An independent management team has resigned from the Woodbridge Group of Companies after the SEC accused the firm of being a Ponzi scheme.
According to Reuters, the SEC also requested a court-appointed trustee to run the firm, which allegedly defrauded 8,400 investors after telling them it was fundraising for luxury real estate and to hand out loans to commercial property developers.
Marc Beilinson, who served as independent manager, and chief restructuring officer Lawrence Perkins of SierraConstellation Partners LLC were part of the team that resigned. The duo took over from company founder Robert Shapiro, who resigned from his positions as president, manager and CEO in early December.
The California-based company stated that Perkins will stay on until Woodbridge finds a new chief executive.
The SEC alleges that the commercial property developers, who were supposed to be securing loans through Woodbridge, were actually entities controlled by Shapiro. He is accused of stealing at least $21 million in company funds to purchase luxury items, as well as improperly combining investor funds. Shapiro allegedly took $328 million to repay early investors and doled out around $300 million on commissions and operating expenses.
While Perkins was also questioned about deals he made that could possibly make Shapiro millions, Perkins said they were made solely so that Shapiro would contribute properties to Woodbridge's bankruptcy estate.
Shapiro has denied any wrongdoing, while Perkins said he was looking into the allegations. After filing for bankruptcy in December, Woodbridge was sued by the SEC to freeze its assets.
The hearings ended on Friday, and the judge overseeing the case, Kevin Carey, scheduled closing arguments for Tuesday.
Beilinson said in a statement that before he left, he brought in three new members on the board of managers: former U.S. bankruptcy judges Robert Gerber and James Peck, and retired Latham & Watkins bankruptcy attorney D.J. (Jan) Baker.