Trio Of Florida Businessmen Charged With $1.3B Ponzi Scheme

April 12-- Apr. 12--Three businessmen who built a real-estate empire on the backs of investors from South Florida to Southern California were arrested Thursday on charges of orchestrating a $1.3 billion Ponzi scheme that swindled thousands, authorities said. Most of the victims were elderly.

Retired doctors, teachers and at least one high-profile investor -- ABC News anchor George Stephanopoulos -- were promised 5 to 10 percent returns while financing high-end properties purchased in Beverly Hills, Aspen and other wealthy enclaves by the Woodbridge Group of Companies and its former CEO, Robert H. Shapiro, who lives in Sherman Oaks, California.

Shapiro, who had launched the business in Boca Raton, delivered on that promise until Woodbridge's collapse amid allegations of securities fraud as well as a bankruptcy filing in late 2017.

Shapiro and two Woodbridge senior executives, Dayne Roseman and Ivan Acevedo, were charged with conspiring to commit wire and mail fraud as well as money laundering. Shapiro, who was arrested at his $9 million Sherman Oaks estate by FBI and Internal Revenue Service agents, was also charged with tax evasion.

All three businessmen had their first appearances in federal court in Los Angeles Thursday afternoon. South Florida federal prosecutor Roger Cruz, who oversaw the criminal investigation, was seeking detention for Shapiro before trial but not the other two Woodbridge executives. All three were charged in the same conspiracy indictment filed in Miami.

Advertisement

"Mr. Shapiro denies the allegations in the indictment and will vigorously defend himself in the appropriate forum," said Shapiro's lawyer, Ryan O'Quinn, who is a former federal prosecutor in Miami.

Dayne Roseman's attorney, Jeffrey Cox, could not be reached for comment late Thursday. Acevedo also could not be reached.

In late 2017, Woodbridge's dealings collapsed as Shapiro and his company ran out of money to pay old investors with funds from new ones, leading to a bankruptcy filing in Delaware and a crackdown by the Securities and Exchange Commission in Miami. More than 10,000 Woodbridge investors lost money in the alleged Ponzi scheme, including 700 in South Florida, according to federal court records.

The scope of Shapiro's scheme was not unlike the racket run by convicted Fort Lauderdale lawyer Scott Rothstein, who sold fabricated legal settlements to rich investors totaling $1.2 billion before the scheme unraveled a decade ago. Rothstein's victims, however, were a much smaller group of wealthy investors from Florida, New York and Texas.

In January of this year, the SEC announced the resolution of its civil dispute with Woodbridge, hundreds of related companies and Shapiro. They agreed to pay $1 billion, including penalties, that might eventually compensate investors who had bought mortgage notes in the real estate investments. Woodbridge's most celebrated purchase was the "Owlwood" estate in the Holmby Hills section of Los Angeles, which was once owned by Tony Curtis and Sonny and Cher. It is now listed on the market for $115 million.

In the SEC case, U.S. District Judge Marcia G. Cooke approved civil judgments against Woodbridge and its 281 related companies, requiring them to pay $892 million. The judge also approved the judgment against Shapiro, requiring him to pay a $100 million civil penalty as well as $18.5 million in ill-gotten gains plus $2.1 million in interest.

Woodbridge's representatives sold "first position commercial mortgages" to thousands of investors who financed the company's real estate purchases through unsecured loans, according to court records. Woodbridge and its agents violated securities laws because they operated as broker-dealers by selling mortgage notes as securities without properly informing investors of the risks and other issues.

Shapiro and his company also made Ponzi payments to investors and used a web of shell companies to conceal the scheme, which spanned five years before Woodbridge's collapse in December 2017, according to authorities.

Under the SEC settlement, funds would be paid back to Woodbridge's investors through the liquidation of its various real estate holdings, mostly in California and Colorado. The money would be repaid on a pro rata basis, less the interest that investors already received on their principal from Woodbridge before its Ponzi scheme collapsed.

In theory, Woodbridge's thousands of investors, who sank from $25,000 to $1 million in its real estate properties, could receive a percentage of their investments, depending on the sale of the company's real estate holdings.

Woodbridge investors said they felt deceived by the company's team of representatives who persuaded them to invest their retirement savings at sales pitches at South Florida hotels and restaurants. They thought their investments would be safe because they were backed by hard assets -- real estate.

___

(c)2019 Miami Herald

Visit Miami Herald at www.miamiherald.com

Distributed by Tribune Content Agency, LLC.