This week, the Securities and Exchange Commission announced that it had ordered Woodbridge Group of Companies LLC and its former owner to pay $1 billion in penalties and disgorgement for operating a Ponzi scheme, which targeted retail investors. The judgment against Woodbridge and its 281 related companies orders them to pay $892 million in disgorgement. Former owner and CEO Robert H. Shapiro has been ordered to pay a $100 million civil penalty and to disgorge $18.5 million in ill-gotten gains. He has also been ordered to pay $2.1 million in prejudgment interest.
The SEC filed an emergency motion charging the company and the other defendants with being involved in a $1.2 billion Ponzi scheme that defrauded 8,400 retail investors in December of 2017. The SEC’s complaint accused Shapiro of making Ponzi payments to investors and using shell companies to hide the scheme. The disgorgement order against Woodbridge and related corporate defendants will be considered satisfied by the Liquidation Trust formed under a plan in the Woodbridge Chapter 11 case.
The Liquidation Trust will be required to make distributions of net proceeds from the disposition of assets in bankruptcy. The amount distributed will depend on the amounts acquired by the Liquidation Trust. All defendants have consented to the entry of the final judgments without admitting or denying the allegations. Further details can be found here.