Purported luxury real estate developer The Woodbridge Group of Companies has filed Chapter 11 bankruptcy leaving investors without dividends. The company was already under investigation by the U.S. Securities and Exchange Commission (SEC).
Developer Leaves Dividends Unpaid
Earlier this month the developer missed payments on notes sold to investors, citing rising legal and compliance costs, and signaling that something was amiss.
Since the bankruptcy was announced, Woodbridge has stopped paying dividends to investors, leaving many elderly investors who invested millions into the company without a monthly dividend. Similarly, brokers who sold the Woodbridge products feel equally duped, having been assured that Woodbridge was selling secure real estate investments.
Woodbridge Wealth Not Registered
According to the company, its wealth management group, Woodbridge Wealth, sold three types of investments: first position commercial mortgages with an annual yield of 5%, secondary market annuities with "above average, risk-adjusted yields," and a commercial bridge loan fund that returns 6%.
There appears to be no broker-dealer named Woodbridge Wealth registered with the Financial Industry Regulatory Authority Inc. (FINRA).
Woodbridge Group to Recapitalize Debt
According to a statement released by the company, Woodbridge Financial Group will recapitalize $750 million in debt and has a commitment of $100 million from investor Hankey Capital.
In addition, the company’s CEO Robert Shapiro has resigned. Shapiro will remain on the payroll as a consultant to the firm, receiving a monthly fee of $175,000, according to a Bloomberg News report.
Woodbridge Group Currently Under SEC Investigation
The company has been under SEC investigation for the last year under allegations that it was operating as a fraud. In August, the Commission subpoenaed 235 LLCs that are believed to be owned and/or controlled by Woodbridge's former president, Mr. Shapiro. According to SEC filings in October of this year, the SEC did not receive sufficient responses from the companies.
According to court filings, Woodbridge has $650 million to $750 million in debt, around $350 million less than the $1 billion it claims to have raised from investors.
Have You Lost Money with the Woodbridge Group?
If you lost money investing with the Woodbridge Group or are a victim of an investment scheme, contact a qualified investment fraud attorney today.
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