Two more California men pleaded guilty for their roles in a $1.3 billion Ponzi scheme orchestrated by convicted felon Robert Shapiro and the Woodbridge Group of Companies, according to the U.S. Attorney’s Office for the Southern District of Florida.
Dane Roseman, 38, and Ivan Acevedo, 44, both residents of Los Angeles, pleaded guilty Monday to mail and wire fraud conspiracy in the massive investment fraud scheme, in which more than 7,000 victims, many of whom were elderly, suffered financial losses, prosecutors said.
Shapiro, the former owner, president, and CEO of Woodbridge, spearheaded and concealed the scheme through his business, which employed about 130 people and had offices throughout the U.S. The scheme ran from at least July 2012 to December 2017, when Woodbridge filed for Chapter 11 bankruptcy and defaulted on its obligations to investors, the court document said.
Shapiro pleaded guilty to conspiracy for his leadership role in the fraudulent scheme and tax evasion and was sentenced to 25 years in prison in 2019.
Roseman and Acevedo started as sales agents and served as sales managers at Woodbridge, whose “main business model was to solicit money from investors and, in exchange, issue investors promissory notes reflecting purported loans to Woodbridge that paid high monthly interest rates, the indictment said. It added that Woodbridge misrepresented to investors that the investments were tied to “real property owned by third parties and that the third parties would be making the interest payments to Woodbridge and its investors; it was portrayed as an investment in a hard-money lending business,” the court document said.
Roseman and Acevedo sold Woodbridge securities and trained and supervised internal sales agents who sold the securities, the indictment said. Along with Shapiro and others, they used high-pressure sales tactics to market and promote the investments as low-risk, safe, simple and conservative, the court document said. “At minimum, investors were made to believe that Woodbridge’s real estate dealings would generate the funds used to pay the return on their investments,” the indictment said.
The sales operation, controlled by Shapiro and managed by Acevedo and then Roseman, functioned as a “phone room” to deceive investors, the papers said, adding that the company promoted investments through telephone and in-person conversations, e-mails and website displays.
The scheme also involved misrepresentations to financial planners who helped Woodbridge to sell investments to potential investors, prosecutors said.
“Despite Woodbridge’s claims that these investments would be backed by properties owned by third parties, in fact, to the extent that the properties existed, they were secretly owned by Shapiro," the court document said, adding that Shapiro, unbeknownst to investors, created and controlled a network of more than 270 limited liability companies, which he used to acquire and sell the properties pitched to investors.
Shapiro, Roseman, and Acevedo falsely promised investors returns as high as 10% from investments in loans to property developers. But when Shapiro’s real estate portfolio failed to generate sufficient cash flow to satisfy the loan obligations and interest payments owed to investors, he resorted to making Ponzi payments, using hundreds of millions of dollars invested by new investors to pay “returns” to older, existing Woodbridge investors, the court document said. The indictment further noted that “in some instances, Shapiro made these fraudulent “interest” payments even when the advertised investment properties were never acquired.”
Shapiro, the court document said, restricted access to information concerning Woodbridge’s finances, meaning Roseman and Acevedo did not have knowledge of Woodbridge’s finances and were unaware that Shapiro was operating a Ponzi scheme by using new investor money to pay prior investors.
Shapiro and his co-conspirators, the indictment said, convinced more than 9,000 investors to invest more than $1.29 billion to Woodbridge. The victims included at least 2,600 investors who invested about $400 million of their retirement savings, of which about $25 million to $95 million was misappropriated to benefit Shapiro and his immediate family. Roseman received about $2.5 million in Woodbridge money and Acevedo received about $1.1 million, the court document said.
Both Roseman and Acevedo are scheduled to be sentenced on September 20.
The Securities and Exchange Commission also has filed parallel civil enforcement actions against Woodbridge, Shapiro, his wife, Acevedo and Roseman related to the fraud. The SEC previously brought charges against several other California sales agents for their roles in the scheme.