Update on Woodbridge Ponzi Scheme
According to a press announcement on Jan. 28, 2019, a federal court in Florida reportedly ordered Woodbridge Group of Companies LLC and its former owner to pay $1 billion in penalties and disgorgement for allegedly operating the Woodbridge Ponzi scheme that targeted retail investors.
Woodbridge and its 281 related companies were reportedly ordered to pay $892 million in disgorgement by the Honorable Judge Marcia G. Cooke of the U.S. District Court for the Southern District of Florida.
The court ordered former owner and CEO Robert H. Shapiro to pay a $100 million civil penalty and to disgorge $18.5 million in ill-gotten gains plus $2.1 million in prejudgment interest, according to the press release.
The SEC reportedly filed an emergency action in December 2017 charging Woodbridge and other defendants with operating a massive $1.2 billion Ponzi scheme that defrauded 8,400 retail investors nationwide, many of them seniors who had invested retirement funds.
The SEC’s complaint alleged that Shapiro made Ponzi payments to investors and used various shell companies to hide the scheme.
A Liquidation Trust is reportedly being formed under a plan in the Woodbridge Chapter 11 case in the U.S. District Court for the District of Delaware (Case No. 17-12560-KJC). The trust will be obligated to make distributions of net proceeds from the disposition of the defendants’ assets in bankruptcy. The amount to be distributed will depend upon the amounts collected by the Liquidation Trust, according to the SEC.
All defendants and relief defendants, without admitting or denying the SEC’s allegations, consented to the entry of final judgments which also permanently prohibit the defendants from violating the antifraud and other provisions of the federal securities laws.
According to the announcement, RS Protection Trust and several relief defendants were collectively ordered to pay $5.3 million in ill-gotten gains and interest.
Shapiro also reportedly consented to the entry of an SEC administrative order, without admitting or denying the SEC’s findings, permanently barring Shapiro from association with any broker, dealer, investment adviser, municipal securities dealer, municipal advisor, transfer agent, or nationally recognized statistical rating organization, and from participating in any offering of a penny stock.
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