SEC charges business journalist, 12 others who sold Woodbridge Ponzi

The 13 additional unregistered brokers sold more than $350 million of the Ponzi's notes

Dec 19, 2018 @ 4:42 pm

By Bruce Kelly

The Securities and Exchange Commission said Wednesday that it had charged an additional 13 individuals, including a former financial journalist, with unlawfully selling the securities of Woodbridge Group of Companies, a $1.2 billion Ponzi scheme that collapsed last December and filed for bankruptcy.

The 13 individuals charged were among Woodbridge's top salespeople, selling more than $350 million of its unregistered securities to more than 4,000 investors, according to the SEC statement.

A year ago, the SEC charged The Woodbridge Group of Cos. and its founder, Robert Shapiro, with running a massive $1.2 billion Ponzi scheme that targeted 8,400 investors. Woodbridge ran a real estate scheme based on short-term, one-year loans and mortgages, according to the SEC's complaint.

Last month, without admitting or denying the charges, Mr. Shapiro agreed to pay $120 million to settle allegations that he had defrauded investors.

Woodbridge depended on a network of unregistered brokers, some of whom had previously been barred by the securities industry, to sell the notes, which promised annual interest of 5% to 8%.

This is the second group of unregistered salespeople involved with Woodbridge that the SEC has charged. In August, the agency charged five unlicensed salespeople in the scheme. Three of those individuals have since settled with the SEC.

Prominent among the individuals newly charged is Jordan E. Goodman, a self-described nationally recognized expert on personal finance who for 18 years worked on the editorial staff of Money magazine, where he served as a Wall Street correspondent, according to the SEC. He also appears frequently on Fox News Network, Fox Business Network and other television stations.

According to the SEC's complaint, Mr. Goodman helped a company known as Knowles Systems raise $147 million from investors who bought the Woodbridge notes. That's roughly 12% of the total amount of money raised in the scheme, which purportedly invested in real estate assets.

Mr. Goodman gave Woodbridge publicity and circulated communications about Woodbridge, which, though not a direct offer of sale, described the securities, according to the SEC. Unbeknownst to the journalist's readers and viewers, many of whom used their retirement savings to purchase the Woodbridge securities, Mr. Goodman received a sales commission each time they invested through Knowles Systems. He was paid almost $2.3 million in commissions and marketing fees, which he failed to disclose.

Mr. Goodman did not return a call for comment. According to the SEC, he settled the regulator's charges without admitting or denying the allegations. He will pay back $2.29 million and interest of $315,850, along with a $100,000 penalty.

Alan H. New and David S. Knuth, co-owners of Synergy Investment Services, were also charged. They settled without admitting or denying the SEC's allegations. The court will determine payment at a later date.

The other 10 individuals charged were: Robert S. "Lute" Davis, Donald Anthony Mackenzie, Aaron R. Andrew, Jeffrey L. Wendel, Randy T. Rondberg, Richard Fritts, Marcus Bradford Bray, Gregory W. Anderson, Claude Steven Mosley, and Gregory A. Koch.

A call to Mr. Davis' and Mr. Mackenzie's firm, Old Security Financial Group Inc., could not be completed. A call to Mr. Rondberg's firm, Trager, also could not be completed.

Mr. Andrew, Mr. Wendel, Mr. Anderson, Mr. Mosley and Mr. Koch did not return calls to comment.

A call to Mr. Fritts' firm, Fritts Financial, could not be completed, and Mr. Bradford Bray could not be reached to comment.


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