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Company Linked To Ponzi Scheme Begins Liquidating LA Assets

A liquidation entity for a company that allegedly ran a massive $1.2B Ponzi scheme, defrauding about 8,400 investors including ABC news anchor George Stephanopoulos, has liquidated five assets in Southern California

The Woodbridge Liquidation Trust last month sold five properties in four sale transactions in Los Angeles totaling $69.1M, according to Securities and Exchange Commission documents

Office building 8124 West 3rd St. in Los Angeles
Office building 8124 West Third St. in Los Angeles

The properties include four luxury residential homes in Beverly Hills and a 9,100 SF office building in Los Angeles. The SEC did not disclose the names of the buyers nor how much each transaction totaled.

The Woodbridge Liquidation Trust is an entity formed out of the bankruptcy of Woodbridge Group of Cos. headed by CEO Robert Shapiro. The liquidation trust is one of two entities that were formed as part of a settlement with federal authorities after Woodbridge emerged from bankruptcy last year.

The entities own many of Woodbridge's real estate assets, including mansions, apartments, vacant land and commercial office buildings, and will sell those assets to generate cash and then distribute it to defrauded investors and others. 

Shapiro, who founded Woodbridge and operated the company out of Boca Raton, Florida, and Sherman Oaks, California, pleaded guilty to investment fraud and tax evasion last year.

Shapiro was convicted for running a Ponzi scheme with two others, former Woodbridge Director of Investments Dane Roseman and Ivan Acevedo, from July 2012 through December 2017, according to federal authorities. All three were arrested and charged in April.

In October, Shapiro was sentenced to 25 years in prison for orchestrating the multiyear Ponzi scheme, according to reports. Roseman and Acevedo have pleaded not guilty. 

According to court documents, Shapiro “told investors that their money would be used to make high-interest loans to unrelated, third-party borrowers and gave note holders documents referencing a specific property for which their funds were allegedly being used. Shapiro also told note holders that their notes were backed by mortgages on those specific properties, which, if true, would typically mean that investors could recover their investments from the proceeds of a sale of that property. 

“In reality, these were lies on a massive scale. Investors’ money was nearly entirely not used to make high-interest loans to unrelated, third-party borrowers, and investors’ money was not used for the specific property that may have been identified in any particular investor’s documentation.”

Woodbridge used the funds to acquire more than 193 residential and commercial properties primarily in Los Angeles and Aspen, Colorado, according to bankruptcy filings.

SEC investigators said they believe Shapiro diverted hundreds of millions to pay back longtime investors and misappropriated at least $35M to enrich himself and his family. When the funds ran out, the company filed for bankruptcy, resulting in massive losses, and the SEC began to investigate Woodbridge.