The Securities and Exchange Commission has charged Charles Nilosek, a Massachusetts-based external sales agent for Woodbridge Group of Companies LLC, with illegally selling Woodbridge securities to retail investors while acting as an unregistered broker. According to the complaint, Nilosek was among Woodbridge’s top revenue producers.
The SEC previously charged Woodbridge and its former owner, Robert H. Shapiro, and Woodbridge’s other highest-earning unregistered brokers. In January, a federal court in Florida ordered Woodbridge, related companies, and Shapiro together to pay $1 billion for operating this Ponzi scheme. The SEC also charged Woodbridge’s two former directors of investments for their roles in Woodbridge’s Ponzi scheme.
According to the SEC’s complaint, from at least September 2013 to September 2015, Nilosek and his company, Position Benefits LLC, raised more than $23 million by selling Woodbridge securities to more than 200 retail investors located in at least four states.
Nilosek was not registered in any capacity with the SEC, and allegedly received more than $1.4 million in transaction-based compensation. The SEC amended its complaint in the Central District of California and added Nilosek as a defendant.
The SEC’s amended complaint charges Nilosek with violating certain registrations provisions of the Securities Act of 1933 and the Securities Exchange Act of 1934 and seeks disgorgement of allegedly ill-gotten gains with interest and financial penalties.
Yesterday, The DI Wire reported that the SEC barred Claude Mosley, Andrew Costa, Randy Rondberg, and Marcus Bray, four unregistered brokers that sold Woodbridge securities.
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.
The scheme collapsed in typical Ponzi fashion in early December after Woodbridge stopped paying investors and filed for Chapter 11 bankruptcy protection.