Regulators and prosecutors are levelling new charges at the alleged operators of a $1.2 billion Ponzi scheme involving the Woodbridge Group of Companies.
Woodbridge owner Robert H. Shapiro, along with California-based Ivan Acevedo and Dane R. Roseman, both former Woodbridge directors of investment, were charged on Thursday by the U.S. Securities and Exchange Commission with fraudulently raising $1.2 billion from more than 8,400 retail investors in a complaint filed with U.S. District Court for the Southern District of Florida.
In an indictment unsealed on Thursday, several federal criminal charges have also been brought against Shapiro, Acevedo and Roseman, including conspiracy to commit mail and wire fraud and substantive mail and wire fraud counts. Shapiro was also charged with conspiracy to commit money laundering and tax evasion.
The Woodbridge Group of Companies, headquartered in Boca Raton, Fla., ostensibly operated as a luxury real estate developer, but was found by the SEC to have been a Ponzi scheme.
Acevedo oversaw fundraising for the firm’s securities from 2012 until he left the firm in 2015, when he was succeeded by Roseman, according to the SEC’s complaint. The men allegedly hired and trained the company’s sales force.
In doing so, each allegedly approved fraudulent marketing materials and sales scripts, creating the appearance that Woodbridge was a legitimate alternative investment firm when, according to the SEC, it was actually a massive Ponzi scheme funneling money from new investors to pay existing investors.
In previous complaints, the SEC laid out allegations that from July 2012 to December 2017 Woodbridge’s sales agents promised investors returns of up to 10 percent from luxury real estate investments. The investors were allegedly assured that they would be repaid from high rates of interest Shapiro’s companies earned on loans they purportedly made to third part borrowers. But nearly all of the borrowers were LLCs owned and controlled by Shapiro himself, operating with no revenue and no bank accounts, and the borrowers never paid any interest on the loans, according to the SEC.
According to the unsealed criminal complaint, Shapiro, Roseman and Acevedo targeted elderly investors with their scheme.
The SEC alleged that Shapiro and Woodbridge used investor money to pay $64.5 million in commissions to sales agents who pitched the firms’ investments as “low risk” and “conservative.” Investor money was also used to pay investors who cashed out of the investments.
The scheme collapsed in December 2017 when Woodbridge stopped paying investors.