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Regulation and Compliance > Federal Regulation > SEC

SEC Charges 3 More Sales Agents in Woodbridge Case

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The Securities and Exchange Commission has charged three more sales agents for the Woodbridge Group of Companies LLC, which operated as a Ponzi scheme, with illegally selling Woodbridge securities to retail investors while acting as an unregistered broker.

According to the latest complaint, filed Thursday in U.S. District Court for the Southern District of Florida in Miami, from about June 2014 to December 2017, Brook Church-Koegel, David H. Goldman and Nicole J. Walker sold and assisted others in selling approximately $444 million in Woodbridge securities in unregistered transactions to thousands of mostly elderly investors who invested their retirement savings as a result of the defendants’ sales and marketing tactics.

The complaint alleged that the three California-based internal sales agents for Woodbridge were among the firm’s largest revenue-generating internal sales agents, with Church-Koegel and Goldman eventually becoming “team leaders” who assisted sales agents throughout the United States.

The defendants received significant transaction-based compensation from their unlawful sales, with Church-Koegel of Marina del Rey, California, and Goldman of Chatsworth, California, making more than $1 million each and Walker of Marina del Rey pocketing more than $750,000, the SEC said.

Each of the defendants “coordinated and assisted external sales agents in their efforts to sell Woodbridge’s securities, including regularly speaking with them over the telephone and sometimes joining them in calls with investors to answer questions about Woodbridge’s securities,” the suit stated.

The defendants pitched Woodbridge’s securities to the general public through email, telephone, at in-person meetings and by using other instruments of interstate commerce, according to the SEC. The defendants provided investors with Woodbridge’s sales and marketing materials that touted the firm’s securities as “safer” and “conservative,” the suit stated.

“At all relevant times,” the defendants “held no securities licenses, were not registered with the Commission, and were not associated with registered broker-dealers,” the SEC pointed out. Woodbridge’s securities were also not registered with the SEC, nor did they qualify for an exemption from registration, it noted. The defendants, therefore, were not permitted to sell Woodbridge’s securities, according to the SEC.

The SEC’s complaint charged Church-Koegel, Goldman, and Walker with violating the securities registration provisions of Sections 5(a) and 5(c) of the Securities Act of 1933 and the broker-dealer registration provisions of Section 15(a)(1) of the Securities Exchange Act of 1934 and seeks a permanent injunction against the defendants, disgorgement of ill-gotten gains, prejudgment interest and civil penalties against each of them.

The SEC found Woodbridge operated as a massive Ponzi scheme from July 2012 through December 2017. In October, ex-Woodbridge CEO Robert Shapiro was sentenced to 25 years in prison by a federal judge in Miami for leading the $1.22 billion fraud scheme that hurt more than 8,400 unsuspecting investors across the U.S. through unregistered securities offerings.

The Ponzi scheme collapsed Dec. 4, 2017, when Shapiro caused Woodbridge and its many related companies to file for bankruptcy, the SEC pointed out in its complaint Thursday. “Once Woodbridge filed for bankruptcy, investors stopped receiving their monthly interest payments and have not received a return of their investment principal,” the SEC said.

Among the several Woodbridge-related complaints prior to the one filed Thursday, the SEC in November charged Brett Pittsenbargar, a Texas-based external sales agent for the Woodbridge Group and his wholly owned alter ego company with illegally selling Woodbridge securities to retail investors while acting as an unregistered broker.

According to that complaint, Pittsenbargar was also among Woodbridge’s top revenue producers.


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