Woodbridge Group filed Chapter 11 earlier this month

 According to a press announcement today, the Securities and Exchange Commission is charging Woodbridge Group of Companies LLC, a group of unregistered companies and its owner, for allegedly bilking thousands of retail investors in a $1.2 billion Ponzi scheme. An asset freeze has also been ordered.

The SEC’s complaint states that Robert H. Shapiro and the Woodbridge Group of Companies LLC formerly headquartered in Boca Raton, Florida, defrauded more than 8,400 investors, in unregistered Woodbridge funds.

 SEC Alleges Ponzi Scheme

According to Steven Peikin, Co-Director of the SEC’s Enforcement Division, “Our complaint alleges that Woodbridge’s business model was a sham. The only way Woodbridge was able to pay investors their dividends and interest payments was through the constant infusion of new investor money.”

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, according to the SEC’s complaint. In return, Woodbridge allegedly promised to pay investors 5-10 percent interest annually.

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.

The SEC complaint alleges that 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, California, is alleged to have diverted at least $21 million for his own luxury lifestyle, including to private planes, luxury vehicles and jewelry.  According to the complaint, the Ponzi scheme collapsed in in early December as Woodbridge stopped paying investors and filed for Chapter 11 bankruptcy protection.

SEC investigators filed the asset freeze to prevent further dissipation of investor assets after obtaining court orders in September and November in subpoena enforcement actions that forced the unregistered companies to open their books.

The Honorable Judge Marcia G. Cooke granted the SEC’s request for a temporary asset freeze against Shapiro and a group of his unregistered investment companies, and ordered them to provide an accounting of all money received from investors.

Free Consultation

If a broker or brokerage firm makes an unsuitable investment recommendation or fails to adequately disclose the risks associated with an investment they may be liable for investment losses.

This information is all publicly available and brought to you by The White Law Group. To determine whether you may be able to recover investment losses incurred as a result of your purchase of a Woodbridge Group private placement investment, please contact The White Law Group at 1-888-637-5510 for a free consultation.

The White Law Group, LLC is a national securities fraud, securities arbitration, investor protection, and securities regulation/compliance law firm with offices in Chicago, Illinois and Franklin, Tennessee. For more information on the firm, visit www.WhiteSecuritiesLaw.com.