SEC and FINRA Continue to Identify Brokers Involved in the Sale of Woodbridge Group of Companies’ Promissory Notes in the $1 Billion Nationwide Ponzi SchemeWednesday, May 29, 2019
The attorneys at ChapmanAlbin have helped and continue to help investors recover money lost due to the Woodbridge Ponzi scheme. Call us today at 1-877-410-8172 to discuss your options.
Over the past two years, the U.S. Securities and Exchange Commission has barred numerous brokers in connection with their involvement or alleged involvement in soliciting promissory notes issued by Woodbridge Group of Companies, a real estate investing firm that executed a $1 billion scheme that has affected thousands of investors nationwide.
The SEC believes that Woodbridge and the 235 associated Limited Liability Companies made false statements or failed to disclose material facts to investors regarding the use of investor funds, the safety and profitability of the investments, associated sales fees, and other costs associated with the purchase of perceived low-risk and conservative securities offered by the company. The scheme was revealed when the company stopped paying investors and filed for bankruptcy in December 2017.
Most recently, Robert Shapiro, the former owner and president of Woodbridge, and two of its directors, were arrested on federal criminal charges relating to the sale of these promissory notes, including conspiracy to commit mail and wire fraud. Shapiro was already ordered by a federal judge to pay $1 billion in penalties and repayments related to the alleged scheme.
Most brokers sanctioned by the Financial Industry Regulatory Authority (FINRA) and SEC in this case were accused of violating FINRA rules that required them to obtain prior approval from their member firm before executing private securities transactions.
Floyd Powell, a former broker most recently associated with MML Investors Services, LLC (March 2017 to February 2018) and MSI Financial Services, Inc. (March 1992 to March 2017) in Albertville, Alabama, allegedly sold nearly $3.5 million in Woodbridge promissory notes to 13 investors and received $103,000 in commissions.
Another broker, Michael Rappa, formerly of Foresters Equity Services, Inc. in San Diego, California from September 2010 to July 2017, agreed to be barred from associating with all FINRA member firms to resolve allegations of his involvement in selling the Woodbridge promissory notes without his firm’s approval.
Kirk Bertsch, a former registered representative associated with Farmers Financial Solutions, LLC in Spearfish, South Dakota from September 2000 to August 2018, was suspended for one month in February 2019 and ordered to pay $1,500 in disgorgement to resolve his alleged involvement in the Woodbridge scheme. According to the Letter of Acceptance, Waiver and Consent submitted to FINRA Department of Enforcement, Bertsch sold a $50,000 Woodbridge promissory note to an investor, receiving $1,500 in commission. He also allegedly invested $240,000 of his own money.
Finally, FINRA suspended Edward Sova, formerly associated with Hornor, Townsend & Kent, Inc. in Baton Rouge, Louisiana from October 2007 to June 2018, for selling $250,000 in Woodbridge notes to three investors without obtaining prior approval from his member firm. Sova allegedly received $5,000 in commission, which he was ordered to pay back as disgorgement, and complete a five-month suspension from February to July 2019.
The SEC and FINRA continue to investigate allegations concerning brokers who participated in the solicitation and sale of promissory notes offered by Woodbridge Group of Companies, LLC.
ChapmanAlbin recently helped Woodbridge investors recover hundreds of thousands of dollars. If a broker was not properly supervised while registered at a brokerage firm, the firm can be held liable for the broker’s misconduct. If you invested and lost money in Woodbridge Group of Companies’ Ponzi scheme, you may be able to recover from the broker or his/her brokerage firm. Call us (1-877-410-8172) today for a free, no obligation consultation.