Robert Shapiro, the former CEO of Woodbridge Group of Companies, pleaded guilty to running a $1.3 billion fraud that caused more than 7,000 investors to lose money, according to prosecutors.
Mr. Shapiro, 61, of Sherman Oaks, California, promised returns as high as 10% from investments in loans to property developers. Instead, he used money from new investors to repay earlier ones and stole as much as $95 million, routing money through a network of 270 limited liability companies he controlled, Miami U.S. Attorney Ariana Fajardo Orshan said in a statement Thursday.
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Losses to investors are expected to exceed $100 million, both sides agreed in a court filing. The scam ran from July 2012 until December 2017, when
Woodbridge filed for Chapter 11 bankruptcy protection.
Mr. Shapiro pleaded guilty to conspiracy and tax evasion Wednesday in Miami. He faces as long as 25 years in prison when he's sentenced Oct. 15. In November,
he agreed to pay $120 million to resolve related civil claims by the U.S. Securities and Exchange Commission. Two alleged co-conspirators are scheduled for trial in February.
Prosecutors said Mr. Shapiro used investor money for his $6.7 million home and $3.1 million for chartering planes and for personal travel. He agreed to forfeit artworks by Pablo Picasso, Alberto Giacometti, Marc Chagall, and Pierre-August Renoir; 603 bottles of wine; numerous pieces of luxury jewelry; and a 1969 Mercury convertible.
"Mr. Shapiro has taken personal responsibility for the failure of Woodbridge," his lawyer, Ryan O'Quinn, said in a statement. "His guilty plea follows his decision to voluntarily place hundreds of millions of dollars of assets under bankruptcy court supervision and the consensual resolution of the SEC enforcement investigation. Mr. Shapiro hopes that these decisions allow the estate to focus on maximizing the value of the real estate portfolio for the benefit of Woodbridge's creditors."
