Articles Tagged with Woodbridge Group of Companies

The US Securities and Exchange Commission has filed financial fraud charges against the Woodbridge Group of Companies, LLC and its owner Robert H. Shapiro. The Woodbridge Group is comprised of unregistered investment companies. According to the regulator, Woodbridge and Shapiro ran a $1.2B Ponzi Scam that bilked over 8,400 investors, many of whom where older investors. At least 2,600 investors collectively spent close to $400M that came from their IRAs.

The civil fraud charges include other alleged federal securities law violations. The SEC also announced an asset freeze to keep more investor funds from dissipating. The regulator wants restoration of allegedly ill-gotten gains plus interest, as well as financial penalties.

Senior Financial Fraud
The Commission’s complaint accused Woodbridge and its owner of defrauding seniors using a “sham” business model that involved selling investments in unregistered Woodbridge funds. The company presented its main business as giving loans to third-party commercial property owners that were paying 11-15% in yearly interest for “’hard money’ short-term financing.” In fact, claims the SEC, the property owners were not third-parties but were companies belonging to Shapiro. Not only that but they had no income streams and never paid interest on these supposed loans. Woodbridge and Shapiro are said to have used investor money to buy nearly 200 commercial and residential properties in California and Colorado.

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Already under investigation by the US Securities and Exchange Commission for financial fraud, the Woodbridge Group of Companies has filed for Chapter 11 bankruptcy protection. According to InvestmentNews, this move comes a week after the luxury real estate developer missed payments due to investors on the notes they had purchased.

The company has raised over $1B from investors, including senior investors. InvestmentNews reports that many investors were told that their investments would be safe in real estate. Now, however, Woodbridge is saying that it has $750M of debt. Court documents submitted in US Bankruptcy Court state that this is how much nearly 9000 noteholders are owed.

Woodbridge Wealth sells the following investments: first positions in commercial mortgages, secondary market annuities, and a commercial bridge loan. However, reports InvestmentNews, the Financial Industry Regulatory Authority’s BrokerCheck doesn’t show any registered brokerage firm by that name.

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