A Ponzi Scheme, the SEC and a Developer - News | Think Realty
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A Ponzi Scheme, the SEC and a Real Estate Developer

ponzi

What housingwire.com calls a “Mini-Madoff,” Robert Shapiro, luxury real estate developer of the WoodBridge Group of Companies, created a $1.2 billion Ponzi scheme, pilfering more than 8,400 investors. A minimum of 2,800 of those investors used their IRAs personal retirement accounts for the investment. Shapiro resigned from his position shortly prior to the company filing Chapter 11 bankruptcy.

SEC Complaint

From July 2012 through December 4, 2017 Shapiro used his “web” of 275 plus Limited Liability Companies to create an unusually large Ponzi scheme. The Security and Exchange Commission’s (SEC) complaint stated how, “Shapiro, as the sole person in control of the Corporate Defendants, not only made material misrepresentations and omissions to investors, but also signed falsified documents, controlled the company’s bank accounts, made Ponzi payments to investors, paid significant sales commissions to unregistered sales agents, and misappropriated investor funds for his own personal enjoyment and the enjoyment of his family.”

Some of the fraudulent behavior included:

  • Ponzi Scheme
  • Woodbridge’s Sales Team Perpetuated the Fraud at Shapiro’s Behest
  • Misuse and Misappropriation of Investor Funds
  • Internal Bookkeeping System Indicative of Ponzi Scheme

In a forbes.com article, one of Shapiro’s attorneys said, “Mr. Shapiro is co-operating with the bankruptcy to protect the assets held for the benefit of Woodbridge’s stakeholders,” Ryan O’Quinn. “He denies any allegation of wrongdoing and looks forward to his opportunity to defend himself in a court of law.”

What’s Next?

On December 21, 2017 the SEC successfully had Shapiro’s and several of his companies’ assets frozen. One of the triggers that alerted the SEC to investigate him and his companies was that he had filed bankruptcy proceedings on a majority of his businesses. Despite collected over one billion in funds, Shapiro’s investing ploy only generated about $13 million. In the meantime, a regular has requested someone to be appointed to oversee the companies and ensure they can continue to function yet if it is approved it might upend the bankruptcy proceedings.


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