Trust selling off Robert Shapiro’s seized assets wins $4M settlement

A trust tasked with liquidating the assets of jailed developer Robert Shapiro’s firm has agreed to a $4 million settlement with an investor who profited from a $1.3 billion Ponzi scheme, according to a filing with the Securities and Exchange Commission.

Shapiro, who was sentenced to 25 years in prison in 2019, defrauded more than 7,000 investors over a five-year period. The scheme ended in 2017, when Shapiro’s firm— Sherman Oaks-based Woodbridge Group of Companies — became the subject of a federal investigation. 

However, not all Woodbridge investors lost money. The trust, a Delaware entity called Woodbridge Liquidation Trust, filed hundreds of complaints against the so-called net winners of Shapiro’s scheme. Court documents described the net winners as investors who made more than their investment without actively participating in the fraud. 

The new settlement involved Kenneth Halbert, one the supposed net winners. However, the suit was not as simple as other Woodbridge cases. In its initial complaint, the trust sought the return of “fictitious profits,” which were distributions that Woodbridge initially gave to investors to prop up its scheme. However, the trust amended its complaint against Halbert in December of 2021, claiming that he was aware of “numerous troubling facts” relating to Shapiro. 

“Among other things, Halbert was aware of the central lie of the Ponzi scheme: Shapiro’s false representation to investors that the real estate at issue was owned by bona fide third-party borrowers, when in fact it was owned by disguised Woodbridge affiliates,” the amended complaint read. 

With the revamped complaint,  the trust increased its monetary claims against Halbert from around $1.7 million to $58.6 million. 

Woodbridge and Halbert agreed to the settlement on June 27. Halbert has until August 15 to pay the settlement. Halbert’s attorneys from White & Williams and Leech Tischman did not respond to requests for comment.  

Woodbridge Group promised its investors, many of whom were elderly, five to ten percent returns from luxury properties in Beverly Hills and Aspen. In court, Shapiro admitted that he “misappropriated” the money to buy a mansion in Los Angeles, jewelry and an extensive collection of vintage wines. He also had an art collection that included works from Marc Chagall and Pablo Picasso. He pleaded guilty to investment fraud and tax evasion charges and was given the maximum sentence in federal court.