The investment fraud lawyers at the law firm of Meyer Wilson have been contacted by investors regarding potential securities fraud claims involving the Woodbridge Group of Companies, LLC, including its affiliate Woodbridge Wealth. Based on our investigation, it appears that investors may have been improperly sold unregistered securities in violation of federal and state securities laws. We are currently representing investors to pursue claims to recover their investment losses suffered in Woodbridge.
Listen to Managing Partner David Meyer’s recent radio broadcast about potential individual investor claims relating to Woodbridge Group and its Woodbridge Mortgage Funds.
On December 20, 2017, the Securities & Exchange Commission filed a Complaint for Injunctive Relief against Woodbridge, its founder and former principal, Robert Shapiro, and numerous LLCs allegedly controlled or operated by Shapiro. The SEC’s Complaint alleges:
"Beginning in July 2012 through December 4, 2017, Defendant Robert H. Shapiro ("Shapiro") used his web of more than 275 Limited Liability Companies to conduct a massive Ponzi scheme raising more than $ 1.22 billion from over 8,400 unsuspecting investors nationwide through fraudulent unregistered securities offerings. Shapiro promised investors they would be repaid from the high rates of interest Shapiro's companies were earning on loans the companies were purportedly making to third-party borrowers. However, nearly all the purported third-party borrowers were actually limited liability companies owned and controlled by Shapiro, which had no revenue, no bank accounts, and never paid any interest under the loans."
On December 4th, just weeks before the SEC action was filed, Woodbridge filed for Chapter 11 bankruptcy protection. The very next day, Shapiro resigned from the company.
Prior to the bankruptcy announcement, Woodbridge informed investors that the firm was stopping dividend payments to its investors. Citing litigation and compliance costs, Woodbridge announced on its website:
"Historically a leading developer of high-end real estate, as the size and scope of the business has grown, increased operating and development costs have been exacerbated by the unforeseen costs associated with ongoing litigation and regulatory compliance. This combination of rising costs and regulatory pressure led to a loss of liquidity, resulting in Woodbridge's inability to make its regularly scheduled one-year notes payment due Dec. 1, 2017."
As of today, Woodbridge’s website is still active. The site states that its wealth management group, Woodbridge Wealth, sells secondary market annuities with "above average, risk adjusted yields", and a commercial bridge loan fund that potentially returns 6%. The lawyers at Meyer Wilson have reviewed filings with the Financial Industry Regulatory Authority (FINRA), the self-regulatory organization that oversees brokerage firms. There is no broker-dealer named Woodbridge Wealth registered with FINRA.
The lawyers at Meyer Wilson have also reviewed documents that Woodbridge filed with the SEC in connection with selling securities to investors. That review identified at least six different LLCs that Woodbridge sold to investors as Regulation D offerings. Regulation D under the Securities Act of 1933 allows some companies to offer and sell their securities without having to register the offering with the SEC.
SEC records show the following LLCs that Woodbridge sold to investors: Woodbridge Mortgage Investment Fund 1, LLC; Woodbridge Mortgage Investment Fund 2, LLC; Woodbridge Mortgage Investment Fund 3, LLC; Woodbridge Mortgage Investment Fund 3A, LLC; Woodbridge Mortgage Investment Fund 4, LLC; and Woodbridge Structured Funding, LLC.
In addition to the pending SEC investigation, Woodbridge has also been the subject of various investigations by state regulators.
In August 2017, Woodbridge Investment Fund 2 was ordered to pay a $500,000 fine as part of a cease and desist order issued by the State of Michigan Corporations, Securities & Commercial Licensing Bureau. Woodbridge was accused of improperly selling unlicensed securities to Michigan residents.
In April 2017, the Pennsylvania Bureau of Securities Compliance and Examinations entered into an agreement with Woodbridge Structured Funding settling allegations that the firm was improperly selling unregistered securities in Pennsylvania. Woodbridge admitted no wrongdoing in that case but consented to a $30,000 fine.
In May 2015, Woodbridge Mortgage Investment Funds 1, 2, and 3 settled similar allegations brought by the Massachusetts Securities Division and agreed to a $250,000 fine.
If you invested in Woodbridge and have questions about your legal options, contact the experienced investment fraud lawyers at the law firm of Meyer Wilson. Since 1999, we have represented over 1,000 investors and recovered over $300,000,000 on behalf of their clients. We represent clients nationwide with offices in California, Ohio and Michigan.