It could be up to 25 years in prison for former Woodbridge Group of Companies CEO Robert H. Shapiro after he pleaded guilty to conspiracy and tax evasion in a Miami courtroom on Aug. 7.
Under Shapiro, now-defunct Woodbridge perpetrated a $1.3 billion Ponzi scheme from July 2012 to Dec. 2017, when Woodbridge went bankrupt, seeking Chapter 11 protection.
The firm ran its scheme through offices across the country, including in Boca Raton, Fla., and Sherman Oaks, Calif.
Back in January, the Securities and Exchange Commission announced that Shapiro and Woodbridge Group of Companies LLC had been ordered to pay $1 billion in penalties and disgorgement for operating the Ponzi scheme that targeted retail investors, many of them seniors who had invested retirement funds.
Last November, the court also ordered Shapiro to pay a $100 million civil penalty and to disgorge $18.5 million in ill-gotten gains plus $2.1 million in prejudgment interest.
Shapiro, who resigned as CEO in Dec. 2017 but according to court papers continued to receive a $175,000 monthly consulting fee during the Chapter 11 proceedings, admitted the company continued to solicit investors even as it was on the verge of bankruptcy. The company said in the 2017 court documents that the consulting fee was justified due to Shapiro’s unique business experience and to ensure his cooperation with the restructuring.
This week Shapiro pleaded guilty to one charge of conspiracy to commit mail fraud and one count of tax evasion based on his failure to pay more than $6 million in taxes from 2000 to 2005. He will be sentenced in the case, U.S. v. Shapiro, 19-cr-20178, U.S. District Court, Southern District of Florida (Miami), on Oct. 15.
Two alleged co-conspirators in the Woodbridge Ponzi scheme, both former directors of investment at Woodbridge—Dane Roseman and Ivan Acevedo, are scheduled for trial in February.
In an Aug. 8 statement, Miami U.S. Attorney Ariana Fajardo Orshan said Shapiro, 61, promised returns as high as 10% from investments in loans to luxury property developers.
Instead, he used money from new investors to repay earlier ones and stole as much as $95 million, routing money through a network of 270 limited liability companies owned by RS Protection Trust, of which Shapiro is the trustee and his family members the sole beneficiaries.
Shapiro takes ‘personal responsibility’
Shapiro’s attorney Ryan O’Quinn said in a statement, “Mr. Shapiro has taken personal responsibility for the failure of Woodbridge. His guilty plea follows his decision to voluntarily place hundreds of millions of dollars of assets under bankruptcy court supervision and the consensual resolution of the SEC enforcement investigation. Mr. Shapiro hopes that these decisions allow the estate to focus on maximizing the value of the real estate portfolio for the benefit of Woodbridge’s creditors.”
Losses to the more than 7,000 Woodbridge investors are expected to exceed $100 million, according to a court filing.
Prosecutors said Shapiro used investor money for his $6.7 million home and $3.1 million for chartering planes and for personal travel. He and his wife agreed to forfeit artworks seized from their home in Sherman Oaks, Calif., by Pablo Picasso, Alberto Giacometti, Marc Chagall and Pierre-August Renoir; 603 bottles of wine; numerous pieces of luxury jewelry; and a 1969 Mercury convertible (among $672,000 in luxury cars).
Shapiro, not to be confused with L.A. celebrity attorney Robert L. Shapiro, gained some public attention in Sept. 2016 when one of his companies, Sturmer Pippin Investments, LLC, bought the famed Owlwood Estate in Los Angeles, the former home of stars such as Tony Curtis and Cher, for $90 million.
The property is currently listed for sale at $115,000,000.
Veteran financial services industry journalist Brian Anderson joined 401(k) Specialist as Managing Editor in January 2019. He has led editorial content for a variety of well-known properties including Insurance Forums, Life Insurance Selling, National Underwriter Life & Health, and Senior Market Advisor. He has always maintained a focus on providing readers with timely, useful information intended to help them build their business.
