Former Woodbridge Group owner and chief executive officer Robert Shapiro was sentenced to 25 years in prison yesterday for his role in a $1.3 billion Ponzi scheme that spanned from July 2012 until December 2017, when Woodbridge went bankrupt.
Shapiro pleaded guilty to conspiracy and tax evasion in Miami back in August, and previously agreed to pay $120 million to resolve civil claims related to the scheme brought by the U.S. Securities and Exchange Commission.
Under his leadership, the scheme raised $1.3 billion from approximately 8,000 investors, and resulted in losses topping nearly $500 million.
Regulators have since charged Woodbridge’s highest-earning brokers for their role in the scheme, and instituted court-ordered injunctions, return of allegedly ill-gotten gains with interest, and financial penalties.
The SEC previously charged Ivan Acevedo and Dane R. Roseman, two former directors of investments at Woodbridge, who were separately arrested and charged by criminal authorities.
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.
While Woodbridge claimed it made high-interest loans to third parties, the vast majority of borrowers were Shapiro-owned companies that had no income and never made interest payments on the loans.
Shapiro and Woodbridge purportedly used investors’ money to pay other investors, and paid $64.5 million in commissions to sales agents who pitched the investments as “low risk” and “conservative.”
Shapiro diverted at least $21 million for his own benefit, including to charter planes, pay country club fees, and buy luxury vehicles and jewelry. The scheme collapsed in typical Ponzi fashion in early December after Woodbridge stopped paying investors and filed for Chapter 11 bankruptcy protection.