SEC files amended complaint in Woodbridge Ponzi scheme case

Adds names of 16 "advisers" and unlicensed financial firms to civil suit

May 23, 2019 @ 1:11 pm

By InvestmentNews

In an amended complaint filed in the U.S. District Court in Los Angeles, the Securities and Exchange Commission has widened its case against Woodbridge Securities to include 16 additional unlicensed individuals and financial firms who it charges with selling unregistered securities.

(More:SEC bars four 'advisers' for selling unregistered Woodbridge securities)

The agency is seeking permanent injunctions against the 16, disgorgement of ill-gotten gains and unspecified civil penalties.

Beginning in April 2013 through December 2017, the 16 additional defendants "served as unregistered brokers on behalf of Woodbridge, raising approximately $183 million from the sale of Woodbridge's unregistered securities from approximately 2,300 retail investors located throughout the United States," the SEC's complaint stated.

It said the defendants earned approximately $9.8 million in commissions from the sales, noting that many of the securities' buyers were elderly and had invested their retirement savings as a result of the defendants' marketing techniques.

(More:Woodbridge Group execs charged with criminal fraud in Ponzi scheme)

"Woodbridge was actually operating a massive Ponzi scheme, raising more than $1.2 billion before collapsing in December 2017 and filing a petition for bankruptcy," the SEC said.

"At all relevant times, the defendants held no securities licenses, were not registered with the Commission, and were not associated with registered broker-dealers. Further, Woodbridge's securities were not registered with the Commission nor did they qualify for an exemption from registration. Defendants were thus not permitted to sell Woodbridge's securities," filing stated.

The 16 defendants are: Donald Anthony Mackenzie and Robert S. "Lute" Davis, Jr., of Spring, Texas, and their firm, Old Security Financial Group Inc.; Aaron R. Andrew of Holladay, Utah; Live Abundant, the firm where Mr. Andrew worked; Jeffrey L. Wendel of Fort Recovery, Ohio, and his firm, Wendel Financial Network; Richard Fritts of Knoxville, Tenn., and his firm, Fritts Financial; Marcus Bray of American Canyon, Calif., and his firm, Bradford Solutions; Gregory W. Anderson of Fort Collins, Colo., and his firm, Balanced Financial; Gregory A. Koch of Douglassville, Pa. and his firm, Koch Insurance Brokers; and Charles N. Nilosek of Plymouth, Mass.

(More:SEC charges five unlicensed salespeople in Woodbridge Ponzi)

In connection with its Woodbridge-related actions the SEC has barred four individuals posing as registered representative or registered investment advisers: Randy Rodberg of Mesa, Ariz.; Andrew Costa of Fort Lauderdale, Fla.; Claude Mosely of Myrtle Beach, S.C.; and Marcus Bray of American Canyon, Calif.

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