A federal judge has approved judgments against Woodbridge Group of Companies and its former owner to pay $1 billion in penalties and disgorgement for operating a Ponzi scheme that targeted retail investors, the Securities and Exchange Commission announced Monday.
Judge Marcia G. Cooke of the U.S. District Court for the Southern District of Florida approved previously announced settlements with Woodbridge and its 281 related companies, ordering them to pay $892 million in disgorgement, and ordering its former owner, Robert Shapiro, to pay a $100 million civil penalty and to disgorge $18.5 million in ill-gotten gains, plus $2.1 million in prejudgment interest.
In December 2017, the SEC filed an emergency action that charged Woodbridge and other defendants with operating a scheme that defrauded 8,400 retail investors nationwide, many of them seniors.
Mr. Shapiro promised investors returns of as high as 10% from investments in developers who flipped luxury real estate, but instead their cash flowed into a web of related companies that Mr. Shapiro controlled, the SEC said. He then used money from new investors to repay earlier ones and spent at least $21 million to charter planes, pay country club fees and buy luxury items, according to the agency's filing.
"Our complaint charged that when Woodbridge's fictitious business model collapsed, the company stopped paying investors and filed for Chapter 11 bankruptcy protection," said Eric I. Bustillo, director of the SEC's Miami Regional Office. "The settlement provides for the return of significant funds to investors."