The Securities and Exchange Commission on Monday charged five Floridians with illegally selling securities of a troubled California-based real estate investment firm to unsuspecting investors.
The announcement by the agency’s Miami office marks regulators’ latest action against Sherman Oaks, California-based Woodbridge Group and its affiliates, which the SEC last year alleged operated as a $1.2 billion Ponzi scheme before it filed for bankruptcy in December 2017.
The five defendants named in the complaint, Barry Kornfeld, Ferne Kornfeld, Lynette Robbins, Andrew Costa, Albert Klager, and their companies, were mostly based in South Florida and were among Woodbridge’s top revenue producers, according to a press release from the SEC. The securities regulator alleges they sold $243 million of unregistered securities to more than 1,600 investors.
The complaint further alleges the defendants reaped millions of dollars in commissions on their sales of Woodbridge securities, despite that they were not registered as broker-dealers and were not permitted to sell the securities.
Woodbridge had previously 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.
Prior to its fall, Woodbridge, previously led by developer Robert Shapiro, acquired several of the Los Angeles’s prime residential properties, including the former home of Sonny and Cher, known as the Owlwood Estate; and film producer Megan Ellison’s former 10,000-square-foot hilltop home in Mount Olympus. The firm also owned five parcels in the Hidden Hills neighborhood, along with homes in Bel Air, Beverly Hills and Holmby Hills.
According to the SEC’s latest complaint, the Florida defendants touted 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 Florida Atlantic University. The SEC alleges that Klager pitched Woodbridge investments in newspaper ads while Costa recommended them during a radio program he hosted.