ADMINISTRATIVE PROCEEDING
File No. 3-20070

September 25, 2020 - The SEC filed settled fraud charges against Sabra Capital Partners, LLC, an unregistered investment adviser based in Illinois, and its managing member Zvi Rhine, of Deerfield, Illinois, for defrauding investors by concealing losses in a hedge fund they managed.

According to the SEC's order, Sabra Capital and Rhine raised over $7 million from 24 fund investors through July 2015, but, by the end of 2017, the value of the fund had declined to approximately $1.2 million due to investor redemptions and fund losses. As found in the order, beginning in at least January 2018, Sabra Capital and Rhine provided false information to investors about the hedge fund's performance to conceal those losses, including false monthly performance reports that showed the fund had gains from January 2018 through April 2019, when, in fact, it had lost more than 35% of its value. In addition, the order found that Sabra Capital and Rhine significantly overstated one investor's capital balance and subsequently provided the same investor with falsified audited financial statements to cover up the misstatements.

The SEC's order finds that Sabra Capital and Rhine violated the antifraud provisions of Section 206(4) of the Investment Advisers Act of 1940 and Rule 206(4)-8 thereunder. Without admitting or denying the SEC's findings, Sabra Capital and Rhine agreed to cease and desist from committing or causing violations of the charged provisions. In addition, Sabra Capital agreed to be censured. Rhine agreed to pay an $80,000 civil penalty and to an associational bar with a right to reapply in five years.

The investigation was conducted by Jen Peltz and Pesach Glaser and was supervised by Jeffrey A. Shank in the Chicago Regional Office.