SEC charges unregistered brokers who sold shares in fraud to retail investors
The Securities and Exchange Commission charged five individuals and four companies on Monday for allegedly selling shares of now-bankrupt Ponzi scheme Woodbridge Group of Companies LLC to retail investors even though they were not registered broker-dealers. The SEC previously charged Woodbridge Group, which filed for bankruptcy in December 2017, and its owner with operating a $1.2 billion Ponzi scheme. Barry M. Kornfeld, Ferne Kornfeld, Lynette M. Robbins, Andrew G. Costa, Albert D. Klager, and their companies, sold more than $243 million of Woodbridge Group unregistered securities to more than 1,600 retail investors. Barry Kornfeld also allegedly violated a prior SEC order which barred him from acting as a broker. The defendants allegedly touted Woodbridge as a "safe and secure" investment to potential investors at seminars and a "conservative retirement and income planning class" they taught at a Florida university as well as in newspaper ads and on one defendant's radio program. Once Woodbridge filed for bankruptcy, investors stopped receiving monthly interest payments and have not received a return of their investment principal. The SEC's investigation is continuing.
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