Luxury Real Estate Developer Under SEC Scrutiny For Investment Fraud Files For Chapter 11 Bankruptcy
Woodbridge Group of Companies, filed for bankruptcy on Monday, December 4, 2017, citing exacerbated unforeseen costs associated with both expansion and regulatory compliance, as well as litigation costs and an ongoing SEC fraud investigation.
Woodbridge, a privately-owned company out of Sherman Oaks, California, failed to pay on Notes due to investors on December 1, just prior to filing bankruptcy. Woodbridge raised over $1 billion from investors nationwide through hundreds affiliated companies. According to documents filed in the US Bankruptcy Court, the company owes approximately $750 million to thousands of note holders.
The SEC has been investigating Woodbridge since 2016 for fraudulent sales of securities.
In addition, the company has received inquiries from multiple state regulators, including Michigan, regarding the alleged offer and sale of unregistered securities by unregistered agents. In some states, Woodbridge allegedly failed to inform investors that other state securities agencies had ordered the company to stop selling unregistered securities, as well as failed to disclose investment risks.
CEO Robert Shapiro, resigned following the bankruptcy. However, Shapiro has been retained as a consultant during the bankruptcy proceedings. He will receive a monthly fee of $175,000, justifiable Woodbridge documents claim, due to Shapiro’s extensive and unique business experience.
Woodbridge operates through a network of over 230 limited liability companies owned by RS Protection, all of which appear to have connections with former CEO Shapiro or his family members.
According to a statement offered by the company, the company intends to cooperate fully with regulators. Woodbridge has a commitment of $100 million in debtor-in-possession financing (secured by liens on 28 properties) from Los Angeles-based investor Hankey Capital LLC. Woodbridge intends to recapitalize $750 million on debt.
If you feel that you may have been a victim of securities fraud, investment fraud, or broker negligence please contact our Investment Fraud and Securities Fraud Law Offices serving the Greater Detroit Area including; Birmingham MI, Troy MI, Pontiac MI, Warren MI, Livonia MI, and Beyond! We offer FREE consultations and are happy to talk to you about your unique case today.