(Photo: National Law Journal)
The Securities and Exchange Commission on Monday charged five individuals and four companies for unlawfully selling securities of the bankrupt Woodbridge Group of Companies LLC to retail investors, reaping more than $5.8 million in sales commissions.
Woodbridge collapsed into bankruptcy in December 2017, and the SEC previously charged the company, its owner and others with operating a $1.2 billion Ponzi scheme.
From at least April 2013 through December 2017, the Florida-based defendants named in the SEC's complaints — Barry M. Kornfeld, Ferne Kornfeld, Lynette M. Robbins, Andrew G. Costa, Albert D. Klager and their companies — were among Woodbridge's top revenue producers, selling more than $243 million of its unregistered securities to more than 1,600 retail investors, according to the SEC order.
Barry Kornfeld also violated a prior SEC order which barred him from acting as a broker.
The defendants collectively earned more than $5.8 million in transaction-based sales commissions and pitched investors via TV, radio and newspaper ads, as well as emails, social media and at in-person meetings and investment seminars — and routinely touted Woodbridge's securities as "safe and secure."
"The broker-dealer and securities registration provisions are vital protections for retail investors," said Eric Bustillo, director of the SEC's Miami Regional Office, in a statement. "Our actions allege the defendants, while not registered as broker-dealers, pocketed millions of dollars in unlawful commissions from their widespread sales of unregistered Woodbridge securities."
