In a subpoena enforcement action, the US Securities and Exchange Commission is ordering 235 LLCs in Colorado and Delaware to provide documents related to its probe into whether Woodbridge Group of Companies, LLC, a California-based real estate and investment company owned and run by its president Robert Shapiro, engaged in a $1B financial fraud. All of the entities, plus another LLC, are affiliated with Woodbridge. The regulator had subpoenaed the 236 of them for the documents in August. Only one LLC responded by the deadline.
Now, the Commission wants a federal district court to make the rest of the LLCs comply with the subpoenas. Meantime, Shapiro has invoked his Fifth Amendment right. However, he maintains that his company did not commit fraud.
SEC Has Been Probing Woodbridge Since 2016
For the past year, the regulator has been looking into looking into possible securities fraud by Woodbridge and others involving more than $1B that was provided by thousands of investors throughout the US. The alleged fraud may include unregistered securities sales, including securities sales by brokers who were not registered, and other fraud.
The SEC wants information about payments issued by the LLCs to Woodbridge, the names of LLC members and managers, and information about financial institutions used by the LLCs. They also are probing whether Woodbridge and others made false statements or omissions to investors about how their money would be used, “the safety of investments,” associated fees and costs, and their investments’ profitability.
Woodbridge remains in operation and, according to the SEC’s latest filing, continues to raise money from investors. According to the Aspen Daily News, Woodbridge is accused of representing to investors that the 235 LLCs were third parties when most, perhaps even all of them, are operated by Shapiro.
According to The Real Deal, certain sources are wondering whether Woodbridge’s asking prices on some of the properties it sells may be inflated. One source compared the real estate and investment company’s business model to that of a Ponzi Scam.
From 2015 and 2017, Woodbridge has been the subject of litigation brought by the state governments of Michigan, Arizona, Massachusetts, Texas, and Pennsylvania. It has settled the actions brought by Massachusetts, Texas, and Pennsylvania and is in talks to settle the other actions. Shapiro, in an email to The Real Deal, noted that despite settling, he and Woodbridge did not admit guilt nor has there been a “finding of fraud.”
Woodbridge Securities Fraud Attorneys
If you are investor whose broker recommended you invest in anything, including a structured financial product, that may be tied to Woodbridge Group of Companies or Woodbridge Wealth, you may want to speak with a broker fraud law firm to explore your legal options. Woodbridge Wealth, which succeeded Woodbridge Structured Funding LLC, usually sells structured financial products via intermediary brokers to investors.
Please contact Shepherd Smith Edwards and Kantas, LTD LLP today. We can help you determine whether you have grounds for a securities case against a broker, a brokerage firm, and/or other parties.
Read the SEC’s Latest Application in this Matter (PDF)
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