Monday, January 21, 2019

SEC nails Ponzi Scammer Shapiro for $ 1 Billion

The Woodbridge Group of Companies LLC and its 281 associated companies have been ordered by a U.S. District Court Judge to pay $892m in disgorgement to defrauded retail investors. Woodbridge Group’s former owner and CEO, Robert H. Shapiro, was also ordered to disgorge $18.5m plus interest, and a $100m civil penalty. The SEC charged the company with operating a $1.2 billion Ponzi scheme that defrauded 8,400 retail investors, many of them seniors using their retirement savings.
The fund advertised its primary business as issuing 'secured' loans to supposed third-party commercial property owners who paid Woodbridge between 11% and 15% interest. In return, Woodbridge promised to pay investors 5% to 10% interest.

The SEC said that the fund used new investor money to pay other investors as well as $64.5m in commissions to sales agents. It was a classic Ponzi scheme. Shapiro diverted at least $21m for his own benefit, including to charter planes, pay country club fees and buy luxury vehicles and jewelry. Woodbridge filed for bankruptcy in December 2017.