Amidst Ponzi Scheme Allegations, SEC Seeks Trustee Takeover in $1B Woodbridge Bankruptcy

Posted on January 4th, 2018 at 11:18 AM
Amidst Ponzi Scheme Allegations, SEC Seeks Trustee Takeover in $1B Woodbridge Bankruptcy

From the Desk of Jim Eccleston at Eccleston Law LLC:

Real estate Investment company, Woodbridge Group of Companies LLC (“Woodbridge”), of Sherman Oaks, California has filed for Chapter 11 protection. Woodbridge stated the reasons for the bankruptcy filing relate to the fact that it owes $750 million to noteholders as its primary debt along with having incurred significant compliance costs. 

According to the SEC, Mr. Shapiro (owner) through Woodbridge used new investor money to pay the returns owed to existing investors in a Ponzi-scheme like manner. Meanwhile, Mr. Shapiro and his family spent an exorbitant amount of investor funds for their personal use, such as to pay for luxury automobiles, jewelry, country club memberships, fine wine, and chartering private planes. The SEC filed securities action in Florida last month, accusing Woodbridge of defrauding more than 8,400 investors through its real estate investment deals.

After Woodbridge filed for bankruptcy, the SEC sought a trustee takeover of the company, asserting that after the company filed for bankruptcy, Mr. Shapiro hand-picked managers who were involved in the alleged fraud and therefore were too tainted to remain in control of the company. In addition, after the appointment of the new management team, the SEC has accused Mr. Shapiro of continuing to influence the sale of the alleged fraudulent securities after Woodbridge filed for Chapter 11 bankruptcy.

Moreover, the SEC has accused Woodbridge of attempting to use its bankruptcy case to block a receiver appointment in the Florida securities action.

The Delaware bankruptcy court is scheduled to hear arguments on the trustee appointment starting on Jan. 10th.  So far, no date has been set to hear Woodbridge’s objection to the receiver appointment.

Investors likewise need to be concerned about Woodbridge and the future of their debt or equity investments. We currently are investigating Woodbridge to determine recourses for recovery of investment losses. If you had dealings with Woodbridge, Robert Shapiro or a related entity and suffered losses, you may be able to recover your investment losses due to the fraud and/or securities law violations. Contact us at 312.332.0000 for an initial, no charge consultation.

The attorneys of Eccleston Law LLC represent investors and advisors nationwide in securities and employment matters. The securities lawyers at Eccleston Law also practice a variety of other areas of practice for financial advisors including Broker Litigation & ArbitrationStrategic Consulting ServicesRegulatory  MattersTransition Contract Review, and much more. Our attorneys draw on a combined experience of nearly 65 years in delivering the highest quality legal services. If you are in need of legal services, contact us to schedule a one-on-one consultation today.

Related Attorneys: James J. Eccleston

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