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NEWSLETTERS & ALERTS
$1.2Bn Ponzi Scheme Preyed on Florida Elderly
[Photos: Charles Ponzi; Florida Elderly / Huffington Post]
The SEC charged a group of unregistered funds and their owner with bilking thousands of retail investors, many of them seniors, in a $1.2 billion Ponzi scheme. A federal judge granted the SEC’s request for a freeze of assets. According to the SEC complaint, Robert Shapiro and a group of unregistered investment companies called the “Woodbridge Group of Companies,” formerly headquartered in Boca Raton, defrauded more than 8,400 investors in unregistered Woodbridge funds.
BACKGROUND. Shapiro, a resident of Sherman Oaks, CA, is a Florida registered voter based on a Palm Beach County address. He is Woodbridge's owner and President, and during all relevant times maintained sole operational control over the company. Shapiro is not, and has never been, registered with the Commission, FINRA, or any state securities regulator. Shapiro personall y solicited investors, including several high net-worth individuals, to invest in Woodbridge.
SEC FINDINGS. Woodbridge advertised its primary business as issuing loans to supposed third-party commercial property owners paying Woodbridge 11-15% annual interest for “hard money,” short-term financing. In return, Woodbridge allegedly promised to pay investors 5-10% interest annually.
Woodbridge and Shapiro allegedly sought to avoid investors cashing out at the end of their terms and boasted in marketing materials that “clients keep coming back to [Woodbridge] because time and experience have proven results. Over 90% national renewal rate!” While Woodbridge claimed it made high-interest loans to third parties, the SEC’s complaint alleges that the vast majority of the borrowers were Shapiro-owned companies that had no income and never made interest payments on the loans.
Shapiro and Woodbridge used investors’ money to pay other investors, and paid $64.5 million in commissions to sales agents who pitched the investments as “low risk” and “conservative.” Shapiro, of Sherman Oaks, CA, is alleged to have diverted at least $21 million for his own benefit – which went for such things as chartered planes, country club fees, and luxury vehicles and jewelry.
The scheme apparently collapsed in early December as Woodbridge stopped paying investors and filed for Chapter 11 bankruptcy protection.
The SEC, which is continuing its investigation, seeks disgorgement of ill-gotten gains with interest and financial penalties. A court hearing is scheduled for 12/29/17.
[Click here for further details: SEC Complaint.]