SHERMAN OAKS—A Sherman Oaks business man plead guilty to a $1.3 billion fraud scheme on Wednesday, August 7 before a South Florida judge.
Robert Shapiro, 61, conducted a massive investment fraud scheme between 2012 and 2017, where more than 7,000 victims suffered financial losses. He plead guilty to tax evasion as he was unable to pay more than $6 million in taxes for the years 2000 through 2005.
Shapiro, the former owner, president, and CEO of Woodbridge Group of Companies LLC. According to the United States Department of Justice, Shapiro employed over 130 people and had offices through the United States, including Boca Raton, Florida; Sherman Oaks, California; Colorado; Tennessee; and Connecticut. The scheme ran from at least July 2012 to December 2017, when Woodbridge filed for Chapter 11 bankruptcy and defaulted on its obligations to investors. The main business model was to solicit money from investors, in exchange issue them promissory notes reflecting purported loans to Woodbridge that paid high monthly interest rates.
Shapiro’s company made the false claim that the investments were attached to property owned by third parties. It was the third party owners that would make interest payments to Woodbridge and its investors. Many of these third party properties were owned by Shapiro if they existed at all.
The investors were unaware that Shapiro created and controlled a network of more than 270 limited liability companies. He used these companies to acquire and sell the properties to pitch to potential buyers. The Woodbridge sales operation used high pressure sales tactics, deception, and manipulation. The scheme involved misrepresentations of financial planners who helped Shapiro’s company sell investments to possible investors.
About five states issued cease and desist orders against Woodbridge based on their unregistered sale of securities.
The defendant and his co-conspirators convinced more than 9,000 investors to invest more than $1.29 billion at Woodbridge. At least 2,600 of these investors, invested their retirement savings which totaled approximately $400 million. Shapiro took $25 million to $95 million of that $400 million for himself and to benefit his family. The money taken was spent on personal expenditures like $2.6 million on home improvement projects, about $600,000 in luxury vehicles, $6.7 million on a personal home, and $3.1 million for travel expenses and charting private planes.
As a part of Shapiro’s plea agreement, both he and his wife agreed to forfeit valuable items including, but not limited to: artworks by Pablo Picasso, Alberto Giacometti, Marc Chagall, and Pierre-August Renoir; a collection of 603 bottles of wine; a 1969 Mercury convertible; luxury jewelry, including a pair of 14-karat, white gold earrings with two black diamonds (61.81 carats), two grey diamonds (23.92 carats), two rose-cut diamonds, and 266 round diamonds; a platinum ring with an oval-cut ruby (10.91 carats), two trapezoid diamonds and 70 round-cut diamonds; a platinum ring with certified Colombia emerald-cut emerald (9.54 carats), trapezoid-cut diamonds, and 166 round-cut diamonds; and other items detailed in court documents.
The indictment also charged two co-defendants, Dane Roseman, a/k/a “Dayne Roseman,” and Ivan Acevedo, who are scheduled for trial in February 2020.
Shapiro is scheduled for sentencing on October 15, 2019, at 8:30 a.m. before Judge Cecilia M. Altonaga. This case is one of the biggest ever charged in South Florida. Shapiro faces up to 25 years in prison.