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Unregistered Brokers Who Sold Woodbridge Securities Charged by SEC

Unregistered Brokers Who Sold Woodbridge Securities Charged by SEC

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On August 20, 2018, the Securities and Exchange Commission announced that it charged five individuals and four companies for unlawfully selling securities of Woodbridge Group of Companies LLC (“Woodbridge”) to retail investors.  Woodbridge collapsed into bankruptcy in December 2017 and the SEC previously charged the company, its owner, and others with operating a massive $1.2 billion Ponzi scheme.

The Florida-based defendants named in the SEC’s complaints, Barry M. Kornfeld, Ferne Kornfeld, Lynette M. Robbins, Andrew G. Costa, Albert D. Klager, and their companies, were among Woodbridge’s top revenue producers, selling more than $243 million of its unregistered securities to more than 1,600 retail investors. The complaints allege that defendants reaped millions of dollars in commissions on their sales of Woodbridge securities, even though they were not registered as broker-dealers and were not permitted to sell securities.  According to the SEC, Barry Kornfeld also violated a prior SEC order which barred him from acting as a broker.

According to the SEC’s complaints, the defendants touted Woodbridge as a “safe and secure” investment.  Allegedly, the Kornfelds solicited investors at seminars and a “conservative retirement and income planning class” they taught at a Florida university.  The SEC alleges that Klager pitched Woodbridge investments in newspaper ads, while Costa recommended them during a radio program he hosted, and Robbins used radio, television, and internet marketing.

Once Woodbridge filed for bankruptcy, investors stopped receiving monthly interest payments and have not received a return of their investment principal.  Woodbridge has since agreed to settle the liability portion of the SEC’s charges without admitting or denying the allegations and reached a resolution with the SEC and creditors in a bankruptcy action regarding the ongoing control and management of Woodbridge.  The SEC’s monetary claims against Woodbridge remain pending.

In its latest actions, the SEC filed charges seeking court-ordered injunctions, return of allegedly ill-gotten gains with interest, and financial penalties against the Kornfelds, Costa, Klager and their companies.

Robbins and her company, Knowles Systems Inc., agreed to settle the SEC’s charges in a separate action without admitting or denying the allegations and return more than $1 million of allegedly ill-gotten gains plus interest.  Robbins also agreed to pay a $100,000 civil penalty and to an industry and penny-stock bar.

Source: SEC.gov

Kehoe Law Firm, P.C.