A rabbi who was the CEO of a nursing home has been charged with 10 counts of mail fraud connected to a large Ponzi scheme. The Ponzi scheme allegedly cost victims over $22 million. The rabbi and the vice-president of his nursing home face federal criminal charges in connection with a local nursing home for fraudulent activities between 2012 and 2017.
The Rabbi and His Vice-President Face Federal Wire Fraud Charges
The rabbi pleaded not guilty to 10 counts of wire fraud in September. His co-defendants, the executive vice president and bookkeeper, have been charged with a single count of wire fraud. Each count of wire fraud carries a maximum prison sentence of up to 20 years. The charges have come as a shock to many in the community. The Orthodox Jewish rabbi is a prominent figure in the Orthodox Jewish community on Chicago’s north side.
The rabbi allegedly exploited his relationships with members of the Orthodox Jewish community by pressuring them to invest in his Ponzi scheme. His co-defendant also allegedly solicited investors from the Orthodox Jewish community. The rabbi founded the Bais Medrash Binyan Olam, which met and operated at his building. He also served as the president of an Orthodox Jewish Elementary School.
According to prosecutors, the rabbi created at least 15 limited liability companies. He created these companies under the umbrella of his company, called FNR Healthcare LLC, as investment vehicles. The rabbi allegedly used the LLCs to buy and manage properties, typically assisted living homes or nursing homes, that outside companies would manage.
The co-defendants raised investment money for these LLCs by lying to Orthodox Jewish investors about their company’s profitability. They allegedly lied about their company being profitable and promised investors a high return on their investment. Once they obtained the money, they reportedly misappropriated the money. As is common with Ponzi schemes, they allegedly paid back their early investors but used some of the money to acquire more health care facilities. They also allegedly used some of the money for their own benefit, according to the federal indictment.
Prosecutors are Seeking Asset Forfeiture
Prosecutors allege that the rabbi falsely told investors that he had invested his own money in the limited liability corporations. According to the SEC’s complaint, the co-defendants raised money for approximately 20 LLCs beginning in 2010. Federal prosecutors are seeking forfeiture of $13.56 million from the rabbi and $3.76 million from his co-defendant. In total, the defendants allegedly caused over 75 investors to lose over $22 million through their nursing home Ponzi scheme.
Contact an Illinois Fraud Lawyer Today
If you are facing charges for white-collar crime in Illinois, you need an experienced lawyer on your side. The penalties for wire fraud are severe, and you could be facing decades in prison. Contact the award-winning criminal defense lawyers at Glasgow & Olsson today to schedule your initial consultation.