The Securities and Exchange Commission charged five Florida residents with unlawfully selling securities of Woodbridge Group of Cos., a defunct real estate firm formerly in Sherman Oaks.
Prosecutors allege the individuals sold more than $243 million of Woodbridge securities to more than 1,600 retail investors. The company “collapsed into bankruptcy in December 2017,” and the SEC previously charged the company and its previous owner with operating a $1.2 billion Ponzi scheme, according to the agency.
The defendants named in court filings are Barry Kornfeld, Ferne Kornfeld, Lynette Robbins, Andrew Costa and Albert Klager. They were among Woodbridge’s top revenue producers and earned millions of dollars in commissions even though they were not registered broker-dealers and were not permitted to sell securities by law.
According to the SEC, the defendants touted Woodbridge as a safe investment. The Kornfelds allegedly solicited investors at seminars and a class they taught at a Florida university. The others used newspaper, radio, television and internet ads – and one even recommended Woodbridge shares during a radio program he hosted.
Once Woodbridge filed for bankruptcy, investors stopped receiving monthly interest payments and have not received a return of their principal. Woodbridge has since agreed to settle the liability portion of the SEC’s charges without admitting or denying the allegations. The company also reached a resolution with the SEC and creditors in a bankruptcy case regarding ongoing control 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.
The SEC investigation is continuing.