Real estate Ponzi scammers ordered to pay $1 billion

The real estate investment company allegedly swindled 8,400 investors across the country

Real estate Ponzi scammers ordered to pay $1 billion

A real estate investing firm and its former owner have been ordered to pay $1 billion in penalties for operating a Ponzi scheme.

In December 2017, the Securities and Exchange Commission filed an action against Robert H. Shapiro and The Woodbridge Group of Companies, a group of unregistered investment companies of which Shapiro was CEO. The SEC alleged that the companies were operating a massive Ponzi scheme that swindled 8,400 investors. The SEC charged that Shapiro and Woodbridge cheated customers in “a business model built on lies.”

Woodbridge claimed that it would pay investors a 10% annual return by investing in developers who flipped luxury real estate, according to a CNBC report. In reality, the money was used to pay off earlier investors. Shapiro was accused of siphoning off $21 million in investor money for himself.

A federal court in Florida has ordered Woodbridge to pay $892 million in disgorgement, while Shapiro has been ordered to pay a $100 million civil penalty and return more than $20 million in ill-gotten gains and interest, according to CNBC.

Woodbridge and Shapiro have neither admitted nor denied the SEC’s accusations, according to CNBC.

 

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