SEC accuses luxury realty developer Woodbridge of running $1.2B Ponzi scheme

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Owlwood Estate
Owlwood Estate, former home to Sonny and Cher, is currently marketed at $180 million | Mercer Vine

Woodbridge Group of Companies and its owner are facing a lawsuit filed by the Securities and Exchange Commissions for allegedly spending more than $328 million of the $1.22 billion invested in the firm since 2012 to pay back its older investors.

The lawsuit claims that owner Robert Shapiro convinced investors that they would be “repaid from high rates of interests” his companies were making through loans to third-party borrowers. However, the SEC says those borrowers were actually limited liability companies that Shapiro also owned and operated.

Among these borrowers is luxury real estate developer Mercer Vine whose big-ticket LA properties include the Owlwood Estate in Holmby Hills and Marilyn Monroe’s home in Brentwood.

Mercer Vine and the other limited liability companies benefited from the scheme, as Woodbridge used investor money to fund their own real estate projects, such as purchasing and renovating properties owned by celebrities.

For instance, the SEC says an unbuilt $100-million mansion dubbed Skygarden in Bel Air has “received proceeds of fraud without any legitimate entitlement to the funds.”

The agency also accuses Shapiro of personally misusing investor money on “luxury automobiles, jewelry, country club memberships, fine wine, and chartering private planes.”

Prior to a hearing for the lawsuit, the SEC has frozen assets owned and businesses operated by Woodbridge. This move will also suspend the sale or marketing of the Owlwood Estate, which is the most expensive property owned by Woodbridge. It was bought for $90 million in 2016 and sold for $180 million in the summer of 2017.

A legal counsel for Woodbridge said that Shapiro denies the agency’s allegations and “looks forward” to proving his innocence in court.

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