Three California-Based, Internal Woodbridge Sales Agents That Sold and Assisted in Selling Approximately $444 Million in Woodbridge Securities to Retail Investors Charged For Illegally Selling Securities in Unregistered Transactions
On March 5, 2020, the SEC announced charges against Brook Church-Koegel (“Church-Koegel”), David H. Goldman (“Goldman”), and Nicole J. Walker (“Walker”), three California-based internal sales agents for Woodbridge Group of Companies LLC, for illegally selling Woodbridge securities in unregistered transactions to retail investors in numerous states while acting as unregistered brokers.
According to the SEC’s complaint, from approximately June 2014 to December 2017, Church-Koegel, Goldman, and Walker sold and assisted others in selling approximately $444 million in Woodbridge securities in unregistered transactions to thousands of predominantly elderly investors.
The SEC’s complaint alleges that Church-Koegel, Goldman, and Walker were among Woodbridge’s largest revenue-producing internal sales agents, and Church-Koegel and Goldman eventually became “team leaders,” who assisted sales agents throughout the United States. Allegedly, the defendants reaped significant transaction-based compensation from these unlawful sales, with Church-Koegel and Goldman receiving more than $1 million each, and Walker receiving more than $750,000.
The SEC’s complaint charges 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 disgorgement of ill-gotten gains, prejudgment interest, and civil penalties against each of them.
SEC’s “Complaint For Injunctive And Other Relief” (SEC v. Brook Church-Koegel, David H. Goldman, and Nicole J. Walker)
According to the SEC’s complaint:
1. From at least June 2014 through December 2017, Brook Church-Koegel, David H. Goldman, and Nicole J. Walker (collectively, the “Defendants”) were among the top revenueproducing internal sales persons for Woodbridge Group of Companies, LLC, d/b/a Woodbridge Wealth (“Woodbridge”). Woodbridge and its then owner and President, Robert H. Shapiro, operated Woodbridge as a massive Ponzi scheme, which, from July 2012 through December 2017, raised at least $1.22 billion from more than 8,400 unsuspecting investors nationwide through fraudulent unregistered securities offerings.
2. In their internal sales agent positions, the Defendants personally solicited and sold Woodbridge securities in unregistered transactions to investors, many of whom were elderly retirees who invested their retirement savings as a result of the Defendants’ sales and marketing tactics. Church-Koegel and Goldman also served as “team leaders,” and in that role, were responsible for coordinating and assisting the wide-ranging sales efforts of many internal sales agents who sold Woodbridge securities. Additionally, 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.
3. The Defendants pitched Woodbridge’s securities to the general public via email, telephone, at in-person meetings, and using other instruments of interstate commerce. The Defendants provided investors with Woodbridge’s sales and marketing materials, touting Woodbridge’s securities as “safer” and “conservative.” The Ponzi scheme collapsed on December 4, 2017, when Shapiro caused Woodbridge and its many related companies to file for bankruptcy. Once Woodbridge filed for bankruptcy, investors stopped receiving their monthly interest payments and have not received a return of their investment principal.
4. The Defendants, acting as unregistered brokers, together were responsible for raising through their own efforts and the efforts of external sales agents that they assisted, approximately $444 million between June 2014 and December 2017, from thousands of investors in more than 40 states, from the offer and sale of Woodbridge’s securities in unregistered transactions. For their efforts during this time period, together, Church-Koegel, Goldman, and Walker received at least $2.75 million in transaction-based compensation, in addition to their salaries. At all relevant times, the Defendants held no securities licenses, were not registered with the Commission, and were not associated with registered broker-dealers. Further, Woodbridge’s securities were not registered with the Commission, nor did they qualify for an exemption from registration. The Defendants thus were not permitted to sell Woodbridge’s securities.