Recent Lawsuit Claims Chicago Cleric Steered $35 Million into his Ponzi Scheme
The following is an article authored by Law360’s David Matthews describing how a Chicago rabbi allegedly abused his trust with the Chicago Jewish community by convincing his followers to invest over $35 million into a Ponzi scheme. The facts as described by the following article contain the hallmarks of a typical Ponzi scheme. These are:
- A person in a position of trust, such an accountant, cleric, preacher, insurance salesman, or an investment advisor;
- Abusing his trust by convincing his followers to invest their hard earned retirement savings;
- By promising big returns with little or no risk;
- The Ponzi schemer steals a portion of the money to support his lavish lifestyle, uses a portion of the investment money to pay early investors inflated returns so that those early returns can be touted in continuing the scheme; and
- Eventually the investments fail and a large majority of investors end up holding the proverbial bag.
Starr Austen & Miller has represented hundreds of victims of Ponzi schemes just like the one described below. If you or a loved one have been victimized by a Ponzi schemer, contact us today for a free no obligation consultation.
Chicago Rabbi Steered $35M RE Ponzi Scheme, Suit Says
By David Matthews of Law360.com
A suburban Chicago rabbi abused his standing in the local Jewish community by luring and defrauding investors of more than $35 million through shady real estate deals, according to a new Racketeer Influenced and Corrupt Organizations Act suit.
Jewish day school teachers and a 90-year-old Holocaust survivor are among Tzvi Feiner’s victims, according to the complaint filed Friday in Illinois federal court.
The suit accuses Feiner of soliciting investors with promises of big returns in real estate acquisitions, then pocketing the proceeds himself after selling the properties. He continued the scheme for five years by using new investors to pay off older ones in classic Ponzi fashion, the named plaintiffs said.
“[Feiner’s] schemes have had a profound destructive impact on the plaintiffs and in every part of the Jewish community,” said named plaintiffs Ari, Shanie, Lois and Doniel Cohen.
The Cohens say Feiner cost them $3 million in what is at least the third lawsuit accusing the rabbi of fraud. Court records show Feiner reached settlements earlier this year in two other lawsuits accusing him of defrauding investors through real estate investments.
Attempts to reach Feiner, of the Bais Medrash Binyan Olam congregation in Skokie, Illinois, were unsuccessful.
All three suits take aim at Feiner’s investments in nursing homes and other commercial properties. The new lawsuit accuses Feiner of setting up different limited liability companies to buy the properties, then using the LLCs like “piggy banks” to transfer money among the assets without investors’ consent.
In one instance, Feiner committed bank fraud to acquire one property by pledging collateral that belonged to the Cohens and other victims, according to the suit.
Feiner recruited new investors to pay returns he promised to older investors, but his end game was secretly selling the properties and pocketing the profits, the Cohens said. The scheme began to unravel when some of the properties stopped paying distributions to investors in 2016, and Feiner got caught in lies over why, they said.
The Cohens’ lawsuit details Feiner’s dealings with two properties in the Chicago suburbs, two more in Ohio and another in central Illinois.
Court records show Feiner settled with two investors who said they got swindled out of $25 million on one of those properties — a pair of senior facilities in South Holland, Illinois.
Chicago lawyer Ariel Weissberg, who represented Feiner in that settled case, did not immediately return a message seeking comment.
The plaintiffs are represented by Harold L. Moskowitz.
Attorney information for Feiner was not immediately available.
The case is Cohen v. Feiner et al., case number 1:18-cv-07328, in the U.S. District Court for the Northern District of Illinois.
The team of investment fraud lawyers at Starr Austen & Miller LLP fights for the protection of investors and handles cases involving securities arbitration misrepresentation, overconcentration, broker fraud, negligence and breach of trust.