The founder and former chief executive officer of a Florida real estate company has pleaded guilty in Miami federal court to a Ponzi scheme that cost investors — many of them retirees — a total of $1.3 billion.
The 61-year-old man, Robert Shapiro, who ran the Woodbridge Group of Companies, admitted that he “misappropriated” somewhere in the range of $25 million and $95 million given to him by approximately 9,000 investors. He reportedly used it to purchase property in Aspen, Beverly Hills and other exclusive areas as well as jewelry, vintage wines, artwork and other luxury items. The feds have now taken possession of all of these.
Some 700 of those investors are Florida residents. They include retired teachers and doctors. One famous person was also named as a victim of the scheme – – George Stephanopoulos of ABC News and Good Morning America.
The plea comes four months after his arrest, along with two of his senior executives, for wire and mail fraud conspiracy and tax evasion. His attorney says that his client “came to the conclusion he would like to take responsibility for his actions.” He could be sentenced to up to 25 years behind bars. The other two have pleaded not guilty. Their trials are scheduled to begin early next year.
The way the scheme worked was that people were persuaded by representatives of Woodbridge to invest their retirement savings in “first position commercial mortgages” on properties primarily in Colorado and California. They were promised a return of 5% to 10% on their investments, which ran from approximately $25,000 to $1 million. However, Shapiro took the money and used it for himself and his family.
Like many Ponzi schemes, this one collapsed when the company, which originated in Boca Raton, no longer had enough money from new investors to pay earlier ones. It filed for bankruptcy in 2017 amid securities fraud allegations.
Woodbridge and Shapiro’s other related companies reached an agreement in civil court with the Securities and Exchange Commission (SEC) to pay $1 billion, which includes penalties. Some of that money could go to investors as the properties are liquidated.
There are a lot of fraudulent real estate schemes out there. If something seems too good to be true, it probably is. It’s wise to consult with an attorney before making any real estate investment.