CEO in Woodbridge Ponzi scheme fined $120 million by SEC

CEO in Woodbridge Ponzi scheme fined $120 million by SEC
Robert Shapiro is settling claims he defrauded investors in a $1.2 billion real estate Ponzi.
NOV 01, 2018
Robert Shapiro, the former chief executive officer of Woodbridge Group of Companies, agreed to pay $120 million to the Securities and Exchange Commission to settle allegations he defrauded investors in a $1.2 billion real estate Ponzi scheme that drove his company into bankruptcy, according to court papers. Mr. Shapiro didn't admit or deny the allegations. Mr. Shapiro promised 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. Mr. Shapiro, his wife Jeri, and the various Shapiro-owned entities named as defendants in the SEC suit are together responsible for paying $892 million to the commission, according to the documents filed Oct. 25 in federal court in Miami. The fines will go into a "fair fund" which will be used to compensate the victims of the Ponzi scheme, the documents said. Ryan O'Quinn from DLA Piper, an attorney for Mr. Shapiro, didn't immediately respond to a request for comment on the settlement. Representatives for the SEC declined to comment. Woodbridge, which has been working its way through Delaware bankruptcy court, received approval Oct. 29 to go forward with the liquidation plan for its remaining assets. The bankruptcy court found sufficient evidence to show that the debtors operated as a Ponzi scheme and the proposed settlements are fair and in the best interests of the various creditor groups. The settlement is subject to District Court approval. The bankruptcy case is: Woodbridge Group of Cos., 17-12560, U.S. Bankruptcy Court, District of Delaware. The District Court case is: Securities and Exchange Commission v. Shapiro, 17-24624, U.S. District Court, Southern District of Florida.

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