Law & Justice

FBI Arrests West Orange Resident Jonathan E. Rosenberg in Ponzi Scheme

September 5, 2013 at 11:41 PM

WEST ORANGE, NJ - On Sept. 5, the United States District Attorney's Office in Maryland  indicted West Orange resident Jonathan E. Rosenberg, 44, and Richard Shusterman, 65, of Highland Beach, Florida  "on charges of conspiracy and wire fraud, in connection with a scheme to defraud equity investors and asset-based lenders in medical accounts receivable of more than $275 million."  The indictment, returned on Sept. 4, was unsealed Thursday after the arrest of the defendants.

In addition, Robert Feldman, 65, of Beach Haven, and Douglas A. Kuber, age 53, of Livingston, were also unsealed today. They pleaded guilty to conspiracy to commit wire fraud on Sept. 3, 2013 and Oct.11, 2012.

“The indictment alleges that the defendants designed a complex Ponzi scheme that defrauded investors of more than $275 million,” said U.S. Attorney Rod J. Rosenstein. The 10-count indictment alleges that Shusterman was a shareholder and president of International Portfolio Inc. (IPI); Feldman was part owner of IPI and was also the president of United Consulting Inc.;  Shusterman and Feldman represented that IPI was a company that had experience in the field of medical accounts receivable, including "purchase, valuation, collection, and resale." The FBi alleges that starting on June 21, 2006, Shusterman and Feldman, through United Consulting and IPI, engaged in buying and selling consumer debt, including medical debt portfolios.

Sign Up for E-News

Jonathan E. Rosenberg and Douglas A. Kuber operated Account Receivable Services LLC (ARS). They invested in medical accounts receivable purchased from IPI using funds borrowed from investors interested in asset-based lending. Rosenberg was also president of two other companies that recruited investors for medical accounts receivable portfolios purchased from IPI.

The FBI further alleges that from "December 2006 through June 2008, IPI paid more than $25 million to purchase over $4.1 billion in medical accounts receivable, comprising more than 3,872,514 past due patient accounts that the hospitals and other entities selling the accounts had been unsuccessful in collecting. Beginning in June 2007, Shusterman, Rosenberg, Feldman, and Kuber began promoting an investment model to individual investors and investment fund managers."

All conspirators allegedly agreed that Shusterman, through IPI, would package accounts receivable from IPI’s inventory into debt portfolios with specified total outstanding account balances. These portfolios would then be offered for sale to investors. In addition, Shusterman and IPI would manage the collection efforts for each debt portfolio IPI sold.

The indictment also claims that Shusterman, Rosenberg, Kuber and Feldman lied to clients by making misrepresentations and omissions regarding purchase prices, collection results, and resale values of IPI medical debt portfolios to persuade investors to invest in the portfolios.

The FBI also alleges that the indictee "negotiated and agreed upon two different purchase prices for each IPI debt portfolio that hedge funds and other investors financed on behalf of ARS." They set higher purchase prices for the IPI debt portfolios ARS financed through hedge funds and other investors. IPI would kickback the loan proceeds in excess of the true purchase prices to Rosenberg and Kuber. The defendants allegedly called the kickbacks a "refund for any unqualified accounts in the portfolio" e.g.when a debtor was deceased or bankrupt. The indictment alleges that between June 2007 and March 2009, Shusterman paid Kuber and Rosenberg kickbacks totaling approximately $8.3 million.

Shusterman, Rosenberg, Feldman, and Kuber also lied about the  actual amount of collections and rates of liquidation of IPI debt portfolios in an effort to entice more shareholder participation.  The FBI indicated noted that "In fact, because IPI debt portfolios did not generate sufficient collections to meet the minimum debt service payments due to the investors, Shusterman, Rosenberg, Feldman, and Kuber allegedly caused IPI to wire money disguised as “direct payments” to ARS entities to fund interest payments owed to hedge funds and other investors who loaned money for the acquisition of IPI debt portfolios."

From July 2008 and March 2010, the defendants created false and misleading collection reports stating that a total of approximately $56 million in “direct payments” were collected during the liquidation of IPI debt accounts, in order to deceive hedge funds such as Platinum Partners and other investors. In February 2010, Shusterman, Rosenberg, Feldman, and Kuber tried to convince Eton Park Capital Management to invest by portraying four portfolios financed by Platinum as receiving approximately $28.7 million in collections, though the total net was only approximately $2 million.

In a final attempt to convince investors to continue with IPI, and cover up the real lower-than-projected collection figures, Shusterman, Rosenberg, Feldman and Kuber illegally repurchased and resold investors’ IPI debt portfolios at "artificially inflated prices that neither corresponded to a particular debt portfolio’s actual collection results, nor to an asking price from a purchaser in the debt-buying industry."

The FBI also alleged that the four defendants misrepresented the nature of the IPI debt portfolios to investors, claiming they were comprised of medical accounts receivable that they had purchased from hospitals and medical providers after those institutions had "exhausted their efforts to collect from their debtor patients."  The indictment alleges that Shusterman and Feldman purposefully sold IPI debt portfolios to investors that IPI had already sold to and repurchased from a different investor, and sometimes multiple investors.

The FBI indictment seeks the forfeiture of $278,105,193, the alleged proceeds of the scheme.

The FBI releases further note that "Shusterman and Rosenberg each face a maximum sentence of 20 years in prison for the conspiracy and for each of nine counts of wire fraud. Shusterman was arrested in Baltimore and is scheduled to have his initial appearance in U.S. District Court in Baltimore today at 3:30 p.m. Rosenberg was arrested in Newark, New Jersey, and is expected to have his initial appearance in U.S. District Court there today."

Robert Feldman and Douglas Kuber pleaded guilty to conspiracy to commit wire fraud.  They will face a maximum sentence of 20 years in prison. Feldman is scheduled for sentencing on Dec. 3, 2013, and Kuber has not yet received a sentencing date.

 

 

TAP Into Another Town's News:

TAP Into Another Town's News:

Sign Up for E-News

Livingston

Chris Brown Named President at Berkshire Hathaway HomeServices New Jersey Properties

Berkshire Hathaway HomeServices New Jersey Properties is proud to announce the appointment of Chris Brown to President of the 21-office real estate brokerage headquartered in Somerset, New Jersey. Previously serving as Executive Vice President and General Sales Manager, Brown is a member of the company’s ownership team along with Bill Keleher, Seymour and Nancy Litwin, and Steve Janett.

Death of Missing Montclair Woman Ruled Homicide

December 2, 2016

WEST ORANGE, NJ — The death of Sarah Butler, whose body was located in the area of Eagle Rock Reservation in West Orange on Thursday after being missing for more than a week, was determined to be a homicide by the New Jersey Regional Medical Examiner’s Office, according to Acting Essex County Prosecutor Carolyn Murray and Montclair Police Chief Todd Conforti.

Essex County ...

Elizabeth Native Diagnosed With Rare Brain Tumor

November 20, 2016

ELIZABETH, NJ – When 28-year-old, Elizabeth resident Mike Georgevich was diagnosed with a rare brain tumor, his sister Nicole didn’t hesitate to spring into action. Along with family and friends, she set up a GoFundMe to help raise funds for her brother’s upcoming surgery and potential rehabilitation thereafter.

“People's reactions and stories of their own ...

Upcoming Events

Sun, December 4, 1:00 PM

Montclair Art Museum, Montclair

NEW! Drop-In Studio - Every Sunday, 1–4 p.m., ...

Arts & Entertainment

Carousel_image_3bd3383c6098777405f2_bokeh_tree_magic_christmas_merry_xmas_hd-wallpaper-1646961

Sun, December 4, 5:00 PM

Community Congregational Church, Short Hills

Caroling and Tree Lighting

Religions And Spirituality

Carousel_image_603b3a5a4aff991bd378_neccholiday

Tue, December 6, 11:00 AM

The Manor - Garden Room, West Orange

North Essex Chamber of Commerce 2016 Holiday ...

Arts & Entertainment Business & Finance Food & Drink

Don't Sacrifice the Environment to Fund the State Treasury

November 23, 2016

Dear Editor:

New Jersey’s Natural Resource Damages (NRD) program is an incredibly important and necessary program rising from the state’s history of incremental spills and discharges, as well as historic industrialization. 

NRD requires polluters to go beyond the mandated cleanup and to pay damages for restoration and compensation for the public loss of use of natural ...

Friends of the Livingston Library Restocks Its Ongoing Book Sale for December

December 1, 2016

LIVINGSTON, NJ — Friends of the Livingston Library has fully restocked its Ongoing Book Sale for the month of December. On a monthly basis, Friends takes down all stock and replaces it with entirely new inventory. 

This is the “Friends flip.” Approximately 1200 items of fiction, non-fiction, children’s books, DVDs, and CDs are available at great ...

Andy’s Family Music Showcases Alex Weiss on Drums

LIVINGSTON, NJ — Andy’s Family Music Center of Livingston is proud to highlight 11-year-old Alex Weiss, a fifth grader at Collins Elementary School with an aptitude for drums.

Alex studies drums at Andy’s under the instruction of Joe Vitello. He says hid favorite band is Fall Out Boy and that his dad is his number one musical influence.

Check him out in the video ...

Q&A With Owners of Meadowbrook Country Day Camp

Recently, the owners of Meadowbrook Country Day Camp, Dan Milman and George Stein, took part in a fun Question and Answer session. Below are the questions and their responses. To learn more about Milman, Stein and Meadowbrook, click here to read a recent article that ran on TApinto.net.

 

WHEN YOU HEAR THE WORD CAMP, WHAT VISUAL COMES TO MIND?

George: A six lb.

Getting a Handle on Thanksgiving

This year, on our National Day of Thanks, I would like to express my gratitude for having hands.

We typically don’t thank our body parts because they seldom leave us.  Most of us have not experienced unfortunate accidents or suffered the horrible consequences of war; tragic events  which might cause us to lose a limb.  

Most of us take our fingers and hands and elbows ...

My Epic Beauty Fails

One day as I was looking around a high-end cosmetics store for a new lipstick, a “beauty expert” approached me and said that I was so stunning I should forget the lipstick, and get a lip plumper instead. At first I wondered why I needed a lip plumper if I was already so stunning. But then I thought, “Now here is someone wearing a badge that says, ‘beauty expert,’ so ...