Barry Kornfeld Sold Millions Worth of Woodbridge Loans

Barry Kornfeld Sold Millions Worth of Woodbridge Loans

Florida broker Barry Kornfeld, who was barred from the securities industry, sold millions of dollars of defunct Woodbridge loans to clients through his company First Financial Tax Group.

The company, which claimed to specialize in real estate loans, advertised that investments in First Position Commercial Mortgages yielded 5%. Kornfeld sold the Woodbridge loans as guaranteed promissory loans, promising that if Woodbridge defaulted, the investors would be paid first because of their position as a note holder.

Since Woodbridge filed Chapter 11 bankruptcy, the company has stopped paying investor distributions and First Financial Tax Group has announced it will be closing. According to the SEC’s filing, some of Kornfeld’s clients had invested close to $1 million in Woodbridge loans.

Kornfeld Previously Banned from Securities Industry

Kornfeld was barred from the securities industry in 2010 by the U.S. Securities and Exchange Commission (SEC) for selling unsuitable collateralized mortgage obligations (CMOs) to clients while working at Brookstreet Securities Corp.

Before the credit crisis, Kornfeld sold high-risk CMOs. According to the SEC, Kornfeld falsely told clients that the CMOs were safe, secure investments that were suitable for low-risk investment profiles. When in fact, the investments were only appropriate for investors with high-risk investment profiles.

In June 2007 Brookstreet failed to meet margin calls for the CMOs and then failed to meet net-capital requirements, essentially deeming the CMOs worthless.

Woodbridge Files for Chapter 11 Bankruptcy

The Woodbridge Group of Companies recently filed for Chapter 11 bankruptcy and has stopped paying investor distributions. The company blames increasing costs, including litigation and compliance expenses, as a reason for its bankruptcy.

Based in Sherman Oaks, California, the company raised more than $1 billion from investors and is currently under SEC investigation. In October, the regulator said it was investigating the company to determine whether it was operating as a fraud.

According to a statement made by the company in the wake of filing for bankruptcy, Woodbridge has a $100 million dollar commitment from investor Hankey Capital and intends to recapitalize $750 million in debt.

The company so far has declined to comment about working with Barry Kornfeld or acknowledge if it was aware that Kornfeld had been previously barred from the securities industry.

Are You a Victim of Stockbroker Misconduct?

If you lost money as a result of investments made with Barry Kornfeld or are a victim of stockbroker misconduct, contact a qualified securities fraud attorney today.

Call a Securities Fraud Attorney Today

If you are looking for an attorney to review your rights and options, the securities fraud lawyers at Dimond Kaplan & Rothstein, P.A. have recovered more than $100 million from banks and brokerage firms for their wrongful actions.

With offices in Los AngelesNew YorkWest Palm Beach and Miami, our securities fraud attorneys represent clients nationwide and can help you recover your investment losses.

Contact a securities fraud attorney at Dimond Kaplan & Rothstein, P.A. today to schedule an appointment or consultation to review your rights and options.

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SEC Investigates Woodbridge Group for Potential Fraud

SEC Investigates Woodbridge Group for Potential Fraud

The U.S. Securities and Exchange Commission (SEC) has been investigating Woodbridge Group of Companies, a real estate and investment company based in Sherman Oaks, California, that has raised over $1 billion from investors, under allegations of operating as a fraud.

California Firm is Suspected of $1 billion Scheme

According to court documents, in August the SEC sent subpoenas to 235 LLCs, which the Commission believes are owned and/or controlled by Woodbridge president Robert Shapiro. The inquiry is part of an ongoing year-long investigation into Woodbridge regarding the possible improper sale of securities.

The Commission states that it did not receive a sufficient response from the entities. As of recent court filings, the SEC received a response from only one LLC entity that said it was not affiliated with Woodbridge or Woodbridge president Robert Shapiro.

The subpoenas were sent to gather information and documents about payments the LLCs made to Woodbridge, the names of the LLC’s managers or members, as well as information regarding financial institutions of the LLCs.

According to the filing, the SEC alleges that the LLCs failed to produce any documents. The SEC’s latest application seeks an order from the federal district court compelling respondents to comply with the SEC’s subpoenas.

“As the investigation has unfolded, it has come to the attention of the Commission’s investigative team that there are numerous LLCs that are interwoven into the structure of products Woodbridge offers for investment,” states SEC documents. “Specifically, the Commission is investigating the offer and sale of unregistered securities, the sale of securities by unregistered brokers and the commission of fraud in connection with the offer, purchase and sale of securities.”

Woodbridge claimed that it has and will continue to cooperate with all SEC requests. The company further stated that its wealth management group, Woodbridge Wealth, sells three types of investments: first position commercial mortgages with an annual yield of 5%, secondary-market annuities with “above-average risk -adjusted yields,” and a commercial bridge loan fund that potentially returns 6%.

According to BrokerCheck, there is no broker-dealer named Woodbridge Wealth registered with FINRA.

Have You Invested Money with Woodbridge Group?

If you believe you have been the victim securities fraud or other investment scheme, you may have certain legal rights that require your immediate attention.

Call a Securities Fraud Attorney Today

If you are looking for an securities fraud attorney to review your rights and options, the securities fraud lawyers at Dimond Kaplan & Rothstein, P.A. have recovered over $100 million from banks and brokerage firms for their wrongful actions.

With offices in Los AngelesNew YorkWest Palm Beach and Miami, our securities fraud attorneys represent clients nationwide and may be able to help you recover your investment losses.

Contact an securities fraud attorney at Dimond Kaplan & Rothstein, P.A. today to schedule an appointment or consultation to review your rights and options.

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