No one wants to have their name linked to Bernie Madoff; the infamous mastermind of the largest financial fraud in U.S. history swindled investors out of more than $60 billion.
According to a Securities and Exchange Commission lawsuit, another scheme has defrauded even more investors than Madoff's. More than 8,400 investors lost about $1.22 billion in an alleged Ponzi scheme run by luxury real estate developer Robert H. Shapiro and his Woodbridge Group of Companies LLC.
Madoff's operation defrauded about 4,800 clients, though the nearly $65 billion loss they suffered is more than 50 times greater than the alleged fraud in the Woodbridge case.
The Woodbridge Group has been under investigation in Texas as well as several other states, news reports indicate. The company once employed about 140 people across six states.
“We allege that through aggressive tactics, Woodbridge and Shapiro swindled seniors into a business model built on lies," the co-director of the SEC’s Enforcement Division said in a statement.
The SEC claims that Woodbridge offered its investors -- many of whom are seniors -- interests in short-term commercial real estate loans, which the company said had interest rates ranging from 11 to 15 percent. The SEC alleges that the loans that were purportedly to third parties were actually to companies Shapiro controls. The companies had no revenue and made no payments on loans, the federal agency states.
The SEC says revenue went to pay commissions to salespeople (more than $64 million), with $21 million funneled to Shapiro personally. Funds were also used to pay other investors, the SEC alleges.
No criminal charges have been filed in the case.
If you or your firm faces investigation or white collar criminal charges, you can speak with an attorney experienced in representing clients in these complex matters.