The Securities and Exchange Commission has been investigating a southern California real estate and investment company, the Woodbridge Group of Companies, which has raised over $1 billion from investors, to determine whether the company has been operating as a fraud, according to court documents.
In August the SEC sent subpoenas to 235 LLCs – limited liability companies – which the Commission believes are owned and/or controlled by Woodbridge's president, Robert Shapiro, but did not receive a sufficient response, according to an SEC filing earlier this week.
The SEC is seeking information and documents about payments the LLCs made to Woodbridge, the names of the LLC's managers or members, as well as information regarding financial institutions of the LLCs. The SEC received a response from one LLC entity that said it was not affiliated with Woodbridge or Mr. Shapiro.
"The SEC's application alleges that, although the LLCs were required to produce these documents by August 30 and 31, to date, they have failed to produce any documents," according to the filing. "The SEC's application seeks an order from the federal district court compelling respondents to comply with the SEC's subpoenas." Woodbridge has also not turned over emails of executives and salespeople, according to SEC filings.
The Commission has been investigating Woodbridge, which is based in Sherman Oaks, Calif., for the past year, according to the filing.
Mr. Shapiro did not return phone calls on Friday to comment, but spokesman Michael Rubin replied via email. The Woodbridge Group of Companies "has cooperated, and will continue to cooperate, with the [SEC's] exceedingly broad request for documents," Rubin wrote in the email, adding that the firm has provided more than four million pages of documents to the agency.
"Woodbridge notes that the SEC expressly concedes that the agency 'has not concluded that any individual or entity has violated the federal securities laws,' " Mr. Rubin wrote. "Woodbridge, in its years of dealing with a multitude of regulators, has never been found to have engaged in any fraud and has never settled a matter that included such a charge."
Officials with the SEC did not return calls to comment.
"As the investigation has unfolded, it has come to the attention of the Commission's investigative team that there are numerous LLCs that are interwoven into the structure of products Woodbridge offers for investment," according to the SEC. "Specifically, the Commission is investigating the offer and sale of unregistered securities, the sale of securities by unregistered brokers and the commission of fraud in connection with the offer, purchase and sale of securities."
On the company's website, Woodbridge states that its wealth management group, Woodbridge Wealth, sells three types of investments: first position commercial mortgages with an annual yield of 5%, secondary market annuities with "above average, risk adjusted yields", and a commercial bridge loan fund that potentially returns 6%. According to a scan of BrokerCheck, there is no broker-dealer named Woodbridge Wealth registered with the Financial Industry Regulatory Authority Inc.