Articles Tagged with Woodbridge

Ex-Forest Securities Broker Is Barred By FINRA 

Please contact our broker fraud lawyers at Sheperd Smith Edwards and Kantas (SSEK Law Firm) if former Forest Securities stockbroker, Jeffery Scott Nimmow, sold you Woodbridge promissory notes. 

Nimmow was recently barred by the Financial Industry Regulatory Authority (FINRA) after he sold over $3M in promissory notes from the Woodbridge Group of Companies to 18 investors. Woodbridge is accused of operating a $1.2B Ponzi scam that defrauded 8400 investors. Many of whom were retail investors that included seniors and retirees who lost their retirement money in the scam. 

The US Securities and Exchange Commission (SEC) has filed civil charges against Charles Nilosek for acting as an unregistered broker and illegally selling Woodbridge securities to retail investors. The regulator said that Nilosek, who is based in Massachusetts, was one of the top revenue earners when it came to selling the unregistered investments from the Woodbridge Group of Companies.

The Woodbridge investments are tied to a $1.2B Ponzi scheme that ran from 2012 to 2017. Woodbridge and its 281 related companies are accused of bilking more than 8,400 investors, many of whom were elderly investors who lost their money investing in the company’s promissory notes and private placements. The customers were promised 5-8% in yearly returns and many used their retirement money to invest.

The SEC’s complaint said that Nilosek and his Position Benefits LLC sold over $23M in Woodbridge securities to more than 200 investors in at least four states between 9/2013 and 9/2015. He was paid over $1.4M in compensation. The regulator contends that Nilosek was never a registered broker nor was he ever registered with a brokerage firm.

Investor Awarded $276K in Woodbridge Ponzi Fraud

A Financial Industry Regulatory Authority (FINRA) arbitration panel has awarded more than $276K to an investor that lost money in the $1.2B Woodbridge Ponzi scam. The panel found that Quest Capital Strategies did not properly supervise former broker Frank Dietrich, who sold $400K of Woodbridge-sponsored mortgage notes to the investor.

According to InvestmentNews, Dietrich sold $10.8M of Woodbridge mortgage funds to 58 investors, making nearly $261K in commissions. He retired in March. In November, FINRA barred him after finding that the former broker did not obtain Quest’s approval to sell the notes.

It wasn’t bad enough that over 10,000 investors, many of them retirees and other retail investors, were bilked in the $1.2B Woodbridge Ponzi scam. Now, they are allowed to borrow against what they hope to recover after the bankrupt real estate developer’s assets are liquidated but they must pay a 16% interest rate to do so.

While the rate isn’t necessarily wrong or unfair on the part of hedge fund lender Axar Capital Management—it was the investors that went to the Delaware Bankruptcy court seeking a $215M loan facility so that they could access their funds until Woodbridge’s bankruptcy proceedings are settled—the rate is still a steep sum considering that they thought that their investments would garner an approximately 8% return.

SEC Goes After Woodbridge

Woodbridge to Appoint New Board to Run the Property Developer, Will Pay for Investor Fraud Lawyers
Woodbridge Group of Companies and the US Securities and Exchange Commission have come to an agreement that a New Board of Managers will be appointed to oversee the bankrupt property developer. The company, which is accused of running a $1.2B Ponzi scam, will pay for legal representation for its investors that continue to grapple with losses they may have sustained in the alleged fraud. Some 8,400 investors gave their money to Woodbridge.

Woodbridge owner Robert Shapiro is accused of owing over $961M to investors, many of them elderly investors, who purchased securities from the company while under the impression that they’d be guaranteed up to 8% interest. Investors were told that their money would be lent out to companies in exchange for up to 15% interest when, in fact, contends the SEC, these developers were entities that Shapiro himself controlled.

Shapiro, who is accused of taking at least $21M of investors’ funds to pay for his lavish lifestyle, denies the SEC’s allegations.

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Already under investigation by the US Securities and Exchange Commission for financial fraud, the Woodbridge Group of Companies has filed for Chapter 11 bankruptcy protection. According to InvestmentNews, this move comes a week after the luxury real estate developer missed payments due to investors on the notes they had purchased.

The company has raised over $1B from investors, including senior investors. InvestmentNews reports that many investors were told that their investments would be safe in real estate. Now, however, Woodbridge is saying that it has $750M of debt. Court documents submitted in US Bankruptcy Court state that this is how much nearly 9000 noteholders are owed.

Woodbridge Wealth sells the following investments: first positions in commercial mortgages, secondary market annuities, and a commercial bridge loan. However, reports InvestmentNews, the Financial Industry Regulatory Authority’s BrokerCheck doesn’t show any registered brokerage firm by that name.

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In a subpoena enforcement action, the US Securities and Exchange Commission is ordering 235 LLCs in Colorado and Delaware to provide documents related to its probe into whether Woodbridge Group of Companies, LLC, a California-based real estate and investment company owned and run by its president Robert Shapiro, engaged in a $1B financial fraud. All of the entities, plus another LLC, are affiliated with Woodbridge. The regulator had subpoenaed the 236 of them for the documents in August. Only one LLC responded by the deadline.

Now, the Commission wants a federal district court to make the rest of the LLCs comply with the subpoenas. Meantime, Shapiro has invoked his Fifth Amendment right. However, he maintains that his company did not commit fraud.

SEC Has Been Probing Woodbridge Since 2016
For the past year, the regulator has been looking into looking into possible securities fraud by Woodbridge and others involving more than $1B that was provided by thousands of investors throughout the US. The alleged fraud may include unregistered securities sales, including securities sales by brokers who were not registered, and other fraud.

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