As recently reported, the Woodbridge Group of Companies, LLC (“Woodbridge”) of Sherman Oaks, CA, continue to face considerable regulatory scrutiny in connection with allegations of offering and selling unregistered securities. For the past year on the federal level, the Securities and Exchange Commission (“SEC”) has been conducting an investigation into Woodbridge. In that regard, according to a publicly available court filing, the SEC “[i]s 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” by Woodbridge and its affiliated companies and agents.
Concurrently at the state level, Woodbridge has been the subject of investigations by various state securities regulators in Arizona, Texas, Massachusetts, Pennsylvania, and Michigan (as well as recent inquiries made by the Colorado Division of Securities). Several of these investigations have resulted in regulators issuing cease-and-desist orders, requiring Woodbridge to stop offering and/or selling unregistered securities, and furthermore, to stop otherwise violating applicable securities laws.
For example, on or about April 24, 2017, the Commonwealth of Pennsylvania Department of Banking and Securities, Bureau of Securities Compliance (the “Bureau”) entered into a Consent Agreement and Order (“Consent Order”) with Woodbridge. As part of the Consent Order, Respondent Woodbridge — without admitting or denying any of the allegations raised by the Bureau — agreed to pay an administrative assessment of $30,000, and additionally agreed to adhere to Pennsylvania’s state securities laws which prohibit, among other things, selling unregistered securities that are not exempt from registration.
The Bureau has also focused its attention on various individuals who allegedly sold certain Woodbridge mortgage funds (“Woodbridge Funds”), often marketed as First Position Commercial Mortgages (“FPCMs”), to Pennsylvania investors. For example, from August – October 2017, publicly available information demonstrates that the Bureau has issued Orders to Show Cause against the following four (4) individual Respondents in connection with their purportedly selling certain Woodbridge Funds to Pennsylvania residents:
- August 8, 2017 – an Order to Show Cause was issued by the Bureau against Dennis Drake (“Drake”). The Bureau has alleged that Mr. Drake offered and sold interests in a certain Woodbridge Fund(s) for an aggregate amount of at least $75,000 to at least one Pennsylvania investor;
- August 8, 2017 – an Order to Show Cause was issued by the Bureau against Elizabeth J. Haskell d/b/a Iron Will Advisory Group (“Haskell”). The Bureau has alleged that Ms. Haskell offered and sold interests in a certain Woodbridge Fund(s) for an aggregate amount of at least $350,000 to at least one Pennsylvania investor;
- October 13, 2017 – an Order to Show Cause was issued by the Bureau against Greg A. Koch d/b/a Koch Financial Group (“Koch”). The Bureau has alleged that Mr. Koch offered and sold interests in a certain Woodbridge Fund(s) for an aggregate amount of at least $710,000 to at least three Pennsylvania investors;
- October 18, 2017 – an Order to Show Cause was issued by the Bureau against Michael Kandravi d/b/a Explore Financial Group (“Kandravi”). The Bureau has alleged that Mr. Kandravi offered and sold interests in a certain Woodbridge Fund(s) for an aggregate amount of at least $475,000 to Pennsylvania investors.
The Bureau has alleged that the above-named individual Respondents engaged in activity in Pennsylvania that resulted in a “[w]illful violation of Section 301(a)” of the Pennsylvania Securities Act of 1972 (the “Act”), based upon their purportedly selling unregistered securities that were not exempt from registration.
At this time, Woodbridge reportedly continues to sell securities. Some of the issuers of Woodbridge securities (and not necessarily the same Woodbridge Funds subject to the various aforementioned Pennsylvania regulatory proceedings) include the following entities:
- WMF Management, LLC;
- Woodbridge Group of Companies, LLC;
- Woodbridge Mortgage Investment Fund 1, LLC;
- Woodbridge Mortgage Investment Fund 2, LLC;
- Woodbridge Mortgage Investment Fund 3, LLC;
- Woodbridge Mortgage Investment Fund 3A, LLC
- Woodbridge Mortgage Investment Fund 4, LLC;
- Woodbridge Mortgage Investment Fund PA, LLC;
- Woodbridge Group of Companies, LLC (d/b/a Woodbridge Wealth).
Financial advisors, and by extension their brokerage firm, have a duty to perform adequate due diligence on any investment recommended to customers, including private placement offerings pursuant to Regulation D. In addition, financial advisors have a duty to disclose the risks associated with any investment, and moreover, to conduct a suitability analysis to determine if an investment meets an investor’s stated investment objectives and associated risk profile.
If you have invested in any of the Woodbridge Funds, or otherwise purchased a First Position Commercial Mortgage through investing in a Woodbridge promissory note based on the advice of a stockbroker or financial advisor, you may be able to recover investment losses in FINRA arbitration. Investors may contact a securities arbitration attorney at Law Office of Christopher J. Gray, P.C. at (866) 966-9598 or email@example.com for a no-cost, confidential consultation.