Woodbridge Group Slapped With $1 Billion Penalty for Ponzi Scheme
A federal court in Miami ordered real estate developer Woodbridge Group, its 128 affiliate companies and former CEO Robert H. Shapiro to pay $1 billion in penalties and disgorgement for running a Ponzi scheme that hurt 8,400 investors, many of whom were senior citizens.
January 28, 2019 at 05:52 PM
3 minute read
U.S. District Judge Marcia Cooke for the Southern District of Florida. Photo: Jill Kahn.
U.S. District Judge Marcia G. Cooke of the Southern District of Florida hit real estate developer Woodbridge Group of Companies and former owner Robert H. Shapiro with a $1 billion penalty over a Ponzi scheme that targeted more than 8,400 retail investors.
Cooke approved the fine on Dec. 27, 2018, but it wasn't made public until Monday.
Woodbridge and its 128 sister companies have to shell out $892 million for disgorgement, repayment of ill-gotten gains, while California businessman Shapiro faces a $100 million civil penalty plus $20 million in disgorgement plus interest.
Click here to read the SEC's full complaint
Shapiro and his company, which used to be headquartered in Boca Raton, specialized in flipping luxury real estate but had defrauded investors with unregistered funds and fake real estate investments, according to the SEC.
Robert Shapiro of Woodbridge Realty of Colorado. Courtesy photo.The SEC filed an emergency action in December 2017, accusing Shapiro and his company of running a Ponzi scheme through its hundreds of in-house and external sales agents. Meanwhile, Woodbridge filed for bankruptcy after the scheme fell apart.
The SEC's complaint claimed Shapiro squirreled away more than $21 million that should have gone to investors, instead spending it on fine wine, jewelry, luxury cars and charter planes.
Many of the investors were elderly people who lost their retirement funds to the scheme.
Russell Koonin, Christine Nestor, Scott A. Lowry and David W. Baddley led the investigation for the SEC.
Shapiro's lawyer, Ryan O'Quinn of DLA Piper in Miami, did not immediately respond to requests for comment.
The judgment was nothing new for Adam Schwartz of Homer Bonner Jacobs in Miami, counsel to Woodbridge Group of Companies, which consented to the judgment in October 2018.
“It's part of our ongoing cooperation with the SEC,” Schwartz said.
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