US-based consultancy firm Woodbridge Group of Companies has been sentenced in a Florida federal court to pay $1bn (£761m, €875m) in penalties for operating a Ponzi scheme targeting retail investors.
Woodbridge specialised in real estate, note buying and lending and alternative financial services. It was ordered, alongside its 281 related companies, to pay $892m in disgorgement.
Former owner and chief executive Robert Shapiro was fined $100m in a civil penalty, $18.5m in disgorgement and $2.1m in pre-judgement interest.
The US Securities and Exchange Commission (SEC) filed an emergency action against the group in December 2017, after it found that 8,400 retail investors across the states had been defrauded of $1.2bn via a Ponzi scheme.
Many of the investors were retirees who had dipped into their pension funds.
Held accountable
“This resolution accomplishes one of the SEC’s core missions to protect retail investors,” said Stephanie Avakian, co-director of the SEC’s division of enforcement.
“Shapiro and other defendants will be held accountable and required to pay substantial penalties for their misconduct.”
Eric Bustillo, director of SEC’s regional office in Miami, said that once Woodbridge’s business model collapsed the group stopped paying its investors and filed for bankruptcy.
SEC also announced that “Shapiro also consented to the entry of an SEC administrative order, without admitting or denying the SEC’s findings, permanently barring Shapiro from association with any broker, dealer, investment adviser, municipal securities dealer, municipal adviser, transfer agent, or nationally recognised statistical rating organisation, and from participating in any offering of a penny stock”.
