The Securities and Exchange Commission (“SEC”) announced charges today against five individuals and four companies for unlawful sales of Woodbridge Group of Companies, LLC to main street investors. The five Florida-based defendants: Barry M. Kornfeld, Ferne Kornfeld, Lynette M. Robbins, Andrew G. Costa, and Albert D. Klagler, allegedly sold more than $243 million of unregistered Woodbridge securities to more than 1,600 retail investors.
According to the allegations, the defendants reaped millions of dollars in commissions on Woodbridge securities sales even though they were not registered as broker-dealers and were not permitted to sell securities. One of the defendants, Barry M. Kornfeld, was acting in violation of a previous SEC order which barred him from acting as a broker.
The SEC alleges that the defendants pitched Woodbridge as a “safe and secure” investment. The Kornfelds allegedly solicited investors at seminars and a “conservative retirement and income planning class” they taught at a Florida university. The SEC alleges other defendants pitched Woodbridge investments in newspaper ads, radio, television, and internet marketing. Ms. Robbins previously settled the SEC’s charges without admitting or denying the allegations while returning more than $1 million of allegedly ill-gotten gains, plus interest, a $100,000 civil penalty, and an agreement to an industry bar. The charges seek injunctions against the remaining defendants to prevent similar conduct in the future, a return of the defendants’ ill-gotten gains with interest, and financial penalties.
This is not Woodbridge’s first run-in with the SEC in the past year. As previously covered in this space, the SEC brought charges against the Woodbridge Group and its founder last December based on allegations that the company bilked investors in a $1.2 billion Ponzi scheme.