The Securities and Exchange Commission has barred Claude Mosley, Andrew Costa, Randy Rondberg, and Marcus Bray, four unregistered brokers that sold securities of Woodbridge Group of Companies LLC, a $1.2 billion Ponzi scheme that collapsed in early December 2017 when the firm stopped paying investors and filed for Chapter 11 bankruptcy protection.
The four are barred by the SEC from associating “with any broker, dealer, investment adviser, municipal securities dealer, municipal advisor, transfer agent, or nationally recognized statistical rating organization.”
Between May 2015 and November 2017, Mosley, a resident of Myrtle Beach, South Carolina, sold unregistered Woodbridge promissory notes and private placement fund offerings through his unregistered firm Security Financial LLC. Mosley sold approximately $13 million of Woodbridge securities to 175 investors and received $628,000 in commissions.
Between June 2014 and December 2017, Costa, through his unregistered brokerage firm, Costa Financial Insurance Services Corp, received approximately $735,000 in commissions from Woodbridge after raising approximately $13 million from 76 investors. Costa is based in Fort Lauderdale, Florida.
Rondberg, a resident of Mesa, Arizona, received approximately $918,000 in commissions from Woodbridge after raising approximately $15.5 million between February 2015 and November 2016. Rondberg sold Woodbridge securities through his unregistered firm Trager LLC.
Bray, a resident of American Canyon, California and owner of Bradford Solutions LLC, received an unspecified amount of commissions from Woodbridge after selling approximately $10.4 million of Woodbridge securities to investors between June 2014 and October 2017.
The SEC charged Woodbridge and its owner Robert H. Shapiro in December 2017 for allegedly bilking thousands of retail investors, many of them seniors, in the $1.2 billion Ponzi scheme.
One year later, the regulators charged Woodbridge’s highest-earning unregistered brokers, including Mosley, Costa, Rondberg, and Bray, for their role in the scheme. The SEC sought court-ordered injunctions, return of allegedly ill-gotten gains with interest, and financial penalties against the four unregistered brokers, as well as nine others.
In January 2019, a federal court in Florida ordered Woodbridge and Shapiro to pay $1 billion for operating the Ponzi scheme. Last month, the SEC charged Ivan Acevedo and Dane R. Roseman, two former directors of investments at Woodbridge. Acevedo and Roseman were separately arrested and charged by criminal authorities, along with Woodbridge owner, Shapiro.
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.