SEC Charges 2 Woodbridge Partners With Helping Run 'Massive' Ponzi Scheme

Chris Gaetano
Published Date:
Apr 12, 2019

The SEC has charged two former directors of investments at Woodbridge Group of Companies LLC, Ivan Acevedo and Dane R. Roseman, for their involvement in what the agency said was a massive Ponzi scheme, fraudulently raising at least $1.2 billion from more than 8,400 retail investors, many of them seniors, and together receiving more than $3 million in transaction-based and other compensation.

The SEC had previously charged the company and its owners for the scheme. It said that Woodbridge advertised its primary business as issuing loans to supposed third-party commercial property owners paying Woodbridge 11-15 percent annual interest for “hard money,” short-term financing. In return, Woodbridge allegedly promised to pay investors 5-10 percent interest annually. The SEC said that Woodbridge allegedly sought to avoid investors cashing out at the end of their terms and boasted in marketing materials that “clients keep coming back to [Woodbridge] because time and experience have proven results. Over 90 percent national renewal rate!” While Woodbridge claimed it made high-interest loans to third parties, the SEC’s complaint alleges that the vast majority of the borrowers were companies owned by Woodbridge owner Robert H. Shapiro, and that they had no income and never made interest payments on the loans. The SEC said the company used previous investors’ money to pay other investors, which is pretty much the definition of a Ponzi scheme. The company is also said to have paid over $12 million in commissions to sales agents who pitched the investments as “low risk” and “conservative.”  

The SEC noted that Acevedo managed the company's investments, as did Roseman after Acevedo left the firm, but they were not registered in any capacity with the SEC. Beyond that, however, the SEC said that they were responsible for hiring and training Woodbridge’s sales force, they approved fraudulent marketing materials and sales scripts, and they helped create the false appearance that Woodbridge was a legitimate operation when in reality it was a Ponzi scheme that used money from new investors to pay existing investors. The complaint says that they either knew the entire business model was a sham, or they were so utterly reckless in not knowing that functionally it was the same thing. Among other activities, they operated a boiler room "where generating sales at all cost became paramount, and effectively ran much of the day-to-day operation of the scheme."

“Instead of telling investors the truth—that Woodbridge’s third-party lending business was a sham almost from inception—we allege that Acevedo and Roseman worked diligently to perpetuate this sham by preparing and disseminating false marketing materials to induce more investments, keeping this massive Ponzi scheme afloat,” said Eric I. Bustillo, director of the SEC’s Miami Regional Office. “The SEC is committed to continue to hold responsible parties accountable in this far-reaching scheme.”

Click here to see more of the latest news from the NYSSCPA.