The SEC's Division of Enforcement continues its efforts to protect retail investors, gaining reparations for victimized investors in an action against yet another Ponzi scheme.
At the end of January, the Securities and Exchange Commission (SEC) announced that the U.S. District Court for the Southern District of Florida approved judgements against Woodbridge Group of Companies, LLC, and its former owner and CEO, Robert H. Shapiro for the operation of a Ponzi scheme targeting 8,400 retail investors, including elderly retirees.
The Action Against Woodbridge Group
An emergency action was filed against Woodbridge and other defendants by the SEC in December 2017 alleging the operation of a $1.2 billion Ponzi scheme, in which Shapiro made payments to investors using a web of shell companies. The action states that the fraudulent business model fell apart, the defendants filed for Chapter 11 bankruptcy protection.
As part of the disgorgement to be paid by the defendants, a Liquidation Trust is being formed under a plan in the Woodbridge Chapter 11 case in the U.S. District Court for the District of Delaware, which will distribute net proceeds from the disposition of the defendants' assets in bankruptcy. The amount to be distributed will depend upon the amounts collected by the Liquidation Trust.
All defendants consented to the entry of final judgements in the SEC case without admitting or denying the SEC's allegations. The defendants are prohibited from further violating the anti-fraud and other provisions of the federal securities laws.
Protecting the Aging Investor
It is important to note that this is the latest in a series of actions taken against alleged Ponzi schemes that have frequently targeted seniors and retirees. The SEC, in its December 2017 announcement of charged involving the defendants noted that many of the investors in Woodbridge were seniors.
The protection of elderly and aging investors ranks high on the list of SEC exam priorities for 2019. Financial professionals need to keep in mind the special challenges involved in working with senior investors that can make them susceptible to financial abuse.
Contact Jacko Law Group, PC, with any questions or concerns. Our attorneys can provide your firm with more information on how you can work to protect your senior clients and investors.
Robert D. Conca is a Partner at Jacko Law Group, PC. His practice includes representation of investment advisers, broker-dealers, private funds, and non-financial industry companies, and their personnel, in a variety of ...
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