Woodbridge Group Ponzi Litigation
Invest In a Woodbridge Structured Financial Product?
You may be a victim of fraud. Call or message us for a confidential, free lawyer consultation.
Woodbridge offers to the investing public structured products, one example being First Position Commercial Mortgages, or FPCMs. The FPCMs are described as “private third-party loans to Woodbridge [which] provide higher returns with shorter terms secured by commercial real estate.” The investors get to pick a commercial mortgage in Woodbridge’s inventory to serve as collateral on the loans. They are paid interest and are recorded on the mortgage title. Each time a property is purchased by Woodbridge to add to its inventory, Woodbridge forms a new LLC.
The SEC Investigation
The SEC is investigating Woodbridge for potentially defrauding its investors. In a recently filed application for an order to enforce subpoenas, linked here, the SEC alleged that Woodbridge may be violating securities laws.
Woodbridge has represented to investors that bonafide third parties are borrowing money and repaying interest at a high rate, of which the investors in Woodbridge funds get a portion thereof. However, evidence obtained in our investigation reveals that many, if not, of these LLCs may be Woodbridge affiliates with Shapiro (Woodbridge’s president) as their manager.
While the SEC has sought to obtain proof of its theory by subpoenaing the LLCs directly, 235 of the 236 LLCs have not yet produced documents.
Prior Violations of Securities Laws by Woodbridge
Woodbridge has entered into agreements with a number of state regulators in recent years for alleged violations of securities regulations:
- In April 2017, the Pennsylvania Bureau of Securities Compliance and Examinations entered into an agreement with a Woodbridge entity to settle allegation that it was selling unregistered securities in the state, a violation of the securities laws.
- In October 2016, Woodbridge entities entered into a consent order with the Massachusetts Securities Division for selling FPCMs without registering them as securities. The Massachusetts regulator alleged that Woodbridge does not maintain separate financial accounts for investors, but instead paid investors from its general corporate accounts.
- In October 2016, the Arizona Corporation Commission issued a temporary order to cease and desist against several Woodbridge entities and affiliates relating to charges they sold the FPCMs without registering them as securities and fraud connected to the sale of the FPCMs.
- The Texas State Securities Board issued a similar cease and desist order in July 2015.