On Thursday, the United States Securities and Exchange Commission announced its lawsuit against Robert Shapiro and his Woodbridge Group of Companies for the operation of a $1.2 billion Ponzi scheme that targeted thousands of investors.
Shapiro had resigned as Woodbridge’s chief executive officer on Dec. 1, only a few days prior to the property and investment company filing for Chapter 11 bankruptcy. According to the SEC, Shapiro ran a “sham” business model that defrauded over 8,400 investors in unregistered Woodbridge funds. The claim stated that said Shapiro promised the investors 5 to 10 percent annual interest on the funds that he said would be used for the loans to commercial property owners paying 11 to 15 percent in interest rates.
“Mr. Shapiro is cooperating with the bankruptcy to protect the assets held for the benefit of Woodbridge’s stakeholders,” said Ryan O’Quinn, Shapiro’s lawyer. “He denies any allegation of wrongdoing and looks forward to his opportunity to defend himself in a court of law.”
Investors’ money was utilized to pay other investors and commissions to sales agents to keep up the Ponzi scheme, which gave way earlier this month following Woodbridge’s end of payments to investors and its filing for bankruptcy protection.
The company is now under new management and has stated its intentions to use the Chapter 11 to redistribute some $750 million in debt as we as for the completion of high-end properties that are under development.
THE HERALD FINANCE REPORT
Start your workday the right way with the news that matters most.
On Thursday, the SEC won an asset freeze against Shapiro and quite a few of his companies that are not in the Chapter 11. In the meantime, the SEC has also requested a Miami federal judge to assign someone to supervise the Woodbridge companies and if approved, the request could overturn the bankruptcy measures.