The Texas State Securities Board announced that Brett Pittsenbargar, an Austin-based insurance agent who allegedly sold $9.3 million in fraudulent investments, is facing first-degree felony charges of securities fraud, money laundering, and theft.
According to the regulators, Pittsenbargar sold fraudulent investments to 43 clients, most of whom are older than 65 years of age. His alleged fraud is rooted in his sale of promissory notes issued on behalf of a network of more than 280 entities collectively referred to as the Woodbridge Group of Companies.
Woodbridge purportedly made loans to third parties that were secured by real estate but was actually a Ponzi scheme that raised an estimated $1.3 billion from approximately 9,000 victims.
Although Pittsenbarger has never been registered to sell securities, he allegedly began working as a sales agent for Woodbridge. Beginning in 2015, the Texas Securities Commissioner brought enforcement actions against Woodbridge and its unlicensed sales agents, including Pittsenbargar and his company, BP Financial & Tax Design Group of Austin.
The Texas enforcement actions resulted in the offer of millions of dollars of restitution to Texas investors, and the state securities commissioner barred Pittsenbargar for his role in the scheme.
According to the indictment, even after the entry of an enforcement action against him, Pittsenbargar continued to illegally sell promissory notes issued by an entity called Ironbridge Asset Fund LLC, a company he founded and solely owned. Pittsenbargar didn’t tell potential investors he owned Ironbridge.
Pittsenbargar allegedly transferred money meant for Ironbridge funds into Woodbridge investments, and in most cases, he moved funds that clients already had in Woodbridge investments into the Ironbridge funds, then back into Woodbridge.
Woodbridge filed for bankruptcy protection in December 2017 and in October 2018 the court approved a plan to liquidate the company. Woodbridge’s founder, Robert Shapiro, was sentenced to 25 years in federal prison in 2019.
The Securities and Exchange Commission sued Pittsenbargar in November, alleging that he raised at least $18 million for Woodbridge investments from 2012 through 2016. He earned $1 million in commissions by selling the unregistered investments, according to the SEC, which was assisted by the Texas State Securities Board in the investigation.
Pittsenbargar failed to disclose material facts to investors, according to the Travis County indictment. He didn’t inform investors of two state regulatory orders against the Woodbridge Group in 2015, one by the Texas State Securities Board and another by Massachusetts regulators that found Woodbridge’s main investment product was an unregistered security.