SEC Sues Real Estate Developer Over Alleged ‎$1.2 Billion ‎Ponzi Scheme ‎

The Securities and Exchange Commission (SEC) has charged Florida-based ‎real estate developer Woodbridge Funds, owner Robert Shapiro, and affiliated entities with running a Ponzi Scheme Ponzi Scheme A Ponzi scheme is a scam that looks to lure investors, ultimately paying profits to earlier investors with funds from more later investors.This form of fraud tricks victims into believing that products are instead generated from product sales or other means. In actuality, most investors are completely oblivious to the actual origin of incoming funds.One of the central attributes of a Ponzi scheme is the necessity of its ongoing nature, which is dependent on a steady flow of new contributions and A Ponzi scheme is a scam that looks to lure investors, ultimately paying profits to earlier investors with funds from more later investors.This form of fraud tricks victims into believing that products are instead generated from product sales or other means. In actuality, most investors are completely oblivious to the actual origin of incoming funds.One of the central attributes of a Ponzi scheme is the necessity of its ongoing nature, which is dependent on a steady flow of new contributions and Read this Term that solicited nearly $1.2 billion from approximately 8,400 investors.‎

The SEC filed its complaint Thursday in a federal court in Miami, naming the ‎unregistered investment companies called the Woodbridge Group of ‎Companies LLC. ‎

Woodbridge offered a number of structured investment products to the ‎public, which purportedly provided investors with higher returns and shorter ‎terms, secured by commercial real estate. Earlier this month, Woodbridge stopped paying investors and filed for ‎Chapter 11 bankruptcy amidst allegations of misconduct.‎

According to the SEC complaint, Robert Shapiro and his companies began soliciting investors several years ago through advertising ‎that their money would be pooled and used in short-term loans offered for embattled property ‎businesses. Woodbridge told investors that the commercial loans would generate approximately ‎5-10 ‎percent interest a year, as the company would earn 11-15 percent annual interest from offering “hard ‎money” financing.

Woodbridge paid for commercial ads touting investment opportunities in the company and ‎Shapiro met with some investors to show projects they had purportedly funded, also ‎claiming over 90% national renewal rate. In fact, the vast majority of the borrowers were ‎his owned companies that had no income and never made interest Payments Payments One of the bases of mediums of exchange in the modern world, a payment constitutes the transfer of a legal currency or equivalent from one party in exchange for goods or services to another entity. The payments industry has become a fixture of modern commerce, though the players involved and means of exchange have dramatically shifted over time.In particular, a party making a payment is referred to as a payer, with the payee reflecting the individual or entity receiving the payment. Most commonl One of the bases of mediums of exchange in the modern world, a payment constitutes the transfer of a legal currency or equivalent from one party in exchange for goods or services to another entity. The payments industry has become a fixture of modern commerce, though the players involved and means of exchange have dramatically shifted over time.In particular, a party making a payment is referred to as a payer, with the payee reflecting the individual or entity receiving the payment. Most commonl Read this Term on the ‎loans, the agency said. ‎

All the while, Shapiro diverted at least $21 million for his own benefit. To ‎create the illusion of stability, the defendants allegedly paid $64.5 million in ‎commissions to sales agents for telling investors that they can make steady gains ‎from Woodbridge’s “low risk and conservative” investments. The defendants also used investors’ money to pay other ‎investors – the hallmark of a Ponzi scheme. ‎

Eric I. Bustillo, Director ‎of the SEC’s Miami Regional Office, commented: ‎“Our complaint further alleges that Shapiro used a web of layered companies to conceal ‎his ownership interest in the purported third-party borrowers. Shapiro used the scheme to line his pockets with ‎millions of investor dollars.”‎