Tag Archives: Jona Rechnitz

Report: Shlomo Rechnitz invested millions in Madoff-like ponzi scheme

It looks like  Shlomo Rechnitz might have gotten a taste of his own medicine.

For years, Rechnitz has collected millions in taxpayer money to operate the biggest stable of nursing homes in California while racking up so many health and safety violations that federal regulators decertified three of his facilities and state regulators this year rejected his attempt to buy five more.

Last week, however, the Wall Street Journal reported that Rechnitz appeared to be on the losing end of what federal investigators say is one of the biggest investment frauds since Bernard Madoff’s ponzi scheme.

The firm in question, Platinum Partners, was a hedge fund that had more than $1 billion under management, the paper reported.

According to the Journal, a person familiar with the scheme said that Rechnitz, who the paper described as a “billionaire nursing home magnate”  —  “had tens of millions of dollars tied up in Platinum and related deals.”

Prosecutors had already charged Murray Huberfeld, an associate with the hedge fund, with two counts of fraud, the New York Times reported in June. Those charges were in connection with allegations that he offered kickbacks to the head of New York City’s prison guard union in return for investing union funds in the hedge fund.

And guess who delivered the $60,000 in cash to the union president in a Salvatore Ferragamo bag, according to The Times? Rechnitz’s cousin, Jona Rechnitz.

So it looks like Shlomo Rechnitz might have gotten himself knee-deep in a ponzi scheme orchestrated by a hedge fund for which his cousin was soliciting business. Joan Rechnitz has already pleaded guilty in connection with the case and is cooperating with authorities, the Times reported.

As for Shlomo, The Journal reported that he’s had to cut down on some charitable giving in Israel, but the paper was silent on what this could mean to the mostly poor, elderly Californians who stay in his nursing homes.