SHERMAN OAKS—Former CEO of the Sherman Oaks real estate company Woodbridge Group, Robert Shapiro, was sentenced to 25 years in prison on Tuesday, October 15 for orchestrated fraud.
According to court documents released by the United States District Court Southern District Of Florida, the now defunct company employed an estimated 130 people in offices in six different states. Shapiro told over 7,000 investors that the real estate company held third-party loans that would pay them high interest rates.
Assistant U.S. Attorney, Roger Cruz, wrote in Shapiro’s indictment that stealing from clients was designed and not at all coincidental. Most investors were elderly, and the real estate company promised they would receive 5 to 10 percent annual interest on their money. According to the United States Department of Justice, at least 2,600 investors invested their retirement savings, totaling approximately $400 million.
He argued that the fortune he netted for himself, a total of $36 million for his own use, and $1.3 billion that profited to Woodbridge, came at the expense of investors and the Internal Revenue Service. According to the Department of Justice, $1 million of the stolen money went towards chartering private planes and travel, $6.7 million was spent on a personal home, $2.6 million on home improvements, $1.8 million on personal income taxes, $1.4 million to his ex-wife, and over $672,000 on luxury automobiles.
The ponzi scheme began in July 2012 and ran until December 2017 when Woodbridge filed for Chapter 11 bankruptcy.
“Our complaint charged that when Woodbridge’s fictitious business model collapsed, the company stopped paying investors and filed for Chapter 11 bankruptcy protection,” said Eric I. Bustillo, Director of the Securities and Exchange Commission, Miami Regional Office.
The indictment further alleges that Shapiro caused most of the Woodbridge companies to file Chapter 11 bankruptcy, which caused investors to suffer substantial losses, as they were owed close to $1 billion in principal.