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October 16, 2019

Investment fraudster gets 25 yrs. in prison for $1.3B Ponzi scheme

By Joe Cooper

The former head of a California-based investment firm, which operated a Connecticut office, has been sentenced to 25 years in prison for leading a $1.3 billion Ponzi scheme that stole money from thousands of investors, prosecutors say.

Robert Shapiro, 61, of Sherman Oaks, Calif., was sentenced Tuesday in Miami federal court after pleading guilty to conspiracy and tax evasion charges.

According to the indictment and court documents, Shapiro served as CEO of Woodbridge Group of Co. LLC, which employed about 130 employees at offices in Connecticut, Florida, California, Colorado and Tennessee. Shapiro told investors his firm held real estate loans that paid high monthly interest rates up to 10 percent.

Under the scheme, which ran from at least July 2012 to Dec. 2017, Woodbridge falsely claimed that investments were tied to properties owned by third parties, when in fact, the holdings were “secretly” owned by Shapiro and his co-conspirators.

Prosecutors say Shapiro created and controlled over 270 limited liability companies that he used to acquire and sell the properties pitched to investors. Shapiro and his accomplices then used “high-pressure” sales tactics to market and promote these investments as “low-risk, safe, simple and conservative.”

Woodbridge also falsely claimed the firm was profitable and advertised high rates of return to investors, even though Shapiro’s real estate holdings failed to spur sufficient cash flow to satisfy loan obligations and other interest payments owed to investors.

In an effort to offset the losses, Woodbridge began making Ponzi payments in the hundreds of millions of dollars using money invested by new investors to pay returns to elderly investors. Shapiro in certain cases made fraudulent interest payments even though the advertised properties were never acquired. 
 
At least five states issued cease and desist orders against on Woodbridge entities due to unregistered sale of securities, but Shapiro and his co-conspirators continued to sell Woodbridge investments to residents of those states.

In 2017, Shapiro, without notifying investors that Woodbridge was insolvent, began collecting money from investors through the filing of the firm’s bankruptcy in Dec. 2017. Prior to the bankruptcy filing, Shapiro also diverted millions of dollars in investor funds to numerous bank accounts opened in his wife’s name for new ventures.

In total, Woodbridge coerced over 9,000 investors to invest almost $1.3 billion. At least 2,600 of the victims invested their retirement savings worth about $400 million.

Shapiro diverted approximately $25 million to $95 million of investor money for himself and his immediate family members. More than $10 million was spent on buying homes, home improvements and chartering private planes and travel, among other luxury purchases.

He also admitted to failing to pay over $6 million in taxes to the IRS between 2000 through 2005.

Under his plea deal, Shapiro and his wife agreed to forfeit a number of assets, including jewelry and paintings, to federal authorities.

Following his prison term, Shapiro will be placed on supervised release for three years.

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1 Comments

Anonymous
October 17, 2019

I wonder how many more like him are out there.Doctors and teachers are easy prey for this kind of thing.Bernie Madoff started a trend.

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