Investors Bilked in $1.2B Woodbridge Ponzi Scam Must Pay 16% to Borrow on What They Are Owed

It wasn’t bad enough that over 10,000 investors, many of them retirees and other retail investors, were bilked in the $1.2B Woodbridge Ponzi scam. Now, they are allowed to borrow against what they hope to recover after the bankrupt real estate developer’s assets are liquidated but they must pay a 16% interest rate to do so.

While the rate isn’t necessarily wrong or unfair on the part of hedge fund lender Axar Capital Management—it was the investors that went to the Delaware Bankruptcy court seeking a $215M loan facility so that they could access their funds until Woodbridge’s bankruptcy proceedings are settled—the rate is still a steep sum considering that they thought that their investments would garner an approximately 8% return.

SEC Goes After Woodbridge

In December 2017 the US Securities and Exchange Commission filed charges accusing the Woodbridge Group of Companies and founder Robert H. Shapiro of defrauding thousands of investors in a $1.2B Ponzi scam. While investors thought that they were getting involved in a business that issued loans to third-party commercial property owners, Woodbridge and Shapiro allegedly used investors’ funds in Ponzi-like fashion to pay other investors and also pay $64.5M in commissions to sales agents that touted Woodbridge investments as “conservative” and “low risk.” Shapiro allegedly diverted at least another $21M to pay for his lavish lifestyle. The Woodbridge Ponzi scheme failed after the company stopped issuing payments owed to investors and sought bankruptcy protection.

Last month, the SEC brought charges against five unregistered brokers and their companies for allegedly selling Woodbridge securities to investors even though they did not have the proper broker-dealer registrations and should not have been selling the investments without them. The regulator contends that the brokers made millions of dollars from selling Woodbridge investments.

Woodbridge Investor Fraud

Please contact our Woodbridge investor fraud lawyers at Shepherd Smith Edwards and Kantas, LTD LLP if you are a Woodbridge investor that sustained losses in this colossal Ponzi scam. Our legal team includes skilled retirement losses attorneys dedicated to helping seniors and retirees to recoup their money. We understand the unique challenges that older investors face in the wake of being defrauded. Contact us today so that we can help you explore your legal options.

Promised 8% ROI, Investors Now Offered 16% Loan to Recoup Money, NREI Wire/Bloomberg, August 27, 2018

Read the SEC Complaint (PDF)

Woodbridge Ponzi Victims Seek $215M Loan Fund, Law360, July 12, 2018