Woodbridge Mortgage Investment Funds Tag Archives

Published on: June 28, 2018

Alan H. New Allegedly Sold Unregistered Woodbridge Investments While Employed By NYLife Securities

woodbridge mortgage funds Investors in Woodbridge Units or Notes, as further defined below, who purchased a Woodbridge investment based upon a recommendation by former financial advisor Alan Harold New (CRD# 2892508) may be able to recover losses through securities arbitration. Publicly available information through FINRA BrokerCheck indicates that Alan New was formerly affiliated with broker-dealer NYLife Securities LLC (“NYLife”) (CRD# 5167) in their Fort Wayne, IN office, from June 2004 – August 2016.

As recently reported, the Woodbridge Group of Companies, LLC (“Woodbridge”) and certain of its affiliated entities filed for Chapter 11 bankruptcy protection in the U.S. Bankruptcy Court for the District of Delaware (Case No. 17-12560-KJC) on December 4, 2017. Beginning as early as 2012, Woodbridge and its affiliates offered securities nationwide to numerous retail investors through a network of in-house promoters, unlicensed advisors, as well as various licensed financial advisors, including Mr. New. Woodbridge investments essentially came in two forms: (1) so-called “Units” that consisted of subscriptions agreements for the purchase of an equity interest in one of Woodbridge’s Delaware limited liability companies, and (2) “Notes” or what have commonly been referred to as “First Position Commercial Mortgages” or “FPCMs” that consisted of lending agreements underlying purported hard money loans on real estate deals.

As alleged by the SEC, Woodbridge and its owner and former CEO, Mr. Robert Shapiro, purportedly “used his web of more than 275 Limited Liability Companies to conduct a massive Ponzi scheme raising more than $1.22 billion from over 8,400 unsuspecting investors nationwide through fraudulent unregistered securities offerings.” According to Steven Peiken, Co-Director of the SEC’s Enforcement Division, the Woodbridge “[b]usiness model was a sham. The only way that Woodbridge was able to pay investors their dividends and interest payments was through the constant infusion of new investor money.”

Published on: June 11, 2018

Woodbridge Investors Solicited by Former Quest Capital Broker Frank Dietrich May Have Arbitration Claims

by InvestorLawyers

woodbridge mortgage funds If you invested in Woodbridge upon the recommendation of former financial advisor Frank Roland Dietrich (“Dietrich”), you may be able to recover your losses in arbitration before the Financial Industry Regulatory Authority (“FINRA”). According to FINRA BrokerCheck, a number of investors have already filed claims against Mr. Dietrich and his former employer, broker-dealer Quest Capital Strategies, Inc. (“Quest Capital”) (CRD# 16783). Publicly available information suggests that Quest Capital has disavowed any prior knowledge of Mr. Dietrich’s alleged business activity conducted away form the firm in selling purportedly non-approved Woodbridge investments. Nevertheless, Mr. Dietrich’s alleged “selling away” activity, to the extent it may have occurred while he was still affiliated with Quest Capital, may give rise to Quest Capital being held vicariously liable for the negligence and/or misconduct of its former employee.

As recently reported, the Woodbridge Group of Companies, LLC (“Woodbridge”) of Sherman Oaks, CA, and certain of its affiliated entities, filed for Chapter 11 bankruptcy protection on December 4, 2017 (U.S. Bankruptcy Court for the District of Delaware – Case No. 17-12560-KJC). The SEC has alleged that Woodbridge, through its owner and former CEO, Mr. Robert Shapiro, purportedly utilized “more than 275 Limited Liability Companies to conduct a massive Ponzi scheme raising more than $1.22 billion from over 8,400 unsuspecting investors nationwide through fraudulent unregistered securities offerings.”

Beginning as early as 2012, Woodbridge and its affiliates offered securities nationwide to numerous retail investors through a network of in-house promoters, as well as various licensed and unlicensed financial advisors. Woodbridge investments came in two primary forms: (1) “Units” that consisted of subscriptions agreements for the purchase of an equity interest in one of Woodbridge’s seven Delaware limited liability companies, and (2) “Notes” or what have commonly been referred to as “First Position Commercial Mortgages” or “FPCMs” consisting of lending agreements underlying purported hard money loans on real estate deals.

Published on: May 25, 2018

Woodbridge Noteholders Seek Role in Bankruptcy Restructuring

by InvestorLawyers

money backing hard money real estate deal As we have detailed in numerous blog posts, the Woodbridge Group of Companies, LLC (“Woodbridge”) and certain of its affiliated entities filed for Chapter 11 bankruptcy protection in the U.S. Bankruptcy Court for the District of Delaware (Case No. 17-12560-KJC) on December 4, 2017. From the outset of this Chapter 11 proceeding, investors in Woodbridge Notes (“Noteholders”) have taken the position that they hold secured, perfected liens in various real estate deals.

By way of background, beginning as early as July 2012, Woodbridge and its affiliates offered securities nationwide to investors in at least two forms: (1) subscription agreements for the purchase of equity interests or units in one of Woodbridge’s seven Delaware limited liability companies (“Units”); and, (2) lending agreements, some of which were referred to as “First Position Commercial Mortgage Notes,” “mezzanine loans,” “construction loans,” and “Co-Lending Opportunities” (collectively, “FPCMs”).

On March 27, 2018, the Debtors, the Unsecured Creditors Committee and the Ad Hoc Noteholders Committee all agreed on a plan of reorganization that was encapsulated in a Term Sheet filed with the Bankruptcy Court. However, the Term Sheet failed to address whether or not Woodbridge Noteholders who invested in FPCMs do, in fact, hold secured, perfected liens. Accordingly, on March 27^th a Woodbridge FPCM investor – retired 85 year old attorney Lisa La Rochelle – filed an adversary proceeding (the “Owlwood Complaint”) in an effort to resolve the looming question of whether some $800 million in FPCMs should be treated as secured debt for purposes of disposition of the Chapter 11 proceeding.

Published on: December 5, 2017

Woodbridge Mortgage Investment Fund 3, LLC Subject To Texas Cease-and-Desist Order

by InvestorLawyers

woodbridge mortgage funds On March 18, 2016, the Securities Commissioner of the State of Texas (“Securities Commissioner”) entered a Cease and Desist Order (“Order”) against Woodbridge Mortgage Investment Fund 3, LLC (“Woodbridge 3” or “Respondent”). Respondent Woodbridge 3 is a Delaware-organized limited liability company formed in or around 2014. Woodbridge 3 is one of a number of mortgage funds offered by the Woodbridge Group of Companies, LLC (“Woodbridge”), the successor firm to Woodbridge Structured Funding, LLC. Woodbridge is headquartered in Sherman Oaks, CA, and its principal and controlling person is Robert H. Shapiro (“Shapiro”).

In connection with the Securities Commissioner’s Order, State of Texas securities regulators made the following findings of fact concerning their investigation into Woodbridge 3:

The Bureau determined that Respondents Woodbridge 3 and Shapiro offered and sold “First Position Commercial Mortgages” (“FPCMs” or “The Note Program”) to investors in Texas that fell within the definition of a security;

Published on: November 28, 2017

Woodbridge Mortgage Funds Subject of Pennsylvania Orders to Show Cause

by InvestorLawyers

woodbridge-300x82 As recently reported, the Woodbridge Group of Companies, LLC (“Woodbridge”) of Sherman Oaks, CA, continue to face considerable regulatory scrutiny in connection with allegations of offering and selling unregistered securities. For the past year on the federal level, the Securities and Exchange Commission (“SEC”) has been conducting an investigation into Woodbridge. In that regard, according to a publicly available court filing, the SEC “[i]s investigating the offer and sale of unregistered securities, the sale of securities by unregistered brokers and the commission of fraud in connection with the offer, purchase and sale of securities” by Woodbridge and its affiliated companies and agents.

Concurrently at the state level, Woodbridge has been the subject of investigations by various state securities regulators in Arizona, Texas, Massachusetts, Pennsylvania, and Michigan (as well as recent inquiries made by the Colorado Division of Securities). Several of these investigations have resulted in regulators issuing cease-and-desist orders, requiring Woodbridge to stop offering and/or selling unregistered securities, and furthermore, to stop otherwise violating applicable securities laws.

For example, on or about April 24, 2017, the Commonwealth of Pennsylvania Department of Banking and Securities, Bureau of Securities Compliance (the “Bureau”) entered into a Consent Agreement and Order (“Consent Order”) with Woodbridge. As part of the Consent Order, Respondent Woodbridge — without admitting or denying any of the allegations raised by the Bureau — agreed to pay an administrative assessment of $30,000, and additionally agreed to adhere to Pennsylvania’s state securities laws which prohibit, among other things, selling unregistered securities that are not exempt from registration.

Published on: November 27, 2017

Mass. Regulator Serves Woodbridge With Cease-And-Desist Order

by InvestorLawyers

Money Bags On May 4, 2015, the Commonwealth of Massachusetts Securities Division (“Division”) entered a Cease and Desist Order (“Order”) against certain Woodbridge Mortgage Investment Funds. With respect to the Order, these mortgage funds — which are offered by Woodbridge Wealth (“Woodbridge”) of Sherman Oaks, CA — include: Woodbridge Mortgage Investment Fund 1, LLC, Woodbridge Mortgage Investment Fund 2, LLC, and Woodbridge Mortgage Investment Fund 3, LLC (collectively, the “Woodbridge Funds”). These Woodbridge Funds, and other similar fund iterations, have been offered nationwide by Woodbridge through a network comprised primarily of independent broker-dealers and financial advisors.

Through its findings of fact, the Division noted that the Woodbridge Funds, all Delaware limited liability companies, sought to “[r]aise money from individuals in Massachusetts, by offering and selling ‘First Position Commercial Mortgages…’” Significantly, the Division determined that Woodbridge’s First Position Commercial Mortgages (“FPCMs”) were not registered as securities in either Massachusetts or on the federal level, nor were these FPCMs exempt from registration. In nearly all instances, in order to recommend an investment in a security, the issuer and/or broker or promoter soliciting the investment must either register the security, or seek exemption from registration (e.g., exemption through Regulation D via private placement).

The Order indicated that in response to a Division subpoena, “[W]oodbridge identified 144 Massachusetts residents who invested in [FPCMs] between January 1, 2012 to present. The 144 Massachusetts Investors reside in cities and towns across the Commonwealth, including Springfield, Worcester, Gloucester, Truro, Plymouth, Dorchester, and Boston.” Finally, the Division determined that Charles N. Nilosek, a resident of Plymouth, MA, was promoting and selling FPCMs through his two business entities, Position Benefits, LLC and SHP Financial LLC. Of concern, the Division noted that Mr. Nilosek was not registered in any capacity with the Division, the SEC, or FINRA. Further, Position Benefits, LLC was not registered in any capacity with the Division, the SEC, or FINRA.

Published on: November 16, 2017

Court Orders Woodbridge To Produce Documents To SEC

by InvestorLawyers

woodbridge-300x82 The U.S. Securities and Exchange Commission (“SEC”) obtained an order on September 21, 2017 requiring the Woodbridge Group of Companies LLC (“Woodbridge”), of Sherman Oaks, California, to produce the documents of several company executives and employees, including the President and CEO. This order reportedly relates to an SEC investigation of Woodbridge.

The SEC is reportedly investigating whether Woodbridge and others have violated or are violating the antifraud, broker-dealer, and securities registration provisions of the federal securities laws in connection with Woodbridge’s receipt of more than $1 billion of investor funds. According to the SEC’s application and supporting papers filed in federal court in Miami on July 17, 2017, investors from around the country may have been affected.

On January 31, 2017, in furtherance of the SEC’s probe into Woodbridge, SEC staff in the Miami Regional Office reportedly served Woodbridge with a subpoena seeking the production of electronic communications that the company maintained relating to Woodbridge’s business operations, as well as other documents. Court papers filed by the SEC allege that the company has failed to produce any relevant communications in response to the subpoena, including those of three high-level Woodbridge officials, despite being legally required to make the production. The Court overruled Woodbridge’s objections and ordered the documents produced.

Published on: November 15, 2017

Woodbridge Mortgage Investment Funds Sales Probed By Colorado Division of Securities

by InvestorLawyers

Piggy Bank in a Cage As recently reported, the Colorado Division of Securities (“Division”) is reviewing Woodbridge Mortgage Investment Funds 1, 2, 3, and 3A (collectively, the “Woodbridge Funds”) and related entities in connection with possible sales of unregistered securities. The Woodbridge Funds are offered by Woodbridge Wealth of Sherman Oaks, CA, through a nationwide network comprised primarily of independent broker-dealers and financial advisors. In addition to its investigation into the Woodbridge Funds, the Division is reportedly also conducting a parallel investigation into other individual named Respondents, including James Campbell, Jr. of Woodland Park, CO, Timothy McGuire of Highlands Ranch, CO, and Ronald Caskey of Firestone, CO.

The Division is focused on possible Colorado securities violations stemming from the alleged sale of unregistered securities (that were not exempt from registration), the alleged solicitation of investments in the Woodbridge Funds by unlicensed representatives, as well as alleged fraudulent statements and omissions of material fact concerning sales of the Woodbridge Funds to Colorado investors. The Division has alleged that the named Respondents — Messrs. Campbell, McGuire and Caskey — have raised approximately $57 million in investor capital from approximately 450 Colorado residents, and further, continue to solicit and advertise to potential investors through both online and radio advertisements. Of note, Ronald Caskey bills himself as a “finance professional” on his website, with a focus on retirement planning. Mr. Caskey hosts the Ron Caskey Radio Show and Bible Views Radio Show on stations in Denver, CO, Colorado Springs, CO, in addition to Evansville, IN.

The Division is reportedly reviewing marketing so-called “First Position Commercial Mortgages” (or “FPCMs”) to various investors through issuing promissory notes in exchange for investments that backed certain hard money loans secured by commercial real estate. The Woodbridge Funds allegedly hired Messrs. Campbell, McGuire and Caskey as sales agents in Colorado, despite the fact that none of these named Respondents were/are licensed to solicit or sell securities. Moreover, the Division has alleged that the FPCM’s, although secured by notes and thus falling within the definition of a security, are neither registered as a security, nor exempt from registration. Other allegations concerning reported sales of unregistered securities by Woodbridge are reportedly being reviewed by state regulators in Massachusetts, Texas, and Arizona.