SEC wins asset freeze in suit alleging $1.2B Ponzi scheme
U.S. regulators sued a California man over claims that he raised more than $1.2 billion in a Ponzi scheme that targeted retail investors by touting big returns from short-term loans to commercial property owners.
The SEC won an asset freeze against Robert Shapiro and his unregistered investment companies known as the Woodbridge Group of Companies, the agency said Thursday in a statement announcing the lawsuit. The SEC sought the freeze after earlier orders forced the companies to open their books in recent months, the agency said.
Shapiro, who lives in Sherman Oaks, California, is accused of swindling 8,400 investors who were promised returns as high as 10% from repayments of loans his companies were making to third-party borrowers, the SEC said. He used money from new customers’ to pay earlier ones while using at least $21 million of investor cash to charter planes, pay country club fees and buy luxury items, according to the agency’s complaint filed in federal court in Miami.
“Through aggressive tactics, Woodbridge and Shapiro swindled seniors into a business model built on lies,” Stephanie Avakian, co-director of the SEC’s enforcement unit, said in the agency’s statement.
The SEC accuses Shapiro and Woodbridge of violating securities and broker-registration rules and is seeking return of ill-gotten gains in addition to fines.