthcare

Department of JusticeU.S. Attorney’s OfficeNorthern District of Illinois

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FOR IMMEDIATE RELEASEMonday, September 14, 2020

Chicago Nursing Home Executives Charged With Operating Ponzi Scheme

CHICAGO — The owner of a chain of nursing homes and the company’s executive vice president have been charged with fraud for allegedly orchestrating a Ponzi scheme that raised millions of dollars from investors.

ZVI FEINER was the owner and Chief Executive Officer of Skokie-based FNR Healthcare LLC, and EREZ BAVER served as FNR’s Executive Vice President and bookkeeper.  From 2012 to 2017, Feiner and Baver operated a fraud scheme involving the misappropriation of funds raised through the sale of membership interests in companies that Feiner created under the FNR umbrella to purchase and sell nursing homes and assisted living facilities, according to an indictment returned in U.S. District Court in Chicago.  The indictment accuses Feiner and Baver of intentionally misleading investors about the financial condition of the companies in order to fraudulently raise funds. 

In reality, the payments of returns to investors were funded through a Ponzi scheme, with Feiner and Baver paying early investors with money raised from later investors, the charges allege.  Feiner and Baver also used investor funds for purposes unrelated to the purchase or acquisition of the healthcare facilities, including for Feiner’s and Baver’s own personal benefit, the indictment states.

The indictment seeks forfeiture from Feiner of $13.56 million, and from Baver of $3.76 million.

The indictment charges Feiner, 50, of Chicago, with ten counts of wire fraud, and Baver, 40, of Chicago, with one count of wire fraud.  Feiner has pleaded not guilty to all counts.  Arraignment for Baver is set for Sept. 16, 2020, at 10:00 a.m., before U.S. District Judge Martha M. Pacold.

The indictment was announced by John R. Lausch, Jr., United States Attorney for the Northern District of Illinois; and Emmerson Buie, Jr., Special Agent-in-Charge of the Chicago office of the FBI.  The U.S. Securities and Exchange Commission in Chicago provided valuable assistance.  The government is represented by Assistant U.S. Attorney Kathryn Malizia.

Each count of wire fraud carries a maximum sentence of 20 years in prison.  If convicted, the Court must impose a reasonable sentence under federal statutes and the advisory U.S. Sentencing Guidelines.  The public is reminded that an indictment is not evidence of guilt.  The defendants are presumed innocent and entitled to a fair trial at which the government has the burden of proving guilt beyond a reasonable doubt.

Attachment(s): Download Feiner and Baver indictmentTopic(s): Financial FraudSecurities, Commodities, & Investment FraudComponent(s): Federal Bureau of Investigation (FBI)USAO – Illinois, Northern

Biggest Mortgage Default in History, Nursing Home Rabbi Feiner Indictment

Ex-Owner in $146 Million Elder Care Default Is Charged in Ponzi Case

A Chicago-area rabbi, who formerly owned a nursing home chain at the heart of the biggest default in the history of a federal mortgage-guarantee program, has been indicted by federal authorities on charges he bilked millions of dollars from investors.

The indictment against Zvi Feiner and a business partner, Erez Baver, is the latest chapter in the yearslong saga involving the Rosewood Care Centers chain of nursing homes, which are mainly in the Chicago suburbs.

The $146 million default in 2018 was the worst ever for a program that insures mortgages on roughly 15 percent of the nation’s nursing homes. In the aftermath, the Department of Housing and Urban Development, which administers the mortgage guarantee program, tightened some of its underwriting and review processes.

The Rosewood chain — which has been renamed by the new owners — was part of a network of nursing homes that Mr. Feiner, 50, and Mr. Baver bought after raising money from investors in the Orthodox Jewish communities around Chicago and New York.

Continue here: The New York Times

Platinum Partners – Can the Charges Stick? If not, We are All Doomed…

THE PLATINUM PARTNERS’ CONVICTION AND A VERDICT THAT, IF OVERTURNED, WILL ALLOW WHITE-COLLAR CRIME TO RUN RAMPANT…

Dear Readers:

We cannot overstate the importance of the verdict in the Platinum Partners’ case. The complexities involved in the scams perpetrated on investors, as well as the historical practice of the Defendants can also not be overstated. We followed Platinum for years. There was more than enough evidence to obtain a conviction. Those convictions should stand.

But then, there’s a master orator and talented attorney… Jose Baez.

Jose Baez, whose talent as a show-man, a skilled craftsman and an artist within a legal defense career, can only be admired by those of us who don’t have that type of skill. In a creative and theatrical cinematic courtroom performance, Baez likened the Platinum Partners scheme to a “run on the bank” of the It’s a Wonderful Life variety. He made a direct analogy between George Bailey and the Defendants, trying to place them in the same heroic conundrum of Bailey. What a way to ruin a great Jimmy Stewart movie. 

The major problem with that analogy is that George Bailey did not defraud people out of money. To the contrary, he was prepared to go to jail if the envelope of money was not found. He was prepared to be accountable to the bank’s clients.  The Platinum Partners’ funds did not misplace the money in an envelope. There were no absent-minded employees. Platinum Partners’ assets were intentionally, carefully, and craftily transferred to the benefit of the same partners in other funds. Platinum’s Partners could not meet redemptions because the entire movement of assets by the fund was one scheme after another, a series of  misrepresentations and untruths told to investors. There is no correlation. If anything, the closest comparison to any character from It’s a Wonderful Life is one that makes an analogy between Mark Nordlicht and Mr. Potter, the story’s antagonist who refused to lend Bailey money and wanted to close the bank and destroy the Bailey family.

Unlike the It’s a Wonderful Life story, Platinum Partners were not protagonists, kind decent people who made a terrible and hapless error. To turn Mark Nordlicht into George Bailey is like turning  John and Timothy Rigas into the Bailey Brothers or, Anna Gristina into a virgin. Just not happening… 

Madoff on the Outside, Compassionate Release – Was he Compassionate?

From the files of Larry Noodles, see here.

MADOFF WANTS TO JOIN POLLARD ON THE OUTSIDE

Ten years ago Bernie Madoff got locked up in medium security Federal prison in Butner, North Carolina. Madoff joined fellow Jewish criminal Jonathan Pollard in a facility with about 750 other inmates. Butner is less violent than most medium facilities. The Feds put a lot of child molesters and sexual deviants in Butner. Pedophiles are targets for attack in prison. If you put them all in one place they can protect each other. This results in less violence, and less work for correctional officers.

Pollard was released from Butner five years ago. Before Pollard was released he spent a few years with Madoff. A number of former inmates at Butner were interviewed and said that Pollard and Madoff didn’t get along very well and almost came to blows. Other former inmates have said that they got along great. You can’t always trust the truth and veracity of criminals.

Yesterday Madoff filed a motion to be released under the compassionate release law. Madoff is dying from renal failure. Madoff wants to get out of Butner and spend his last days on earth with his wife. Madoff’s two sons died, one of cancer and the other of suicide. Madoff needs a new kidney. Nobody is lining up to donate a kidney to Madoff. Madoff has refused to be put on dialysis at Butner. Medical care at Federal prisons is about as advanced as medical care provided in the North Pole. The CO’s, or the inmates, would probably figure out a way to kill Madoff with the dialysis machine, just for the fun of it. The Feds still haven’t figured out how Jeffrey Epstein died.

Madoff’s doctors have said that his life expectancy is about 18 months. Madoff wants to die on the outside with his wife by his side. Madoff argued in his motion that a “friend” has agreed to take him in if he is released. Madoff refused to disclose the name of the friend, out of concerns for this friend’s “privacy.” Did Jonathan Pollard agreed to take in Madoff? Why would Madoff not request that he be released to his wife? Or, is the “friend” referring to Madoff’s wife?

A former inmate at Butner told a reporter that Madoff bragged about robbing money from little old bubbes, causing Pollard to rebuke Madoff. According to this inmate Rabbi Pollard told Madoff he would have to answer to G-d for his sins. Madoff allegedly laughed at Pollard. Bubbe maisa or fact? When I report on inmate activities in Otisville I make sure to verify my information with at least two independent inmate sources who don’t know each other. You can’t trust the word of an inmate.

The Feds at the Bureau of Prisons have opposed Madoff’s early release motion. The Feds think that his crime is far too serious to allow Madoff to benefit from the compassionate release law. The compassionate release law should be reserved for more upstanding criminals, like Worldcom executive inmate Bernie Ebbers. Madoff argued in his motion that Bernard Ebbers was just released by New York Federal Judge Valerie Caproni under the compassionate release law, over the objection of Federal prosecutors. Ebbers argued to Judge Caproni that he is 78 years old, he just lost 50 pounds in six months, he suffers from incontinence and dementia and fell down four times which required multiple hospitalizations. The Feds argued that Ebbers was faking his medical conditions in order to get out of jail early. The Feds even got the prison psychologist to eavesdrop on Ebbers prison phone calls with his daughter. The prison shrink said that Ebbers did not sound demented when he spoke with his daughter. I would suggest that Bernie Madoff fake incontinence in order to get the Feds to kick him out of Butner.

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The Platinum (Teflon) Partners – and a New Trial for One an Acquittal for Another – An Unheard of Move…

Note to readers:

One of the problems with having lost total anonymity (see here) is the second hat worn by the blogger, that of an attorney. Unfortunately of late, attorneys have been suspended for criticizing judges. Whistle blowers are now at risk for their lives from the ruler of what used to be the free world; and the moral compass of the judicial system in the US seems to have turned on its axis. Being a nameless and faceless spokesperson for truth or some form of justice is risky; but putting a face to that is like removing a Kevlar vest. 

Anonymity provided protection, not by allowing us to type words we otherwise would not have typed, but by affording us with a voice without the weights and burdens of multiple degrees and professional demands and what could appear to be attorney advertising were it to have a face. Our voice spoke words of a faceless anybody who did the research and came to a set of conclusions. We no longer have that level of protection. So we tread lightly, a chilling of speech in full force and effect. And for the sake of attorney ethics, perhaps call this attorney advertising, perhaps not. View it as you will. 

And we digress. The ruling below by Judge Brian Cogan feels nothing short of a betrayal of justice for the victims, for justice and for the entire financial system. The jury had it right despite the theatrics of truly gifted attorneys representing the defendants. The attorneys did their jobs and the jury ruled, even at the many legal and judicial disadvantages imposed by Judge Cogan. And then the judge overruled. 

We don’t get it. It feels very wrong.

The jury was an unsophisticated jury with likely precious little by way of experience in the investment world. And yet they were convinced that there was enough evidence to convict Mark Nordlicht and David Levy. We were disappointed they missed the whole picture but they got a piece of it right.

Unfortunately the Prosecution team did a rather inadequate job of breaking up the entire fraud piece by precious piece; and missed so many crucial bits of evidence to put before the jury, not the least of which was a comparison to how the global markets were performing at the time the Platinum Partners were active. This comparison shed light on how lacking in transparency were the activities of Platinum Partners now Teflon Partners at the time.

It was all very complicated; but could have been broken down by someone with enough experience in investments to break it all down. Yet the jury got the significance of Black Elk, a feat of epic proportions. 

We have years of research behind our stories on this subject, a lifetime in the hedge fund world and extensive knowledge of the subject matter. The lawyers representing the State were out-played by master craftsmen. Simple.

But the jury got it right.

To be undone by the judge came as a surprise, accompanied by a deep sense of sadness and a feeling of despair for everything just and true about our judicial system, if such truth exists, and our financial markets. The markets work because of the integrity of the investment vehicles, the rules the hedge fund managers MUST play by.  Teflon/Platinum Partners did not play by those rules. It all only works in concert when the investors can count on the judicial system to ensure act as referees or alternatively dole out equitable and judicial remedies when all else has failed. In this case, the justice system was in discord, as we see it.

The world’s financial markets continue to function only when investors can trust the underlying materials about the risks,  solely when investors understand the thickness of the ice they are going to be skating on, which is supposed to be transparently laid out. There can be no substrata of lies and deceit or the entire endeavor is accompanied by hidden risks. That was the Teflon/Platinum Partners strategy. They hid risks, the ice was thinner in places. 

This case, if not for any other in our anonymous and not-so-anonymous viewpoint, is representative of an entirely broken system. If risks can be so well hidden that minutiae determine a Judge’s unilateral decision to overturn a verdict, no market is safe.

The jury understood the material and afforded us with a just result. The judge here we simply do not understand. 

Hopefully the prosecution team will retry this case; and perhaps they will contact those with an abundance of knowledge on the materials for assistance. If they decide not to retry the case, the victims will have been re-victimized by the very system designed to protect them. 

If the Prosecution does not retry this case it will only either serve to substantiate a belief in unequal justice for the wealthy or prove that the Securities Acts and the investor laws are meaningless or some combination of the two. The Jury got it right. One of those convicted has been acquitted by Judge Cogan. Game well played.

We implore upon the Prosecution to take up the case again and to do better. 

New Life In Platinum Partners Case, Acquittal And New Trial

In a rare move, U.S. District Judge Brian Cogan (Eastern District of New York) overturned a jury’s conviction.  Cogan acquitted David Levy and granted a new trial for Mark Nordlicht.  Levy and Nordlicht, both executives at now defunct hedge fund Platinum Partners, were convicted of securities fraud, conspiracy to commit securities fraud, and conspiracy to commit wire fraud in July of this year after a 9-week trial.  A third defendant, former Chief Financial Officer Joseph SanFilippo, was cleared of all charges.

Back on December 14, 2016, seven individuals were indicted for their alleged participation in transactions at Platinum Partners, which was founded in 2003.  Two of the primary targets of the investigation were Nordlicht, one of Platinum’s founder partners and its Chief Investment Officer, and David Levy, a senior executive at Platinum who also served as co-portfolio manager for Black Elk, an oil and gas company that Platinum controlled from August 2010 through September 2015.

As the trial approached,  Nordlicht made a change in counsel from high powered attorneys at Quinn Emanuel Urquhart & Sullivan LLP to Jose Baez who gained notoriety when he won “not-guilty’ decisions in two separate high profile murder cases defending Casey Anthony (Florida) and former New England Patriot tight end Aaron Hernandez.  It was an interesting strategy and one that seems to have paid off for now.

There is no doubt that there was some great lawyering here, but the case is also interesting because it went from some slam dunk Ponzi scheme, to a real hedge, who had some exotic investments, that went out of business after the FBI raided the place.  So was it the hedge fund that was a fraud or an FBI raid that caused the fund to shut down?  One thing is clear, there was a raid.

Platinum managed multiple funds, including Platinum Partners Value Arbitrage Fund, L.P. (“PPVA”), Platinum Partners Credit Opportunities Master Fund, L.P. (“PPCO”), and Platinum Partners Liquid Opportunity Master Fund L.P. (“PPLO”). One transaction involved the valuation of one of the funds’ investments, Black Elk – an oil and gas company that Platinum controlled from August 2010 through September 2015, and the subsequent sale.

Government prosecutors claimed that Nordlicht and Levy hatched a plan to get the money from Black Elk’s sale through misrepresentations to bondholders.  The Government claimed that the evidence would show that the defendants rigged the Black Elk bond consent solicitation.  At trial, the jury found Nordlicht and Levy guilty on counts six to eight (related to the Black Elk) but not guilty on counts one to five, which related to Platinum.   

After a 9-week trial and the partial guilty verdict, Nordlicht and Levy moved for a judgment of acquittal under Federal Rule of Criminal Procedure 29 and for a new trial under Federal Rule of Criminal Procedure 33. Judge Cogan deferred ruling on these motions until Nordlicht, Levy, and the government prosecutors fully briefed their respective positions.  So just when prosecutors thought the trial was over, it wasn’t.  After hearing arguments from both sides, Judge Cogan acquitted Levy and stated that Nordlicht’s motion for acquittal was denied, but a new trial was approved as prosecutors did not provide enough evidence to sustain the conviction.

Judge Cogan wrote;

“In considering whether to grant a new trial, a district court may itself weigh the evidence and the credibility of witnesses, but in doing so, it must be careful not to usurp the role of the jury .. The ultimate test is whether letting a guilty verdict stand would be a manifest injustice. … There must be a real concern that an innocent person may have been convicted.”

Although the Government adduced sufficient evidence for a judgment of acquittal to be unwarranted, letting the verdict stand against Nordlicht would be a manifest injustice. Thus, Nordlicht’s motion for a new trial is granted.

It was a complex case but Platinum was a complex hedge fund, something any jury would struggle with.  It all started with an FBI raid, allegations that Nordlicht was seeking to flee the country and that the hedge fund was a Ponzi scheme.  It turns out that the FBI’s raid was successful in taking down the Platinum but there was no clear motivation as to the defendants when they began to experience a liquidity crisis at Platinum (a real issue but not necessarily criminal).  It’s not against the law to make bad decisions or to lose money … something that seems to have been criminalized in this case.

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Rabbi Zvi Feiner Settles with SEC But, “he won’t be able to satisfy it because…” Where is the Outrage?

People Should Be Outraged, Rabbi Feiner Settles Suit with the SEC; but it is Hard to Imagine any Sense of Remorse Given Comments by his Attorney to Crains

Crain’s Chicago Business reported the below information about the SEC settlement with Rabbi Zvi Feiner and the associates who swindled fellow Jews out of millions. But just to throw salt in the wound, the attorney representing Feiner and FNR, Mr. Ariel Weissberg a respected Chicago attorney, in his comments stated that his client doesn’t have the financial means to pay the SEC fines (or presumably to repay his victims). We wonder how much his attorney is getting paid to have thrown that salt in wounds of Feiner’s victims. This is not intended to in any way malign an attorney who did well by his client.

Should there not be a sense of outrage?

There is something very, very wrong with the statements made by Feiner’s attorney throughout the entire article, but perhaps the last paragraph speaks volumes about the righteous indignant response of the defendant.  The last paragraph in the article reads as follows:

Feiner settled two civil suits, even though one ended in a judgment in his favor, Weissberg said. “It was the right thing to do,” he explained. “In the Jewish Orthodox community, that’s what we aim for. . . .There’s a higher authority that needs to be answered.”

Really? In the Jewish world we should not be committing these crimes at all. There is nothing about this entire incident, lasting years, that reflects “the right thing to do.”

A Rabbi, someone who had the respectability of his community,  should be held to an almost unachievable standard of decency. Rabbi Feiner used the respect of those around him to lure them in and then he financially harmed his investors.

A braggadocios statement saying that the SEC fines will not be met because the Rabbi doesn’t have the financial means (as he apparently spent or repatriated that money to another country) should be leaving everyone with a really sour taste.

It is time that the Orthodox community remove the Hasmachut (Rabbinical Ordination) of those who commit crimes against the Jewish community. If, indeed, we are all looking to the same “higher power.”

Rabbi accused of defrauding Holocaust survivor, other investors settles Ponzi scheme charges

A Chicago rabbi and a business associate settled charges they operated a Ponzi scheme that triggered a $146 million default, the biggest ever for a federally insured loan program for nursing homes. Still at issue is how much the rabbi, Zvi Feiner, will pay.

Feiner, Erez Baver and their Skokie firm, FNR Healthcare, were accused by the Securities & Exchange Commission of defrauding an elderly Holocaust survivor and other members of Chicago’s Orthodox Jewish community. They siphoned off at least $11.5 million raised from 62 or more investors to buy nursing homes and assisted-living facilities throughout the Midwest, according to a complaint filed Sept. 19 in federal court here.

Feiner, 49, is an ordained Orthodox rabbi and sole owner of FNR. Without telling investors in limited liability companies, according to the complaint, he sold facilities owned by other LLCs and used at least $9 million in proceeds to pay other investors and lenders. Baver, 39, is FNR’s executive vice president. He and his company, Cedarbrook Management, received more than $2.5 million for personal use, the filing said.

While Baver and Cedarbrook have agreed to pay back about $2.25 million and a civil penalty to be determined, Feiner and his attorney are negotiating a figure. “It’s going to be a big number,” said Ariel Weissberg, a Chicago attorney representing Feiner and FNR. Whatever it is, Weissberg added, “he won’t be able to satisfy it because he doesn’t have the financial resources.”

Baver’s attorney, Stephen Rosenfeld of McDonald Hopkins’ Chicago office, said he would check with his client before commenting.

Starting in 2010, Feiner solicited funding for 20 LLCs including four cited in the SEC complaint. One of those four, Rosewood Care Centers, operator of a dozen nursing homes and an assisted-living facility in Illinois and St. Louis, was seized last year by the U.S. Department of Housing & Urban Development after defaulting on HUD’s $146 million loan.

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