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Press Release

New Jersey Man Guilty of $148 Million Investment Fraud Scheme

For Immediate Release
U.S. Attorney's Office, District of Maryland
Ponzi Scheme Involved Sale of Medical Debts

Baltimore, Maryland – Jonathan E. Rosenberg, age 47, of West Orange, New Jersey, pleaded guilty today to conspiring to commit wire fraud in connection with a complex scheme to defraud investors and lenders by selling fraudulent investment portfolios of debts purportedly owed by hospital patients. Rosenberg has agreed to the entry of an order to pay restitution of $148,251,859, the amount of the investors’ losses. 

The guilty plea was announced by United States Attorney for the District of Maryland Rod J. Rosenstein; Special Agent in Charge Kevin Perkins of the Federal Bureau of Investigation, Baltimore Field Office; and Special Agent in Charge Andre R. Watson of U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI).

“Jonathan Rosenberg and his co-conspirators perpetrated a brazen and complex Ponzi scheme that defrauded investors of more than $148 million,” said U.S. Attorney Rod J. Rosenstein. “The conspirators pretended that they were repaying investors with revenue earned by collecting patient debts, but they were really using the money of new victims to repay previous investors.”

Rosenberg and co-conspirator Douglas Kuber operated Account Receivable Services, LLC (ARS) in New York, New York.  Beginning in February 2007, they entered into an agreement with International Portfolio, Inc. (IPI), which was operated by co-defendant Robert Feldman and Feldman’s business partner, to promote the sale of IPI debt portfolio.  Pursuant to their agreement, IPI acquired accounts receivables from hospitals (past due patient accounts), bundled them into investment portfolios, and then sold the portfolios to ARS at a discounted rate.  ARS’s purchases of the medical debt portfolios from IPI came from investors who agreed to lend money to ARS on a fixed-term basis in return for a high, fixed interest rate.  IPI agreed to manage the collection activity for each debt portfolio that IPI sold.  Any funds collected by IPI were to be forwarded to escrow accounts opened and maintained by ARS, which, in turn, would use the funds to cover the periodic interest payments and outstanding balances owed to the investors. 

Fraudulent Inflation of Purchase Prices for IPI Debt Portfolios to Obtain Larger Investor Loans

According to his plea agreement, Rosenberg and Kuber misrepresented to investors that a loan secured by IPI debt portfolios would not be used to pay up-front fees and commissions associated with the investment offering.  In fact, however, ARS and IPI devised an elaborate process involving the use of multiple escrow accounts and independent accountants to feign a transparent tracking of the deposit of the loan proceeds, the revenue from collection activity, the repayment of interest, and the sale of portfolios.  Funds to pay a 5% to 10% fee would come from the investor’s loan proceeds.  Pursuant to this undisclosed fee arrangement, ARS and IPI would agree to a concealed purchase price for a debt portfolio.  Then they would tell the investor that the portfolio price was 5% to 10% higher than concealed price. 

IPI agreed to kickback the loan proceeds in excess of the true purchase prices to Rosenberg and Kuber. The kickbacks were characterized as a refund or a rebate. In so doing, ARS and IPI avoided the intricate escrow arrangement they had created to convince investors to finance the joint venture. From June 2007 to March 2009, Rosenberg and Kuber made kickbacks of investor loan proceeds to themselves totaling in excess of $8 million. 

In reliance on those misrepresentations, investors provided loans to ARS of approximately $145 million to purchase IPI debt portfolios, which IPI managed.  Other investors purchased approximately $122,500,000 worth of IPI debt portfolios, which IPI also managed. 

Fraudulent Inflation of Collection Results

In order to induce existing investors to maintain and increase their participation in the investment scheme and to persuade new investors to join, ARS and IPI falsely represented the amount of income being generated from the collection activity for the medical debt portfolios.   It became apparent almost from the start that collections were significantly inadequate, not only in their failure to cover periodic interest payments that ARS owed its investors, but also to repay the investors’ principal. 

Rosenberg agreed that IPI would advance ARS the money needed to make ARS’s periodic interest payments to the investors.  From July 2008 to December 2009, and without the investors’ knowledge, Rosenberg, Feldman and Kuber wired or caused to be wired approximately 209 advances from IPI into the bank accounts of the ARS debt portfolios, which were subsequently used to pay periodic interest payments due to an investor and/or inflate the collection history of the respective investor debt portfolios.  Misleading collection reports were created to deceive the investors.

After their plan to subsidize ARS with monthly advances was implemented, an investor was induced to fund the purchase of 12 more portfolios between July and November 2008, totaling approximately $65 million in new investments.  Another investor representative living in West River, Maryland was induced to fund the purchase of a portfolio on November 8, 2008 for $10 million, and another portfolio on May 26, 2009 for $5 million. 

To conceal poor collection results and artificial resale prices for IPI debt portfolios, and to assure a continuing flow of new funding into the investment scheme, Rosenberg, Feldman, and Kuber continued to solicit existing and prospective investors to purchase or finance IPI debt portfolios.  In so doing, they fraudulently used new investor funds to make interest and resale payments in order to meet the investment benchmarks of prior investors.

Rosenberg Owned Three Other Companies that Purchased IPI Debt Portfolios

Finally, Rosenberg owned and controlled three other companies that recruited investors for medical accounts receivable portfolios purchased from IPI: JER Receivables, LLC (JER); International Portfolio Access, LLC (IPA); and Receivable Partners, LLC.  

A wealth management company owner (Owner) invested with JER under an agreement which was structured as a loan but provided a guaranteed 30% rate of return over 16 months.  From July 2008 to February 2010, the wealth management company invested $18.7 million in nine transactions with JER to purchase portfolios of health care accounts receivable from IPI. JER used all of the proceeds to purchase medical debt portfolios from IPI, and the wealth management company made a $930,000 profit from two of the transactions. In October 2010, however, the wealth management company issued demand notices to JER on a number of the outstanding transactions due to JER failing to make required payments. 

The Owner formed a new wealth management company which entered into a $750,000 loan agreement with IPA in October 2009.  The loan was to be used to secure a larger credit line to purchase additional healthcare accounts receivable portfolios.  The credit line never materialized. From February 2011 to January 2012, this new company made a series of loans totaling $18.6 to Receivable Partners.  These loans were used to pay back some of the investors of the original wealth management company who purchased portfolios through JER.           

Rosenberg faces a maximum sentence of 20 years in prison.  U.S. District Judge James K. Bredar scheduled sentencing for June 14, 2016, at 9:30 a.m.

Robert Feldman, age 68, of Beach Haven, New Jersey, and Douglas A. Kuber, age 55, of Livingston, New Jersey, previously pleaded guilty to their participation in the conspiracy and face a maximum sentence of 20 years in prison.  Feldman and Kuber are scheduled to be sentenced on June 2 and 30, 2016, respectively.

Co-defendant Richard Shusterman, age 53, of Highland Beach, Florida, has pleaded not guilty to charges filed against him relating to the scheme. An indictment is not a finding of guilt.  An individual charged by indictment is presumed innocent unless and until proven guilty at some later criminal proceedings. 

Today’s announcement is part of the efforts undertaken in connection with the President’s Financial Fraud Enforcement Task Force.  The task force was established to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes.  With more than 20 federal agencies, 94 U.S. attorneys’ offices, and state and local partners, it’s the broadest coalition of law enforcement, investigatory and regulatory agencies ever assembled to combat fraud.  Since its formation, the task force has made great strides in facilitating increased investigation and prosecution of financial crimes; enhancing coordination and cooperation among federal, state and local authorities; addressing discrimination in the lending and financial markets; and conducting outreach to the public, victims, financial institutions and other organizations.  Since fiscal year 2009, the Justice Department has filed over 18,000 financial fraud cases against more than 25,000 defendants.  For more information on the task force, please visit

United States Attorney Rod J. Rosenstein thanked the FBI and HSI Baltimore for their work in the investigation.  Mr. Rosenstein praised Assistant U.S. Attorneys Martin J. Clarke and Leo J. Wise, who are prosecuting the case.

Updated February 25, 2016

Financial Fraud