According to court documents, Robert Shapiro, the former CEO of Woodbridge Group of Companies, has agreed to pay $120 million to the Securities and Exchange Commission to settle allegations that he defrauded investors in a $1.2 billion Ponzi scheme.

According to the allegations, Woodbridge and Shapiro defrauded more than 8,400 investors in unregistered Woodbridge funds, based on a business model built on lies. According to the SEC complaint, Woodbridge marketed itself as issuing loans to purported third-party commercial property owners that were paying Woodbridge between eleven and fifteen percent annual interest for “hard money,” short-term financing. Woodbridge then promised to pay investors five to ten percent interest annually, according to the allegations. The claimed high-interest loans to third parties were actually in large part made to Shapiro-owned companies that had no income and never made interest payments on the loans, according to the complaint.

The complaint alleged that the Woodbridge group was only able to pay dividends to investors using a constant infusion of new investor money and that Shapiro used a web of layered companies to conceal his ownership interest in the purported third-party borrowers.

The SEC further alleged that Shapiro and Woodbridge used investors’ money to pay other investors and paid $64.5 million in commissions to sales agents who pitched the investments as “low risk” and “conservative.” Shapiro, of Sherman Oaks, California, was alleged to have diverted at least $21 million for his own benefit, including to charter planes, pay country club fees, and buy luxury vehicles and jewelry.  According to the complaint, the scheme collapsed in typical Ponzi fashion in early December as Woodbridge stopped paying investors and filed for Chapter 11 bankruptcy protection.

According to court documents, the $120 million fine will go into a “fair fund” which will be used to compensate Ponzi scheme victims.

If you or someone you know lost money as a result of an investment in the Woodbridge Group of companies, please call the Frankowski Firm at 888.741.7503 or fill out this contact form.