SEC v. Zvi Feiner; FNR HEALTHCARE, LLC; and Erez Baver, No. 1:19-cv-06269, Northern District of Illinois (Sept. 20, 2019) — Complaint

UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION

__________________________________________
        )
UNITED STATES SECURITIES     )
AND EXCHANGE COMMISSION,  )
         )
   Plaintiff,   )
     )
                                    v.                                                )                                                Case            No.            19-cv-6269
       )
ZVI            FEINER,                                                                        )
FNR HEALTHCARE, LLC, and      )
EREZ BAVER,       )
       )
                                    Defendants,                                    )
       )
 and      )
       )
NETZACH INVESTMENTS LLC, and     )
CEDARBROOK MANAGEMENT, INC.,  )
       )
                                    Relief            Defendants.                        )
__________________________________________)

COMPLAINT

  Plaintiff,  the  United  States  Securities  and  Exchange  Commission,  alleges  the  following
against  Defendants  Zvi  Feiner  (“Feiner”),  FNR  Healthcare,  LLC  (“FNR  Healthcare”),  Erez
Baver (“Baver”), and Relief Defendants Netzach Investments LLC (“Netzach”) and Cedarbrook
Management, Inc. (“Cedarbrook”):
Nature of the Action
1. From at least 2014 to 2017, Defendants Feiner and Baver operated a fraudulent
scheme involving the misappropriation of proceeds raised through the offer and sale of
membership interests in limited liability companies (“LLCs”) that would purchase, own, and sell

nursing homes and assisted living facilities.  Feiner and Baver ran the scheme primarily through
Feiner’s company, Defendant FNR Healthcare, where Feiner was the Chief Executive Officer
and President, and Baver held the position of Executive Vice President.  Since 2014, Feiner and
FNR Healthcare raised more than $10 million from at least 62 investors for purported
investments in four LLCs:  (1) FNR Mountain Crest, LLC (“Mountain Crest”); (2) FNR NVP,
LLC (“NVP”); (3) FNR Rosewood, LLC (“Rosewood”); and (4) North Capital Group, LLC
(“North Capital”).  During this same period, Baver also raised funds and solicited investors for
Mountain Crest and Rosewood.
2. Feiner is an ordained Orthodox Jewish rabbi and was a well-regarded figure in the
Orthodox Jewish community on Chicago’s north side and near north suburbs.  As such, he
exploited those relationships by soliciting members of the Orthodox Jewish community to invest
in his scheme.  Baver also solicited investors from this community.
3. The investment strategy promoted by Feiner and Baver involved creating LLCs
that would pool together investor funds in exchange for membership interests in the LLCs.  Since
2010, Feiner raised investor funds for approximately 20 LLCs, including the four LLCs—
Mountain Crest, NVP, Rosewood, and North Capital—offered during 2014 through 2017.  Baver
began raising funds from investors for certain of these entities starting in 2014.
4. Through the distribution of offering memoranda and/or in oral conversations, the
Defendants told investors that their funds would be used to purchase specific nursing home or
assisted living facilities and that they would earn high returns from the performance of those
investment properties.  The Defendants typically represented that the previous owners of the
facilities had not maximized the revenue that the facilities could generate and that the Defendants

would improve the operations of the facilities to generate the high returns that they promised to
investors.
5. While the Defendants used some of the investor funds to purchase the facilities at
issue, they frequently misappropriated investor funds upon receipt for various purposes,
including to pay promised distributions to investors in other LLCs, to support other struggling
facilities, to pay back loans taken out on other facilities, and for their own personal use.  To
accomplish this, the Defendants frequently transferred funds between the bank accounts of the
numerous LLCs, including Mountain Crest, NVP, Rosewood, and North Capital.  Frequent
transfers were also made between FNR Healthcare and many of the investment LLCs.
6. During the relevant period, Feiner received at least $3 million from the various
LLCs involved in the scheme, including the four LLCs that raised money since 2014, for his
personal use.  Netzach, an entity controlled by Feiner and owned by his family, also received at
least $6 million from FNR Healthcare and from certain investment LLCs.  Baver and his
company, relief defendant Cedarbrook, received more than $2.5 million combined from the
various LLCs, including the four aforementioned LLCs, for their personal use.
7. On at least three occasions since 2014, Feiner sold facilities owned by other
LLCs, including FNR Vermilion, LLC (“Vermilion”), FNR Lakeview, LLC (“Lakeview”) and
FNR South Holland LLC (“South Holland”), without telling the investors, and misappropriated
the sale proceeds to support his other projects, to pay money owed to other investors and lenders,
and for personal use, rather than distributing a portion of the sales proceeds to investors as he had
promised.
8. To date, none of the investors in Mountain Crest, NVP, Rosewood, or North
Capital has had their investment principal returned to them.  FNR Healthcare and the

approximately twenty LLCs involved in the investment scheme have little or no remaining
assets, except, in some cases, the debt-encumbered properties.
Jurisdiction and Venue
9. The Court has jurisdiction over this action pursuant to Sections 20 and 22 of the
Securities Act of 1933 (“Securities Act”) [15 U.S.C. §§ 77t and 77v] and Sections 21 and 27 of
the Securities Exchange Act of 1934 (“Exchange Act”) [15 U.S.C. §§ 78u and 78aa].
Defendants have, directly or indirectly, made use of the means and instrumentalities of interstate
commerce, of the mails, or of the facilities of a national securities exchange in connection with
the acts, practices and courses of business alleged in this Complaint.
10. Venue is proper in this judicial district pursuant to Section 22 of the Securities
Act [15 U.S.C. § 77v] and Section 27 of the Exchange Act [15 U.S.C. § 78aa], because many of
the acts, transactions and courses of business constituting the violations alleged in this Complaint
occurred within the jurisdiction of this district.
Defendants and Relief Defendants
11. Zvi Feiner, age 49, is a resident of Chicago, Illinois.  Feiner is the sole owner and
managing member of FNR Healthcare and was the managing member of the various LLCs that
owned the underlying facilities.
12. FNR Healthcare, LLC is an Illinois limited liability company Feiner formed in
2007, with its principal place of business in Skokie, Illinois.  FNR Healthcare received investor
funds, either directly from investors or through transfers from other related entities.
13. Erez Baver,
 age 39, is a resident of Chicago, Illinois.  Starting in 2012 and
throughout the relevant period, Baver served as the Executive Vice President of FNR Healthcare.

Baver was also the president and sole owner of Cedarbrook, and controlled its operations at all
relevant times.
14. Netzach Investments, LLC was an Illinois limited liability company formed in
2013 with its principal place of business in Chicago, Illinois.  Netzach ceased being in good
standing in April 2019.  Feiner was the manager of Netzach, and his children each have
membership interests.  Netzach was an investment entity created to hold assets for Feiner and his
family.  At times throughout the fraudulent scheme, Netzach received investor funds and
distributions derived from the revenue of the various investment LLCs.
15. Cedarbrook Management, Inc.
 was an Illinois corporation formed in 2012 with
its principal place of business in Lincolnwood, Illinois.  Cedarbrook was involuntarily dissolved
in February 2019.  Cedarbrook was a property management company that managed commercial
real estate properties and provided consulting services to some of the operating companies that
FNR Healthcare contracted with to manage elder care facilities.  At times throughout the
fraudulent scheme, Cedarbrook received investor funds and distributions derived from the
revenue of the various investment LLCs.
Facts
The Defendants’ Background
16. In written materials, Feiner described FNR Healthcare as “a private equity group
focused on quality healthcare assets throughout the United States.”  However, FNR Healthcare
itself did not purchase or sell any facilities.  Instead, Feiner set up a separate LLC for each of the
approximately twenty facilities he purchased, and he sold membership interests in those LLCs as
a way for investors to invest in a specific facility.

17. Feiner was primarily responsible for soliciting investors and did so using his
relationships throughout the Orthodox Jewish community in Chicago.  Once the Defendants had
raised sufficient investor funds, they would acquire a property through the LLC created for that
particular facility.
18. After acquiring the facility, the Defendants would identify an operator who could
carry on the daily operations of the nursing home or assisted living facility, and the investment
LLC would execute a lease with the operator, which in most cases included an option for the
operator to buy the property after a specified number of years.
19. As Executive Vice President of FNR Healthcare, Baver was responsible for,
among other duties, identifying potential facilities to purchase, negotiating the purchase of the
facility, helping secure lender financing for the purchase, and identifying and negotiating a lease
with an operating company to carry on the daily operations of the facility.
20. Baver also solicited investors for two LLCs and frequently responded to investor
inquiries about the status of their investments.  At times, Baver knowingly provided investors
with false information that Feiner had instructed him to share with investors.
21. Baver was also responsible for maintaining the accounting records for FNR
Healthcare and performing monthly reconciliation between the company’s general ledger and its
bank statements.  He also frequently transferred funds among the various LLCs’ accounts at
Feiner’s direction.  Accordingly, at all relevant times, Baver had access to the bank accounts for
FNR Healthcare and most of the various LLCs that held investors funds.
22. For certain of the elder care facilities, Baver also provided consulting services to
the nursing home operators through his company, Cedarbrook.  These services included regular
meetings with the operators to review operations and recommend strategies for increasing

revenue, reducing expenses, upgrading the physical facilities, and other recommendations to
promote the financial success of the facility.  Cedarbrook received management fees directly
from the LLCs that received these consulting services.  Cedarbrook paid its own employees with
these fees.
The Investment Scheme
23. Since 2010, Feiner raised investor funds in the following LLCs:  FNR Akron,
LLC (“Akron”); FNR Buckeye, LLC; FNR Champaign, LLC; FNR Decatur, LLC (“Decatur”);
FNR Farmington, LLC; Lakeview; FNR Morris, LLC; Mountain Crest; FNR Norridge, LLC;
NVP; Rosewood; FNR SH Healthcare, LLC; South Holland; Vermilion; FNR Westlake, LLC
(“Westlake”); FNR Winfield, LLC; FNR Woodview, LLC; FNR Worthington, LLC
(“Worthington”); FR Beta LLC; FR Strongville, LLC; and North Capital.  Beginning in 2014,
Baver assisted Feiner with raising funds for certain of these entities.
24. From at least March 2014 through 2017, Feiner and FNR Healthcare raised more
than $10 million from at least 62 investors through the sale of membership interests in:
(1) Mountain Crest, (2) NVP, (3) Rosewood, and (4) North Capital.  Baver also raised funds and
solicited investors for Mountain Crest and Rosewood.  During this period, Feiner and FNR
Healthcare also obtained funds for their scheme through the liquidation of properties held by
certain of the other LLCs listed above and through loans from businesses and individuals,
including from investors in the LLCs.
25. The Defendants told investors that the LLCs would purchase nursing homes and
assisted living facilities and generate high returns from the performance of those investment
properties.  Investors were misled to believe that their funds would be used entirely to purchase

the facilities.  The Defendants also promised to improve the operations of the facilities to
generate higher revenues from which distributions would be paid.
26. Since 2014, using information that Feiner provided him, Baver was responsible
for drafting the offering memoranda for certain of the LLCs.  He submitted them to Feiner for his
approval before distribution to investors.  Feiner drafted at least one offering memorandum on
his own, and drafted other offering materials for some LLCs that had no offering memoranda.
The Defendants knew that the offering memoranda contained false statements.  Feiner and Baver
each distributed offering memoranda to investors.
27. The offering memoranda identified the specific elder care facility to be purchased
by the LLC, described the “business plan” and “deal structure,” and provided financial
projections including anticipated returns to investors from the lease income provided by the
operator.  Feiner told investors that the rents received from the operators would provide the funds
to pay quarterly distributions to the investors.
28. The financial projections in certain of the offering memoranda showed that the
entire equity raise from investors would be used to help fund the property purchase, with a
mortgage covering the rest of the purchase price.
29. Typically, the offering memorandum and the operating agreement for each LLC
stated that investors would receive a “preferred” annual return before the managers (e.g., Feiner
and/or Baver) received any profits or fees, after which the investors and the managers would
share profits according to an agreed percentage.  Other offering documents similarly contained
representations that investors would receive a “preferred” share of the profits.  For example,
Mountain Crest and NVP investors were promised a 15% preferred annual return.  Investors

were also typically told that they would receive the majority of sales proceeds upon the sale of a
facility, in addition to the return of their investment principal.
30. The offering memoranda often stated that the investment was “low-risk,” that it
was anticipated that investors would receive a complete return of their investment within three to
five years, and, for certain of the entities, the investors would receive an additional “windfall”
return upon sale of the property.  For example, Mountain Crest investors were to receive at least
a 20% additional return upon disposition, and NVP investors were to receive at least a 44%
additional return upon disposition.
31. The offering memoranda frequently touted substantial personal investments by
Feiner and/or Baver in the LLCs, when in fact they either did not invest at all or invested far less
than what was represented.
32. In most instances, Feiner directed each investor to send their funds to the entity in
which they were investing.  For NVP, however, Feiner instructed the investors to submit their
funds to FNR Healthcare.
33. Feiner, Baver, and FNR Healthcare misappropriated investor funds upon receipt
through frequent transfers of funds between Mountain Crest, NVP, Rosewood, and North Capital
and the various LLCs that had been created earlier.  They used these funds to pay promised
distributions to earlier investors of other LLCs, to support other struggling facilities, pay
personal loans or loans taken out on other facilities, and for their own personal use.
34. Since 2014, Feiner received at least $3 million combined from all of the LLCs,
including Mountain Crest, NVP, Rosewood, and North Capital, for his personal use.  Relief
Defendant Netzach also received more than $6 million from FNR Healthcare and several
investment LLCs, which it used for a variety of purposes including repayment of several loans.

This combined $9 million came from investors’ contributions, distributions of revenue generated
by the facilities, proceeds from the sale of facilities, and loans directly from the facilities or
private loans collateralized by the facilities.
35. From 2014 through 2018, Baver and his company, Relief Defendant Cedarbrook,
received more than $2.5 million of investor funds and revenue from nearly all of the LLCs
involved in the scheme.  Baver and Cedarbrook received these funds in the form of “closing
fees” when facilities were bought or sold, “management fees,” periodic distributions, and
personal loans made to Baver that were never fully repaid.
Specific Fraudulent Conduct
36. The investment scheme spanned approximately 20 LLCs, with extensive
commingling of assets, including the four LLCs described below.
Mountain Crest
37. Feiner incorporated Mountain Crest in Delaware on May 5, 2014.
38. Baver drafted the Mountain Crest offering memorandum using information
provided to him by Feiner.  Feiner approved the memorandum before he and Baver distributed it
to investors.  The memorandum purported to be “presented by” FNR Healthcare.  Feiner and
Baver used the offering memorandum to solicit investors and knew it contained false statements.
39. The Mountain Crest offering memorandum stated that the investment was “low-
risk,” that there was an “[a]nticipated complete return of investment within 3-5 years,” and that
investors would receive an “[a]dditional 20%+ ‘windfall’ cash return upon disposition.”  These
statements were false and misleading because, by the time the Defendants began raising funds
for the Mountain Crest offering, they were already enmeshed in their fraud scheme and intended

to use new investor funds to continue making distribution payments to earlier investors in other
investment LLCs and to support failing facilities held by other investment LLCs.
40. The offering memorandum also made the following representations:
a. the total equity required for the purchase of the nursing facilities was
anticipated to be $4.775 million;
b. Feiner and Baver would invest a minimum of $500,000 of their own capital
and retain a 50 percent interest in the LLC; and
c. all profits would be evenly divided between the investors and the managers,
but the investors would receive quarterly distributions at an annual return rate
of 15 percent before any profits were paid to the managers.
41. From May to August 2014, Feiner, FNR Healthcare, and Baver raised
approximately $4 million from sales of Mountain Crest memberships to 39 investors.
42. Contrary to the financial projections in the offering memorandum that showed the
entire $4.775 million equity raise would be used to help fund the facility purchase, Feiner used
only $3.4 million of investor funds towards the purchase of Mountain Crest.
43. Then over the following months, Feiner and Baver used the excess funds for a
variety of purposes, including transferring $47,000 to Akron, $24,000 to an entity owned by
Feiner and Baver, and $218,000 to Cedarbrook.
44. Contrary to the representations in the offering memorandum, Feiner and Baver
never invested any of their own money in Mountain Crest.
45. Feiner and Baver ceased paying investor distributions after April 2016, and in
May 2018, the lender foreclosed on the Mountain Crest facility.  Mountain Crest ceased being in

good standing in the State of Delaware as of June 2018.  None of the investors has had their
investment principal returned.
NVP
46. Feiner incorporated NVP in Illinois on August 14, 2014.
47. Feiner drafted the offering memorandum for NVP and, from August 2014 through
February 2015, he distributed it to investors knowing that it contained false and misleading
statements.
48. The NVP offering memorandum stated that the investment was “low-risk,” that
there was an “[a]nticipated complete return of investment within 3-5 years,” and that investors
would receive an “[a]dditional 44%+ ‘windfall’ cash return upon disposition.”  These statements
were false and misleading because, by the time Feiner and FNR Healthcare began raising funds
for the NVP offering, they were already enmeshed in their fraud scheme and intended to use new
investor funds to continue making distribution payments to earlier investors in other investment
LLCs and to support failing facilities held by other investment LLCs.
49. The NVP offering memorandum also stated that the total anticipated equity raise
for the purchase of the nursing facilities was $2.8 million, and the financial projections reflected
that the entire amount raised would be used for the purchase of the facilities.  However, Feiner
raised nearly $4 million by selling NVP memberships to 31 investors.
50. The NVP offering memorandum falsely stated that the LLC would purchase two
nursing homes.  However, the transaction actually involved the purchase of three nursing homes.
NVP investor funds were used to purchase all three nursing homes, but the investors were only
given equity in the two facilities described in the offering memorandum.

51. Also contrary to representations in the offering memorandum that Feiner would
invest a minimum of $250,000 of his own capital, Feiner never invested any of his own money in
NVP.
52. The NVP offering memorandum also made false statements concerning the
breadth and years of experience of the operating companies for the two facilities.  The two
principals of the operating companies did not have “more than two decades of nursing home
experience,” and in fact, each one had less than ten years of experience.  And they did not own
and operate “800+ SNF beds throughout the St. Louis, MO region,” but rather a substantially
lower number of beds.
53. Investors were directed to send their funds to FNR Healthcare’s bank account
rather than to NVP’s bank account.
54. Rather than using all of the investor funds for a down payment on the NVP
facilities, Feiner and Baver diverted at least $2 million of investor funds for, among other things,
covering debt and expenses of other LLCs.
55. Three days before the purchase of the NVP facilities, Feiner caused FNR
Healthcare to obtain a short-term, high-interest-rate loan of $2 million from a third party to plug
in the gap created by the misappropriation of investor funds.
56. Feiner never returned the investors’ principal.  In February 2019, NVP was
involuntarily dissolved.
Rosewood
57. Feiner incorporated Rosewood in Delaware on April 16, 2013.  Rosewood
consisted of a portfolio of nursing facilities.  Feiner acquired an interest in Rosewood and then

later raised money from investors for the acquisition of the facilities.  Feiner and Baver used an
offering memorandum to raise funds for Rosewood.
58. Using information that Feiner provided him, Baver drafted the offering
memorandum for Rosewood, and both he and Feiner distributed it to investors.  The
memorandum purported to be “presented by” FNR Healthcare.  The memorandum offered an
“opportunity to acquire both the real estate and operations” of a portfolio of skilled nursing
facilities.
59. The memorandum falsely stated that Rosewood was “consistently” and
“currently” profitable, but in fact, at the time of the offering, the Defendants knew that
Rosewood was operating at a loss.  The memorandum also contained a misleading statement that
there was an “opportunity” to “procure readily-available HUD [Department of Housing and
Urban Development] financing,” but in fact, the Defendants knew that Rosewood already had
mortgages from HUD and had already defaulted on those mortgages.
60. In 2016, Feiner and FNR Healthcare raised at least $2.5 million from the sale of
LLC interests in Rosewood to at least four investors, including $1 million from an 86-year-old
Holocaust survivor.  Around this same time, Feiner and Rosewood’s operator issued promissory
notes in their individual capacities and raised an additional $3.25 million that was placed into
Rosewood’s bank account.
61. Rosewood transferred most of the funds it received from the LLC investors and
the promissory notes to FNR Healthcare, which used the money for a variety of purposes,
including sending money to other LLCs, Feiner, Cedarbrook, and investors in other LLCs.
Neither Feiner nor FNR Healthcare disclosed to investors that they had transferred their funds to
other entities.  Feiner and FNR Healthcare used little, if any, of the money they raised from

investors in 2016 to acquire or benefit the nursing facilities described in Rosewood’s offering
memorandum.
62. In mid-2018, the nursing facilities held by Rosewood defaulted on their mortgage
debt.  As a result, HUD took control over the facilities.  None of the investors has had their
investment principal returned.
North Capital
63. Feiner incorporated North Capital on November 4, 2010.  North Capital owned a
parcel of land in Lincolnwood, Illinois on which it intended to build a retail complex.
64. In 2014, Feiner and FNR Healthcare raised $500,000 from two investors for
investment in North Capital, including $250,000 from the same elderly Holocaust survivor that
invested in Rosewood.  After receiving these funds, North Capital sent $100,000 to a company
owned by Feiner’s former business partner.  North Capital also transferred $100,000 to Netzach
which, in the previous month, had sent Rosewood $140,000 that Netzach had obtained from
Worthington.  Feiner and FNR Healthcare used little, if any, of the money they raised for North
Capital to build a retail complex, and, accordingly, no retail complex or other facility was ever
built.
65. Neither of the investors in North Capital have had any of their investment
principal returned.
Misappropriation of Property Sale Proceeds
66. On three occasions since 2015, Feiner sold elder care facilities owned by three
other LLCs, Vermilion, Lakeview, and South Holland, without telling investors of these sales.
Under the offering terms for each of these LLCs, Feiner was supposed to return investors’
principal investments once these facilities were sold and split any profits from the sale with

them.  Instead, he misappropriated the sale proceeds to support his other projects, pay money
owed to other investors and lenders, and for personal use, rather than distributing the proceeds to
investors according to the terms of the offering materials for these LLCs.
67. Feiner solicited investors for Vermilion starting in the summer of 2013.  Feiner
raised $1.75 million from ten investors.  Feiner told investors that when the facility was sold,
investors would receive back their investment principal plus a share of the sales proceeds.  Feiner
misled two people into believing they and Feiner were the only investors in Vermilion, when in
fact there were eight other investors.  Similarly, Feiner misled a separate group of six investors
into believing that group and Feiner were the only investors in Vermilion.  Feiner concealed the
true number of investors by providing these two separate groups of investors with different
versions of the Vermilion operating agreement for their signatures.  In late July 2013, Feiner
used a portion of these investor funds towards the purchase of the Vermilion facility.
68. Nearly two years later, on May 1, 2015, Feiner caused Vermilion to sell the
facility for $2.58 million of net sale proceeds.  The same day, Feiner transferred $2.52 million of
the sales proceeds to FNR Healthcare and $61,400 of the sales proceeds to Cedarbrook.  From
FNR Healthcare, Feiner immediately transferred $400,000 to his own personal account,
$100,000 to an entity he controlled, Feiner Investment Corp., and another $35,500 to Netzach.
Feiner continued to misappropriate the sale proceeds that day, by paying a loan for another entity
and transferring $400,000 from FNR Healthcare to other investment LLCs, including NVP,
North Capital, and Decatur.
69. Feiner concealed the sale from the Vermilion investors for eighteen months by
continuing to pay them distributions.  These distributions were funded by periodic transfers of
funds from FNR Healthcare, which misappropriated funds from other investors and other

investment LLCs for this purpose.  The fake distribution payments continued until November
2016, at which point the Vermilion investors learned that the facility had been sold.  Feiner
neither gave investors their investment principal nor their additional share of the Vermilion sale
proceeds that he had promised them when they invested.
70. Feiner raised $3.5 million from five investors for Lakeview in the fall of 2013.
Feiner told investors that when the facility was sold, investors would receive back their
investment principal plus an additional share of the sales proceeds.  On September 4, 2015,
Feiner sold the facility but did not reveal this fact to investors.  FNR Healthcare received nearly
$800,000 from the sale proceeds.  Over the following five days, Feiner transferred a total of
$257,000 to his personal bank account and Netzach.  During the same time period, he transferred
$285,000 to other investment LLCs, including Decatur, Akron, North Capital, and Westlake, and
paid back loans.
71. To conceal the sale of Lakeview, Feiner continued paying distributions to
investors through at least October 2016.  Some investors continued receiving distributions until
November 2016.  All distributions made after the sale of the Lakeview facility in September
2015 were funded by periodic transfers of funds from FNR Healthcare, which misappropriated
funds from other investors and other investment LLCs to make these distribution payments.
Feiner neither gave investors their investment principal nor their additional share of the
Lakeview sale proceeds that he had promised them they would receive when the facility was
sold.
72. In the spring of 2013, Feiner raised nearly $3.7 million for South Holland from
two investors.  Feiner told investors that when the facility was sold, investors would receive back
their investment principal plus an additional share of the sales proceeds.  On September 30,

2016, Feiner caused South Holland to sell the nursing home it owned netting approximately $3.9
million after retiring the mortgage and paying other closing fees.  At closing, Feiner directed
$303,000 of the sales proceeds to an individual who had made a personal loan to Feiner.  The
remaining $3.6 million of sales proceeds was deposited in FNR Healthcare’s bank account, and
Feiner immediately began misappropriating the money.  For example, on September 30, 2016,
Feiner transferred $100,000 to his personal bank account, sent $200,000 to investors of other
LLCs, and used $100,000 to make a loan payment.  Less than a week later, FNR Healthcare sent
$210,000 to Cedarbrook and $10,000 to Netzach.  Feiner continued misappropriating the sales
proceeds over the following months for various purposes, including transferring more than
$600,000 to other investment LLCs, transferring additional funds to his personal bank account,
and making payments to other investors and lenders.  Feiner neither gave investors their
investment principal nor their additional share of the South Holland sale proceeds that he had
promised them they would receive when the facility was sold.
The Collapse of the Scheme
73. From 2012 through late 2015, the LLCs’ investments appeared to investors to be
performing well because investors were receiving periodic distributions.  But in reality, as early
as 2013, the facilities ran deficits and the various LLCs, including Mountain Crest, Rosewood,
NVP, and North Capital, could not make the promised quarterly distributions out of the cash
flow the facilities actually generated.
74. Rather than tell investors the truth about the financial condition of the investment
LLCs, Feiner and Baver made up the shortfalls in a number of ways, including the following:

a. They commingled funds and freely transferred money between the various
LLCs and in and out of FNR Healthcare’s bank account to meet the most
immediate needs across their projects;
b. They paid distributions to investors using money that was raised from other
investors purportedly to purchase facilities for new investment LLCs;
c. With respect to at least three LLCs, Feiner sold facilities without telling
investors and used the sale proceeds to support other facilities, pay
distributions to investors in other LLCs, pay back loans, and pay himself,
rather than return investors’ principal; and
d. Feiner also borrowed millions of dollars from investors and private lenders, in
some cases using the elder care facilities as collateral, and used the loan
proceeds to pay investors and keep up the appearance of a successful
investment program; he then used new investor money to pay back these
loans.
75. By late 2015, the investment LLCs fell behind in paying investors their
distributions, and by late 2016, they had stopped paying nearly all distributions.  Feiner
prioritized paying certain investors over others, as some continued to receive distributions long
after others stopped receiving them.
76. When investors questioned Feiner and Baver about why the payments were
arriving late or had stopped completely, Feiner and Baver provided various excuses, including
that the nursing home operator was mismanaging the given facility or that unspecified problems
with a bank prevented them from paying distributions.

77. In late 2015, two of the earliest investors began asking Feiner about the status of
an LLC in which they had invested before 2014.  Feiner told them that he was trying to sell the
facility held by the LLC.  Every few months, Feiner would reassure them that he would complete
the sale of the facility.
78. In February 2017, the two investors hired an attorney to check public records and
discovered that Feiner had sold the facility in 2015, but had not told any of the investors about
the sale or distributed the sales proceeds to any investors.
79. Shortly thereafter, the investors confronted Feiner and he admitted on a telephone
call that he had sold three elder care facilities in 2015 to pay off creditors and investors and kept
some of the proceeds for his personal use.  At this point, Feiner agreed to resign as manager of
all of the LLCs that raised funds from investors.
Claims for Relief
Count I
Violations of Section 10(b) of the Exchange Act and

Rule 10b-5 Thereunder (Against Feiner and FNR Healthcare)
80. The Commission realleges and incorporate by reference paragraphs 1 through 79
as if fully set forth herein.
81. Defendants Feiner and FNR Healthcare, in connection with the purchase or sale
of securities, by the use of the means or instrumentalities of interstate commerce or of the mails,
directly or indirectly: (a) used or employed devices, schemes, or artifices to defraud; (b) made
untrue statements of material fact or omitted to state material facts necessary in order to make the
statements made, in the light of the circumstances under which they were made, not misleading;
and (c) engaged in acts, practices, or courses of business which operated or would operate as a
fraud and deceit upon other persons, including current and prospective investors.

82. Feiner and FNR Healthcare acted with scienter by knowingly or recklessly
engaging in the fraudulent conduct described above.
83. By engaging in the conduct described above, Feiner and FNR Healthcare violated
Section 10(b) of the Exchange Act [15 U.S.C. § 78j(b)] and Rule 10b-5 thereunder [17 C.F.R. §
240.10b-5].
Count II

Violations of Section 10(b) of the Exchange Act and
Rules 10b-5(a) and (c) Thereunder (Against Baver)
84. The Commission realleges and incorporate by reference paragraphs 1 through 79
as if fully set forth herein.
85. Defendant Baver, in connection with the purchase or sale of securities, by the use
of the means or instrumentalities of interstate commerce or of the mails, directly or indirectly:
used or employed devices, schemes, or artifices to defraud and engaged in acts, practices, or
courses of business which operated or would operate as a fraud and deceit upon other persons,
including current and prospective investors.
86. Baver acted with scienter by knowingly or recklessly engaging in the fraudulent
conduct described above.
87. By engaging in the conduct described above, Baver violated Section 10(b) of the
Exchange Act [15 U.S.C. § 78j(b)] and Rules 10b-5(a) and (c) thereunder [17 C.F.R. § 240.10b-
5(a) and (c)].

Count III

Violations of Section 17(a) of the Securities Act
(Against All Defendants)
88. The Commission realleges and incorporates by reference paragraphs 1 through 79
as if fully set forth herein.
89. By engaging in the conduct described above, Defendants Feiner, Baver, and FNR
Healthcare, in the offer or sale of securities, by the use of the means and instruments of
transportation or communication in interstate commerce or by use of the mails, directly or
indirectly, (i) employed devices, schemes or artifices to defraud; (ii) obtained money or property
by means of untrue statements of material fact or omitted to state material facts necessary in
order to make the statements made, in light of the circumstances under which they were made,
not misleading, and (iii) engaged in transactions, practices, or courses of business which operated
or would operate as a fraud or deceit upon purchasers of securities.
90. Feiner, Baver, and FNR Healthcare acted with scienter by knowingly or
recklessly engaging in the fraudulent conduct described above.
91. By engaging in the conduct described above, Feiner, Baver, and FNR Healthcare
violated Section 17(a) of the Securities Act [15 U.S.C. § 77q(a)].
Count IV

(Against Defendant Baver for aiding and abetting FNR Healthcare’s and Feiner’s violations
of Section 10(b) of the Exchange Act and Rule 10b-5(b) thereunder)

92. The Commission realleges and incorporates by reference paragraphs 1 through 79
as if fully set forth herein.

93. Defendant Baver knowingly or recklessly provided substantial assistance to FNR
Healthcare and Feiner in their violations of Section 10(b) of the Exchange Act [15 U.S.C. §
78j(b)] and Rule 10b-5(b) thereunder [17 C.F.R. § 240.10b-5(b)].
94. Under Section 20(e) of the Exchange Act [15 U.S.C. § 78t(e)] Baver is liable for
aiding and abetting FNR Healthcare’s and Feiner’s violations of Section 10(b) of the Exchange
Act [15 U.S.C. § 78j(b)] and Rule 10b-5(b) thereunder [17 C.F.R. § 240.10b-5(b)].
Count V

(Against Relief Defendant Netzach Investments LLC)

95. The Commission realleges and incorporates by reference paragraphs 1 through 79
as if fully set forth herein.
96. Relief Defendant Netzach received funds that were improperly obtained from
investors and commingled with other funds.
97. Netzach benefited from the fraud by obtaining funds belonging to investors.
98. The monies received by Netzach, as alleged above, constituted ill-gotten gains
from the fraud of others.
99. Netzach has no legitimate claim to the ill-gotten gains it received as a result of the
fraud of others or to any assets that were acquired with those ill-gotten funds.
Count VI

(Against Relief Defendant Cedarbrook)
100. The Commission realleges and incorporates by reference paragraphs 1 through 79
as if fully set forth herein.
101. Relief Defendant Cedarbrook received funds that were improperly obtained from
investors and commingled with other funds.

102. Cedarbrook benefited from the fraud by obtaining funds belonging to investors.
103. The monies received by Cedarbrook, as alleged above, constituted ill-gotten gains
from the fraud of others.
104. Cedarbrook has no legitimate claim to the ill-gotten gains it received as a result of
the fraud of others or to any assets that were acquired with those ill-gotten funds.
Relief Requested
 THEREFORE, the Commission respectfully requests that the Court:

I.

 Permanently enjoin Defendants Feiner, Baver, and FNR Healthcare, from violating
Section 10(b) of the Exchange Act [15 U.S.C. § 78j(b)] and Rule 10b-5 thereunder [17 C.F.R. §
240.10b-5] and Section 17(a) of the Securities Act [15 U.S.C. § 77q(a)].
II.

 Order Defendants Feiner and FNR Healthcare, jointly and severally, to disgorge the ill-
gotten gains that they received from the violations alleged herein, including prejudgment interest
thereon.  And order Defendant Feiner and Relief Defendant Netzach, jointly and severally, to
disgorge the ill-gotten gains that Netzach received from the violations alleged herein, including
prejudgment interest thereon.
III.
 Order Defendant Baver to disgorge the ill-gotten gains that he received from the
violations alleged herein, including prejudgment interest thereon.  And order Defendant Baver
and Relief Defendant Cedarbrook, jointly and severally, to disgorge the ill-gotten gains that
Cedarbrook received from the violations alleged herein, including prejudgment interest thereon.

IV.
 Order Defendants Feiner, Baver, and FNR Healthcare to pay civil penalties pursuant to
Section 21 of the Exchange Act [15 U.S.C. § 78u] and Section 20 of the Securities Act [15
U.S.C. § 77t].
V.
 Retain jurisdiction over this action to enforce the terms of all orders and decrees that this
Court may enter.
VI.
 Grant such other relief as the Court deems appropriate.
Jury Demand
 Pursuant to Rule 38(b) of the Federal Rules of Civil Procedure, the Commission hereby
requests a trial by jury.

Dated:  September 19, 2019      Respectfully submitted,

      /s/ Michael D. Foster
                                                                        Michael            D.            Foster            ([email protected])
                                                                        Eric            M.            Phillips            ([email protected])
Jerrold H. Kohn ([email protected])
Michelle Muñoz Durk ([email protected])
                                                            U.S.            Securities            and            Exchange            Commission
                                                            175            W.            Jackson            Blvd.,            Suite            1450
                                                            Chicago,            Illinois                        60604-2615
                                                            Phone:                        (312)            353-7390
                                                            Fax:                        (312)            353-7398

                                                            Attorneys            for            Plaintiff
                                                            U.S.            Securities            and            Exchange            Commission

UNITED STATES DISTRICT COURT 
NORTHERN DISTRICT OF ILLINOIS 

EASTERN DIVISION 
   
__________________________________________         
        ) 
UNITED STATES SECURITIES    ) 
AND EXCHANGE COMMISSION,  ) 
         ) 
   Plaintiff,   ) 

     ) 
   v.    )    Case No. 19-cv-6269 
       ) 
ZVI FEINER,      ) 
FNR HEALTHCARE, LLC, and   ) 
EREZ BAVER,       ) 
       ) 
   Defendants,   ) 
       ) 
 and      ) 
       ) 
NETZACH INVESTMENTS LLC, and  )  
CEDARBROOK MANAGEMENT, INC.,  ) 
       ) 
   Relief Defendants.  ) 
__________________________________________) 

 
 

COMPLAINT 
   
 Plaintiff, the United States Securities and Exchange Commission, alleges the following 

against Defendants Zvi Feiner (“Feiner”), FNR Healthcare, LLC (“FNR Healthcare”), Erez 

Baver (“Baver”), and Relief Defendants Netzach Investments LLC (“Netzach”) and Cedarbrook 

Management, Inc. (“Cedarbrook”): 

Nature of the Action 

1. From at least 2014 to 2017, Defendants Feiner and Baver operated a fraudulent 

scheme involving the misappropriation of proceeds raised through the offer and sale of 

membership interests in limited liability companies (“LLCs”) that would purchase, own, and sell 

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nursing homes and assisted living facilities.  Feiner and Baver ran the scheme primarily through 

Feiner’s company, Defendant FNR Healthcare, where Feiner was the Chief Executive Officer 

and President, and Baver held the position of Executive Vice President.  Since 2014, Feiner and 

FNR Healthcare raised more than $10 million from at least 62 investors for purported 

investments in four LLCs:  (1) FNR Mountain Crest, LLC (“Mountain Crest”); (2) FNR NVP, 

LLC (“NVP”); (3) FNR Rosewood, LLC (“Rosewood”); and (4) North Capital Group, LLC 

(“North Capital”).  During this same period, Baver also raised funds and solicited investors for 

Mountain Crest and Rosewood. 

2. Feiner is an ordained Orthodox Jewish rabbi and was a well-regarded figure in the 

Orthodox Jewish community on Chicago’s north side and near north suburbs.  As such, he 

exploited those relationships by soliciting members of the Orthodox Jewish community to invest 

in his scheme.  Baver also solicited investors from this community.   

3. The investment strategy promoted by Feiner and Baver involved creating LLCs 

that would pool together investor funds in exchange for membership interests in the LLCs.  Since 

2010, Feiner raised investor funds for approximately 20 LLCs, including the four LLCs—

Mountain Crest, NVP, Rosewood, and North Capital—offered during 2014 through 2017.  Baver 

began raising funds from investors for certain of these entities starting in 2014. 

4. Through the distribution of offering memoranda and/or in oral conversations, the 

Defendants told investors that their funds would be used to purchase specific nursing home or 

assisted living facilities and that they would earn high returns from the performance of those 

investment properties.  The Defendants typically represented that the previous owners of the 

facilities had not maximized the revenue that the facilities could generate and that the Defendants 

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would improve the operations of the facilities to generate the high returns that they promised to 

investors.  

5. While the Defendants used some of the investor funds to purchase the facilities at 

issue, they frequently misappropriated investor funds upon receipt for various purposes, 

including to pay promised distributions to investors in other LLCs, to support other struggling 

facilities, to pay back loans taken out on other facilities, and for their own personal use.  To 

accomplish this, the Defendants frequently transferred funds between the bank accounts of the 

numerous LLCs, including Mountain Crest, NVP, Rosewood, and North Capital.  Frequent 

transfers were also made between FNR Healthcare and many of the investment LLCs.   

6. During the relevant period, Feiner received at least $3 million from the various 

LLCs involved in the scheme, including the four LLCs that raised money since 2014, for his 

personal use.  Netzach, an entity controlled by Feiner and owned by his family, also received at 

least $6 million from FNR Healthcare and from certain investment LLCs.  Baver and his 

company, relief defendant Cedarbrook, received more than $2.5 million combined from the 

various LLCs, including the four aforementioned LLCs, for their personal use. 

7. On at least three occasions since 2014, Feiner sold facilities owned by other 

LLCs, including FNR Vermilion, LLC (“Vermilion”), FNR Lakeview, LLC (“Lakeview”) and 

FNR South Holland LLC (“South Holland”), without telling the investors, and misappropriated 

the sale proceeds to support his other projects, to pay money owed to other investors and lenders, 

and for personal use, rather than distributing a portion of the sales proceeds to investors as he had 

promised.   

8. To date, none of the investors in Mountain Crest, NVP, Rosewood, or North 

Capital has had their investment principal returned to them.  FNR Healthcare and the 

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approximately twenty LLCs involved in the investment scheme have little or no remaining 

assets, except, in some cases, the debt-encumbered properties. 

Jurisdiction and Venue 

9. The Court has jurisdiction over this action pursuant to Sections 20 and 22 of the 

Securities Act of 1933 (“Securities Act”) [15 U.S.C. §§ 77t and 77v] and Sections 21 and 27 of 

the Securities Exchange Act of 1934 (“Exchange Act”) [15 U.S.C. §§ 78u and 78aa].  

Defendants have, directly or indirectly, made use of the means and instrumentalities of interstate 

commerce, of the mails, or of the facilities of a national securities exchange in connection with 

the acts, practices and courses of business alleged in this Complaint. 

10. Venue is proper in this judicial district pursuant to Section 22 of the Securities 

Act [15 U.S.C. § 77v] and Section 27 of the Exchange Act [15 U.S.C. § 78aa], because many of 

the acts, transactions and courses of business constituting the violations alleged in this Complaint 

occurred within the jurisdiction of this district. 

Defendants and Relief Defendants 

11. Zvi Feiner, age 49, is a resident of Chicago, Illinois.  Feiner is the sole owner and 

managing member of FNR Healthcare and was the managing member of the various LLCs that 

owned the underlying facilities. 

12. FNR Healthcare, LLC is an Illinois limited liability company Feiner formed in 

2007, with its principal place of business in Skokie, Illinois.  FNR Healthcare received investor 

funds, either directly from investors or through transfers from other related entities.  

13. Erez Baver, age 39, is a resident of Chicago, Illinois.  Starting in 2012 and 

throughout the relevant period, Baver served as the Executive Vice President of FNR Healthcare.  

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Baver was also the president and sole owner of Cedarbrook, and controlled its operations at all 

relevant times.   

14. Netzach Investments, LLC was an Illinois limited liability company formed in 

2013 with its principal place of business in Chicago, Illinois.  Netzach ceased being in good 

standing in April 2019.  Feiner was the manager of Netzach, and his children each have 

membership interests.  Netzach was an investment entity created to hold assets for Feiner and his 

family.  At times throughout the fraudulent scheme, Netzach received investor funds and 

distributions derived from the revenue of the various investment LLCs. 

15. Cedarbrook Management, Inc. was an Illinois corporation formed in 2012 with 

its principal place of business in Lincolnwood, Illinois.  Cedarbrook was involuntarily dissolved 

in February 2019.  Cedarbrook was a property management company that managed commercial 

real estate properties and provided consulting services to some of the operating companies that 

FNR Healthcare contracted with to manage elder care facilities.  At times throughout the 

fraudulent scheme, Cedarbrook received investor funds and distributions derived from the 

revenue of the various investment LLCs. 

Facts 

The Defendants’ Background 

16. In written materials, Feiner described FNR Healthcare as “a private equity group 

focused on quality healthcare assets throughout the United States.”  However, FNR Healthcare 

itself did not purchase or sell any facilities.  Instead, Feiner set up a separate LLC for each of the 

approximately twenty facilities he purchased, and he sold membership interests in those LLCs as 

a way for investors to invest in a specific facility.  

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17. Feiner was primarily responsible for soliciting investors and did so using his 

relationships throughout the Orthodox Jewish community in Chicago.  Once the Defendants had 

raised sufficient investor funds, they would acquire a property through the LLC created for that 

particular facility.  

18. After acquiring the facility, the Defendants would identify an operator who could 

carry on the daily operations of the nursing home or assisted living facility, and the investment 

LLC would execute a lease with the operator, which in most cases included an option for the 

operator to buy the property after a specified number of years.   

19. As Executive Vice President of FNR Healthcare, Baver was responsible for, 

among other duties, identifying potential facilities to purchase, negotiating the purchase of the 

facility, helping secure lender financing for the purchase, and identifying and negotiating a lease 

with an operating company to carry on the daily operations of the facility.   

20. Baver also solicited investors for two LLCs and frequently responded to investor 

inquiries about the status of their investments.  At times, Baver knowingly provided investors 

with false information that Feiner had instructed him to share with investors. 

21. Baver was also responsible for maintaining the accounting records for FNR 

Healthcare and performing monthly reconciliation between the company’s general ledger and its 

bank statements.  He also frequently transferred funds among the various LLCs’ accounts at 

Feiner’s direction.  Accordingly, at all relevant times, Baver had access to the bank accounts for 

FNR Healthcare and most of the various LLCs that held investors funds. 

22. For certain of the elder care facilities, Baver also provided consulting services to 

the nursing home operators through his company, Cedarbrook.  These services included regular 

meetings with the operators to review operations and recommend strategies for increasing 

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revenue, reducing expenses, upgrading the physical facilities, and other recommendations to 

promote the financial success of the facility.  Cedarbrook received management fees directly 

from the LLCs that received these consulting services.  Cedarbrook paid its own employees with 

these fees. 

The Investment Scheme 

23. Since 2010, Feiner raised investor funds in the following LLCs:  FNR Akron, 

LLC (“Akron”); FNR Buckeye, LLC; FNR Champaign, LLC; FNR Decatur, LLC (“Decatur”); 

FNR Farmington, LLC; Lakeview; FNR Morris, LLC; Mountain Crest; FNR Norridge, LLC; 

NVP; Rosewood; FNR SH Healthcare, LLC; South Holland; Vermilion; FNR Westlake, LLC 

(“Westlake”); FNR Winfield, LLC; FNR Woodview, LLC; FNR Worthington, LLC 

(“Worthington”); FR Beta LLC; FR Strongville, LLC; and North Capital.  Beginning in 2014, 

Baver assisted Feiner with raising funds for certain of these entities. 

24. From at least March 2014 through 2017, Feiner and FNR Healthcare raised more 

than $10 million from at least 62 investors through the sale of membership interests in: 

(1) Mountain Crest, (2) NVP, (3) Rosewood, and (4) North Capital.  Baver also raised funds and 

solicited investors for Mountain Crest and Rosewood.  During this period, Feiner and FNR 

Healthcare also obtained funds for their scheme through the liquidation of properties held by 

certain of the other LLCs listed above and through loans from businesses and individuals, 

including from investors in the LLCs. 

25. The Defendants told investors that the LLCs would purchase nursing homes and 

assisted living facilities and generate high returns from the performance of those investment 

properties.  Investors were misled to believe that their funds would be used entirely to purchase 

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the facilities.  The Defendants also promised to improve the operations of the facilities to 

generate higher revenues from which distributions would be paid.   

26. Since 2014, using information that Feiner provided him, Baver was responsible 

for drafting the offering memoranda for certain of the LLCs.  He submitted them to Feiner for his 

approval before distribution to investors.  Feiner drafted at least one offering memorandum on 

his own, and drafted other offering materials for some LLCs that had no offering memoranda.  

The Defendants knew that the offering memoranda contained false statements.  Feiner and Baver 

each distributed offering memoranda to investors. 

27. The offering memoranda identified the specific elder care facility to be purchased 

by the LLC, described the “business plan” and “deal structure,” and provided financial 

projections including anticipated returns to investors from the lease income provided by the 

operator.  Feiner told investors that the rents received from the operators would provide the funds 

to pay quarterly distributions to the investors. 

28. The financial projections in certain of the offering memoranda showed that the 

entire equity raise from investors would be used to help fund the property purchase, with a 

mortgage covering the rest of the purchase price. 

29. Typically, the offering memorandum and the operating agreement for each LLC 

stated that investors would receive a “preferred” annual return before the managers (e.g., Feiner 

and/or Baver) received any profits or fees, after which the investors and the managers would 

share profits according to an agreed percentage.  Other offering documents similarly contained 

representations that investors would receive a “preferred” share of the profits.  For example, 

Mountain Crest and NVP investors were promised a 15% preferred annual return.  Investors 

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were also typically told that they would receive the majority of sales proceeds upon the sale of a 

facility, in addition to the return of their investment principal. 

30. The offering memoranda often stated that the investment was “low-risk,” that it 

was anticipated that investors would receive a complete return of their investment within three to 

five years, and, for certain of the entities, the investors would receive an additional “windfall” 

return upon sale of the property.  For example, Mountain Crest investors were to receive at least 

a 20% additional return upon disposition, and NVP investors were to receive at least a 44% 

additional return upon disposition.  

31. The offering memoranda frequently touted substantial personal investments by 

Feiner and/or Baver in the LLCs, when in fact they either did not invest at all or invested far less 

than what was represented.   

32. In most instances, Feiner directed each investor to send their funds to the entity in 

which they were investing.  For NVP, however, Feiner instructed the investors to submit their 

funds to FNR Healthcare. 

33. Feiner, Baver, and FNR Healthcare misappropriated investor funds upon receipt 

through frequent transfers of funds between Mountain Crest, NVP, Rosewood, and North Capital 

and the various LLCs that had been created earlier.  They used these funds to pay promised 

distributions to earlier investors of other LLCs, to support other struggling facilities, pay 

personal loans or loans taken out on other facilities, and for their own personal use. 

34. Since 2014, Feiner received at least $3 million combined from all of the LLCs, 

including Mountain Crest, NVP, Rosewood, and North Capital, for his personal use.  Relief 

Defendant Netzach also received more than $6 million from FNR Healthcare and several 

investment LLCs, which it used for a variety of purposes including repayment of several loans.  

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This combined $9 million came from investors’ contributions, distributions of revenue generated 

by the facilities, proceeds from the sale of facilities, and loans directly from the facilities or 

private loans collateralized by the facilities.   

35. From 2014 through 2018, Baver and his company, Relief Defendant Cedarbrook, 

received more than $2.5 million of investor funds and revenue from nearly all of the LLCs 

involved in the scheme.  Baver and Cedarbrook received these funds in the form of “closing 

fees” when facilities were bought or sold, “management fees,” periodic distributions, and 

personal loans made to Baver that were never fully repaid.   

Specific Fraudulent Conduct 

36. The investment scheme spanned approximately 20 LLCs, with extensive 

commingling of assets, including the four LLCs described below. 

Mountain Crest 

37. Feiner incorporated Mountain Crest in Delaware on May 5, 2014.  

38. Baver drafted the Mountain Crest offering memorandum using information 

provided to him by Feiner.  Feiner approved the memorandum before he and Baver distributed it 

to investors.  The memorandum purported to be “presented by” FNR Healthcare.  Feiner and 

Baver used the offering memorandum to solicit investors and knew it contained false statements. 

39. The Mountain Crest offering memorandum stated that the investment was “low-

risk,” that there was an “[a]nticipated complete return of investment within 3-5 years,” and that 

investors would receive an “[a]dditional 20%+ ‘windfall’ cash return upon disposition.”  These 

statements were false and misleading because, by the time the Defendants began raising funds 

for the Mountain Crest offering, they were already enmeshed in their fraud scheme and intended 

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to use new investor funds to continue making distribution payments to earlier investors in other 

investment LLCs and to support failing facilities held by other investment LLCs.   

40. The offering memorandum also made the following representations: 

a. the total equity required for the purchase of the nursing facilities was 

anticipated to be $4.775 million; 

b. Feiner and Baver would invest a minimum of $500,000 of their own capital 

and retain a 50 percent interest in the LLC; and 

c. all profits would be evenly divided between the investors and the managers, 

but the investors would receive quarterly distributions at an annual return rate 

of 15 percent before any profits were paid to the managers.  

41. From May to August 2014, Feiner, FNR Healthcare, and Baver raised 

approximately $4 million from sales of Mountain Crest memberships to 39 investors.   

42. Contrary to the financial projections in the offering memorandum that showed the 

entire $4.775 million equity raise would be used to help fund the facility purchase, Feiner used 

only $3.4 million of investor funds towards the purchase of Mountain Crest. 

43. Then over the following months, Feiner and Baver used the excess funds for a 

variety of purposes, including transferring $47,000 to Akron, $24,000 to an entity owned by 

Feiner and Baver, and $218,000 to Cedarbrook. 

44. Contrary to the representations in the offering memorandum, Feiner and Baver 

never invested any of their own money in Mountain Crest. 

45. Feiner and Baver ceased paying investor distributions after April 2016, and in 

May 2018, the lender foreclosed on the Mountain Crest facility.  Mountain Crest ceased being in 

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good standing in the State of Delaware as of June 2018.  None of the investors has had their 

investment principal returned.   

NVP 

46. Feiner incorporated NVP in Illinois on August 14, 2014.  

47. Feiner drafted the offering memorandum for NVP and, from August 2014 through 

February 2015, he distributed it to investors knowing that it contained false and misleading 

statements. 

48. The NVP offering memorandum stated that the investment was “low-risk,” that 

there was an “[a]nticipated complete return of investment within 3-5 years,” and that investors 

would receive an “[a]dditional 44%+ ‘windfall’ cash return upon disposition.”  These statements 

were false and misleading because, by the time Feiner and FNR Healthcare began raising funds 

for the NVP offering, they were already enmeshed in their fraud scheme and intended to use new 

investor funds to continue making distribution payments to earlier investors in other investment 

LLCs and to support failing facilities held by other investment LLCs. 

49. The NVP offering memorandum also stated that the total anticipated equity raise 

for the purchase of the nursing facilities was $2.8 million, and the financial projections reflected 

that the entire amount raised would be used for the purchase of the facilities.  However, Feiner 

raised nearly $4 million by selling NVP memberships to 31 investors. 

50. The NVP offering memorandum falsely stated that the LLC would purchase two 

nursing homes.  However, the transaction actually involved the purchase of three nursing homes.  

NVP investor funds were used to purchase all three nursing homes, but the investors were only 

given equity in the two facilities described in the offering memorandum.   

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51. Also contrary to representations in the offering memorandum that Feiner would 

invest a minimum of $250,000 of his own capital, Feiner never invested any of his own money in 

NVP. 

52. The NVP offering memorandum also made false statements concerning the 

breadth and years of experience of the operating companies for the two facilities.  The two 

principals of the operating companies did not have “more than two decades of nursing home 

experience,” and in fact, each one had less than ten years of experience.  And they did not own 

and operate “800+ SNF beds throughout the St. Louis, MO region,” but rather a substantially 

lower number of beds. 

53. Investors were directed to send their funds to FNR Healthcare’s bank account 

rather than to NVP’s bank account. 

54. Rather than using all of the investor funds for a down payment on the NVP 

facilities, Feiner and Baver diverted at least $2 million of investor funds for, among other things, 

covering debt and expenses of other LLCs.   

55. Three days before the purchase of the NVP facilities, Feiner caused FNR 

Healthcare to obtain a short-term, high-interest-rate loan of $2 million from a third party to plug 

in the gap created by the misappropriation of investor funds. 

56. Feiner never returned the investors’ principal.  In February 2019, NVP was 

involuntarily dissolved.   

Rosewood 

57. Feiner incorporated Rosewood in Delaware on April 16, 2013.  Rosewood 

consisted of a portfolio of nursing facilities.  Feiner acquired an interest in Rosewood and then 

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later raised money from investors for the acquisition of the facilities.  Feiner and Baver used an 

offering memorandum to raise funds for Rosewood. 

58. Using information that Feiner provided him, Baver drafted the offering 

memorandum for Rosewood, and both he and Feiner distributed it to investors.  The 

memorandum purported to be “presented by” FNR Healthcare.  The memorandum offered an 

“opportunity to acquire both the real estate and operations” of a portfolio of skilled nursing 

facilities. 

59. The memorandum falsely stated that Rosewood was “consistently” and 

“currently” profitable, but in fact, at the time of the offering, the Defendants knew that 

Rosewood was operating at a loss.  The memorandum also contained a misleading statement that 

there was an “opportunity” to “procure readily-available HUD [Department of Housing and 

Urban Development] financing,” but in fact, the Defendants knew that Rosewood already had 

mortgages from HUD and had already defaulted on those mortgages.  

60. In 2016, Feiner and FNR Healthcare raised at least $2.5 million from the sale of 

LLC interests in Rosewood to at least four investors, including $1 million from an 86-year-old 

Holocaust survivor.  Around this same time, Feiner and Rosewood’s operator issued promissory 

notes in their individual capacities and raised an additional $3.25 million that was placed into 

Rosewood’s bank account.   

61. Rosewood transferred most of the funds it received from the LLC investors and 

the promissory notes to FNR Healthcare, which used the money for a variety of purposes, 

including sending money to other LLCs, Feiner, Cedarbrook, and investors in other LLCs.  

Neither Feiner nor FNR Healthcare disclosed to investors that they had transferred their funds to 

other entities.  Feiner and FNR Healthcare used little, if any, of the money they raised from 

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investors in 2016 to acquire or benefit the nursing facilities described in Rosewood’s offering 

memorandum.  

62. In mid-2018, the nursing facilities held by Rosewood defaulted on their mortgage 

debt.  As a result, HUD took control over the facilities.  None of the investors has had their 

investment principal returned. 

North Capital 

63. Feiner incorporated North Capital on November 4, 2010.  North Capital owned a 

parcel of land in Lincolnwood, Illinois on which it intended to build a retail complex.   

64. In 2014, Feiner and FNR Healthcare raised $500,000 from two investors for 

investment in North Capital, including $250,000 from the same elderly Holocaust survivor that 

invested in Rosewood.  After receiving these funds, North Capital sent $100,000 to a company 

owned by Feiner’s former business partner.  North Capital also transferred $100,000 to Netzach 

which, in the previous month, had sent Rosewood $140,000 that Netzach had obtained from 

Worthington.  Feiner and FNR Healthcare used little, if any, of the money they raised for North 

Capital to build a retail complex, and, accordingly, no retail complex or other facility was ever 

built.   

65. Neither of the investors in North Capital have had any of their investment 

principal returned. 

Misappropriation of Property Sale Proceeds 

66. On three occasions since 2015, Feiner sold elder care facilities owned by three 

other LLCs, Vermilion, Lakeview, and South Holland, without telling investors of these sales.  

Under the offering terms for each of these LLCs, Feiner was supposed to return investors’ 

principal investments once these facilities were sold and split any profits from the sale with 

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them.  Instead, he misappropriated the sale proceeds to support his other projects, pay money 

owed to other investors and lenders, and for personal use, rather than distributing the proceeds to 

investors according to the terms of the offering materials for these LLCs. 

67. Feiner solicited investors for Vermilion starting in the summer of 2013.  Feiner 

raised $1.75 million from ten investors.  Feiner told investors that when the facility was sold, 

investors would receive back their investment principal plus a share of the sales proceeds.  Feiner 

misled two people into believing they and Feiner were the only investors in Vermilion, when in 

fact there were eight other investors.  Similarly, Feiner misled a separate group of six investors 

into believing that group and Feiner were the only investors in Vermilion.  Feiner concealed the 

true number of investors by providing these two separate groups of investors with different 

versions of the Vermilion operating agreement for their signatures.  In late July 2013, Feiner 

used a portion of these investor funds towards the purchase of the Vermilion facility. 

68. Nearly two years later, on May 1, 2015, Feiner caused Vermilion to sell the 

facility for $2.58 million of net sale proceeds.  The same day, Feiner transferred $2.52 million of 

the sales proceeds to FNR Healthcare and $61,400 of the sales proceeds to Cedarbrook.  From 

FNR Healthcare, Feiner immediately transferred $400,000 to his own personal account, 

$100,000 to an entity he controlled, Feiner Investment Corp., and another $35,500 to Netzach.  

Feiner continued to misappropriate the sale proceeds that day, by paying a loan for another entity 

and transferring $400,000 from FNR Healthcare to other investment LLCs, including NVP, 

North Capital, and Decatur.   

69. Feiner concealed the sale from the Vermilion investors for eighteen months by 

continuing to pay them distributions.  These distributions were funded by periodic transfers of 

funds from FNR Healthcare, which misappropriated funds from other investors and other 

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investment LLCs for this purpose.  The fake distribution payments continued until November 

2016, at which point the Vermilion investors learned that the facility had been sold.  Feiner 

neither gave investors their investment principal nor their additional share of the Vermilion sale 

proceeds that he had promised them when they invested. 

70. Feiner raised $3.5 million from five investors for Lakeview in the fall of 2013.  

Feiner told investors that when the facility was sold, investors would receive back their 

investment principal plus an additional share of the sales proceeds.  On September 4, 2015, 

Feiner sold the facility but did not reveal this fact to investors.  FNR Healthcare received nearly 

$800,000 from the sale proceeds.  Over the following five days, Feiner transferred a total of 

$257,000 to his personal bank account and Netzach.  During the same time period, he transferred 

$285,000 to other investment LLCs, including Decatur, Akron, North Capital, and Westlake, and 

paid back loans.   

71. To conceal the sale of Lakeview, Feiner continued paying distributions to 

investors through at least October 2016.  Some investors continued receiving distributions until 

November 2016.  All distributions made after the sale of the Lakeview facility in September 

2015 were funded by periodic transfers of funds from FNR Healthcare, which misappropriated 

funds from other investors and other investment LLCs to make these distribution payments.  

Feiner neither gave investors their investment principal nor their additional share of the 

Lakeview sale proceeds that he had promised them they would receive when the facility was 

sold. 

72. In the spring of 2013, Feiner raised nearly $3.7 million for South Holland from 

two investors.  Feiner told investors that when the facility was sold, investors would receive back 

their investment principal plus an additional share of the sales proceeds.  On September 30, 

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2016, Feiner caused South Holland to sell the nursing home it owned netting approximately $3.9 

million after retiring the mortgage and paying other closing fees.  At closing, Feiner directed 

$303,000 of the sales proceeds to an individual who had made a personal loan to Feiner.  The 

remaining $3.6 million of sales proceeds was deposited in FNR Healthcare’s bank account, and 

Feiner immediately began misappropriating the money.  For example, on September 30, 2016, 

Feiner transferred $100,000 to his personal bank account, sent $200,000 to investors of other 

LLCs, and used $100,000 to make a loan payment.  Less than a week later, FNR Healthcare sent 

$210,000 to Cedarbrook and $10,000 to Netzach.  Feiner continued misappropriating the sales 

proceeds over the following months for various purposes, including transferring more than 

$600,000 to other investment LLCs, transferring additional funds to his personal bank account, 

and making payments to other investors and lenders.  Feiner neither gave investors their 

investment principal nor their additional share of the South Holland sale proceeds that he had 

promised them they would receive when the facility was sold. 

The Collapse of the Scheme 

73. From 2012 through late 2015, the LLCs’ investments appeared to investors to be 

performing well because investors were receiving periodic distributions.  But in reality, as early 

as 2013, the facilities ran deficits and the various LLCs, including Mountain Crest, Rosewood, 

NVP, and North Capital, could not make the promised quarterly distributions out of the cash 

flow the facilities actually generated.   

74. Rather than tell investors the truth about the financial condition of the investment 

LLCs, Feiner and Baver made up the shortfalls in a number of ways, including the following: 

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a. They commingled funds and freely transferred money between the various 

LLCs and in and out of FNR Healthcare’s bank account to meet the most 

immediate needs across their projects; 

b. They paid distributions to investors using money that was raised from other 

investors purportedly to purchase facilities for new investment LLCs;  

c. With respect to at least three LLCs, Feiner sold facilities without telling 

investors and used the sale proceeds to support other facilities, pay 

distributions to investors in other LLCs, pay back loans, and pay himself, 

rather than return investors’ principal; and 

d. Feiner also borrowed millions of dollars from investors and private lenders, in 

some cases using the elder care facilities as collateral, and used the loan 

proceeds to pay investors and keep up the appearance of a successful 

investment program; he then used new investor money to pay back these 

loans. 

75. By late 2015, the investment LLCs fell behind in paying investors their 

distributions, and by late 2016, they had stopped paying nearly all distributions.  Feiner 

prioritized paying certain investors over others, as some continued to receive distributions long 

after others stopped receiving them. 

76. When investors questioned Feiner and Baver about why the payments were 

arriving late or had stopped completely, Feiner and Baver provided various excuses, including 

that the nursing home operator was mismanaging the given facility or that unspecified problems 

with a bank prevented them from paying distributions.   

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77. In late 2015, two of the earliest investors began asking Feiner about the status of 

an LLC in which they had invested before 2014.  Feiner told them that he was trying to sell the 

facility held by the LLC.  Every few months, Feiner would reassure them that he would complete 

the sale of the facility. 

78. In February 2017, the two investors hired an attorney to check public records and 

discovered that Feiner had sold the facility in 2015, but had not told any of the investors about 

the sale or distributed the sales proceeds to any investors.   

79. Shortly thereafter, the investors confronted Feiner and he admitted on a telephone 

call that he had sold three elder care facilities in 2015 to pay off creditors and investors and kept 

some of the proceeds for his personal use.  At this point, Feiner agreed to resign as manager of 

all of the LLCs that raised funds from investors. 

Claims for Relief 

Count I 

Violations of Section 10(b) of the Exchange Act and 
Rule 10b-5 Thereunder (Against Feiner and FNR Healthcare) 

80. The Commission realleges and incorporate by reference paragraphs 1 through 79 

as if fully set forth herein. 

81. Defendants Feiner and FNR Healthcare, in connection with the purchase or sale 

of securities, by the use of the means or instrumentalities of interstate commerce or of the mails, 

directly or indirectly: (a) used or employed devices, schemes, or artifices to defraud; (b) made 

untrue statements of material fact or omitted to state material facts necessary in order to make the 

statements made, in the light of the circumstances under which they were made, not misleading; 

and (c) engaged in acts, practices, or courses of business which operated or would operate as a 

fraud and deceit upon other persons, including current and prospective investors.   

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82. Feiner and FNR Healthcare acted with scienter by knowingly or recklessly 

engaging in the fraudulent conduct described above. 

83. By engaging in the conduct described above, Feiner and FNR Healthcare violated 

Section 10(b) of the Exchange Act [15 U.S.C. § 78j(b)] and Rule 10b-5 thereunder [17 C.F.R. § 

240.10b-5]. 

Count II 
 

Violations of Section 10(b) of the Exchange Act and 
Rules 10b-5(a) and (c) Thereunder (Against Baver) 

84. The Commission realleges and incorporate by reference paragraphs 1 through 79 

as if fully set forth herein. 

85. Defendant Baver, in connection with the purchase or sale of securities, by the use 

of the means or instrumentalities of interstate commerce or of the mails, directly or indirectly: 

used or employed devices, schemes, or artifices to defraud and engaged in acts, practices, or 

courses of business which operated or would operate as a fraud and deceit upon other persons, 

including current and prospective investors.   

86. Baver acted with scienter by knowingly or recklessly engaging in the fraudulent 

conduct described above. 

87. By engaging in the conduct described above, Baver violated Section 10(b) of the 

Exchange Act [15 U.S.C. § 78j(b)] and Rules 10b-5(a) and (c) thereunder [17 C.F.R. § 240.10b-

5(a) and (c)]. 

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Count III 
 

Violations of Section 17(a) of the Securities Act 
(Against All Defendants) 

88. The Commission realleges and incorporates by reference paragraphs 1 through 79 

as if fully set forth herein.   

89. By engaging in the conduct described above, Defendants Feiner, Baver, and FNR 

Healthcare, in the offer or sale of securities, by the use of the means and instruments of 

transportation or communication in interstate commerce or by use of the mails, directly or 

indirectly, (i) employed devices, schemes or artifices to defraud; (ii) obtained money or property 

by means of untrue statements of material fact or omitted to state material facts necessary in 

order to make the statements made, in light of the circumstances under which they were made, 

not misleading, and (iii) engaged in transactions, practices, or courses of business which operated 

or would operate as a fraud or deceit upon purchasers of securities. 

90. Feiner, Baver, and FNR Healthcare acted with scienter by knowingly or 

recklessly engaging in the fraudulent conduct described above. 

91. By engaging in the conduct described above, Feiner, Baver, and FNR Healthcare 

violated Section 17(a) of the Securities Act [15 U.S.C. § 77q(a)]. 

Count IV 
 

(Against Defendant Baver for aiding and abetting FNR Healthcare’s and Feiner’s violations 
of Section 10(b) of the Exchange Act and Rule 10b-5(b) thereunder) 

 
92. The Commission realleges and incorporates by reference paragraphs 1 through 79 

as if fully set forth herein.   

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93. Defendant Baver knowingly or recklessly provided substantial assistance to FNR 

Healthcare and Feiner in their violations of Section 10(b) of the Exchange Act [15 U.S.C. § 

78j(b)] and Rule 10b-5(b) thereunder [17 C.F.R. § 240.10b-5(b)]. 

94. Under Section 20(e) of the Exchange Act [15 U.S.C. § 78t(e)] Baver is liable for 

aiding and abetting FNR Healthcare’s and Feiner’s violations of Section 10(b) of the Exchange 

Act [15 U.S.C. § 78j(b)] and Rule 10b-5(b) thereunder [17 C.F.R. § 240.10b-5(b)]. 

Count V 
 

(Against Relief Defendant Netzach Investments LLC) 
 

95. The Commission realleges and incorporates by reference paragraphs 1 through 79 

as if fully set forth herein.  

96. Relief Defendant Netzach received funds that were improperly obtained from 

investors and commingled with other funds. 

97. Netzach benefited from the fraud by obtaining funds belonging to investors. 

98. The monies received by Netzach, as alleged above, constituted ill-gotten gains 

from the fraud of others. 

99. Netzach has no legitimate claim to the ill-gotten gains it received as a result of the 

fraud of others or to any assets that were acquired with those ill-gotten funds. 

Count VI 
 

(Against Relief Defendant Cedarbrook) 

100. The Commission realleges and incorporates by reference paragraphs 1 through 79 

as if fully set forth herein.  

101. Relief Defendant Cedarbrook received funds that were improperly obtained from 

investors and commingled with other funds. 

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102. Cedarbrook benefited from the fraud by obtaining funds belonging to investors. 

103. The monies received by Cedarbrook, as alleged above, constituted ill-gotten gains 

from the fraud of others. 

104. Cedarbrook has no legitimate claim to the ill-gotten gains it received as a result of 

the fraud of others or to any assets that were acquired with those ill-gotten funds. 

Relief Requested 

 THEREFORE, the Commission respectfully requests that the Court: 
 

I. 
 

 Permanently enjoin Defendants Feiner, Baver, and FNR Healthcare, from violating 

Section 10(b) of the Exchange Act [15 U.S.C. § 78j(b)] and Rule 10b-5 thereunder [17 C.F.R. § 

240.10b-5] and Section 17(a) of the Securities Act [15 U.S.C. § 77q(a)]. 

II. 
 
 Order Defendants Feiner and FNR Healthcare, jointly and severally, to disgorge the ill-

gotten gains that they received from the violations alleged herein, including prejudgment interest 

thereon.  And order Defendant Feiner and Relief Defendant Netzach, jointly and severally, to 

disgorge the ill-gotten gains that Netzach received from the violations alleged herein, including 

prejudgment interest thereon. 

III. 

 Order Defendant Baver to disgorge the ill-gotten gains that he received from the 

violations alleged herein, including prejudgment interest thereon.  And order Defendant Baver 

and Relief Defendant Cedarbrook, jointly and severally, to disgorge the ill-gotten gains that 

Cedarbrook received from the violations alleged herein, including prejudgment interest thereon. 

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IV. 

 Order Defendants Feiner, Baver, and FNR Healthcare to pay civil penalties pursuant to 

Section 21 of the Exchange Act [15 U.S.C. § 78u] and Section 20 of the Securities Act [15 

U.S.C. § 77t]. 

V. 

 Retain jurisdiction over this action to enforce the terms of all orders and decrees that this 

Court may enter.   

VI. 

 Grant such other relief as the Court deems appropriate. 

Jury Demand 

 Pursuant to Rule 38(b) of the Federal Rules of Civil Procedure, the Commission hereby 

requests a trial by jury. 

 
 
 
Dated: September 19, 2019   Respectfully submitted, 
 
 
 
      /s/ Michael D. Foster     
      Michael D. Foster ([email protected]) 
      Eric M. Phillips ([email protected]) 

Jerrold H. Kohn ([email protected]) 
Michelle Muñoz Durk ([email protected]) 

     U.S. Securities and Exchange Commission  
     175 W. Jackson Blvd., Suite 1450 
     Chicago, Illinois  60604-2615 
     Phone:  (312) 353-7390 
     Fax:  (312) 353-7398 
 
     Attorneys for Plaintiff 
     U.S. Securities and Exchange Commission  

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