SEC Charges an Additional 13 Unregistered Brokers Who Sold Woodbridge Securities to Retail Investors
Litigation Release No. 24376 / December 19, 2018
Securities and Exchange Commission v. Robert S. “Lute” Davis, Jr., et al., No. 2:18-cv-10481 (C.D. Cal. filed December 18, 2018)
Securities and Exchange Commission v. Jordan E. Goodman, No. 1:18-cv-25303 (S.D. Fla. filed December 18, 2018)
Securities and Exchange Commission v. Alan H. New, et al., No. 1:18-cv-03975 (S.D. Ind. filed December 18, 2018)
The Securities and Exchange Commission today announced charges against an additional 13 individuals and 10 companies for unlawfully selling securities of Woodbridge Group of Companies LLC to retail investors. 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 and charged five of the top Florida-based sales agents for securities and broker-dealer registration violations.
The 13 individual defendants charged were among Woodbridge's top revenue producers, selling more than $350 million of its unregistered securities to more than 4,400 investors. According to the complaints, the defendants marketed Woodbridge's securities as a "safe" and "secure" investment and reaped millions of dollars in commissions on their sales even though they were not registered as, or associated with, registered broker-dealers. The SEC also alleges that defendant Jordan Goodman, a self-described "media influencer," touted Woodbridge without disclosing that he was paid to do so.
In its latest actions, the SEC is seeking court-ordered injunctions, return of allegedly ill-gotten gains with interest, and financial penalties against Robert S. "Lute" Davis, Jr., Donald Anthony Mackenzie, Jordan E. Goodman, Aaron R. Andrew, Jeffrey L. Wendel, Alan H. New, David N. Knuth, Randy T. Rondberg, Richard Fritts, Marcus Bradford Bray, Gregory W. Anderson, Claude Steven Mosley, Gregory A. Koch, and their companies Old Security Financial Group Inc., Paramount Financial Services Inc. d/b/a Live Abundant, Wendel Financial Network LLC, Synergy Investment Services LLC, Trager LLC, Fritts Financial LLC, Bradford Solutions LLC, Balanced Financial Inc., Security Financial LLC and Koch Insurance Brokers LLC.
Goodman settled the SEC's charges without admitting or denying the allegations and agreed to disgorgement of $2.29 million, plus prejudgment interest of $315,850, a $100,000 civil penalty and to be subject to an injunction and industry and penny-stock bars. Synergy Investment Services, New, and Knuth settled the SEC's charges without admitting or denying the allegations, with the court to determine disgorgement, interest, and penalties at a later date.
The SEC also reached settlements in its previously filed action against Florida-based sales agents Barry M. Kornfeld, Ferne Kornfeld, and Albert D. Klager. Without admitting or denying the allegations, the three agreed to a permanent injunction and to industry and penny-stock bars. The Kornfelds agreed to disgorgement of $3.69 million, plus $690,497 in prejudgment interest; additionally, Barry Kornfeld agreed to a $500,000 civil penalty and Ferne Kornfeld agreed to a $150,000 penalty. Klager agreed to $1.36 million in disgorgement, $278,908 in prejudgment interest, and a $100,000 civil penalty.
The SEC's investigation has been conducted by Scott A. Lowry, Russell Koonin, Christine Nestor, and Mark Dee in the Miami Regional Office, and supervised by Jason R. Berkowitz and Fernando Torres. The litigation will be led by Ms. Nestor, Mr. Koonin, and Mr. Lowry under the supervision of Andrew O. Schiff. The SEC appreciates the assistance of the Texas State Securities Board, Florida Office of Financial Regulation, Arizona Corporation Commission - Securities Division, California Office of the Attorney General and the Department of Business Oversight, Colorado Division of Securities, Pennsylvania Department of Banking and Securities - Bureau of Securities Compliance and Examinations, Utah Department of Commerce - Division of Securities, and the Financial Industry Regulatory Authority.
The SEC's Office of Investor Education and Advocacy has issued an Investor Alert to help seniors identify signs of investment fraud and, in conjunction with the Division of Enforcement's Retail Strategy Task Force, another Investor Alert about Ponzi schemes targeting seniors. The SEC strongly encourages investors to use the agency's Investor.gov website to check the backgrounds of people selling them investments to quickly identify whether they are registered professionals.