SEC Charges Unregistered Broker Who Sold Woodbridge Securities to Retail Investors

Litigation Release No. 24476 / May 22, 2019

Securities and Exchange Commission v. Robert S. Davis, Jr., et al., Case No. 18-cv-10481 (C.D. Cal. Dec. 18, 2018)

On May 22, 2019, the Securities and Exchange Commission charged Charles Nilosek, a Massachusetts-based external sales agent for Woodbridge Group of Companies LLC, with illegally selling Woodbridge securities to retail investors while acting as an unregistered broker. According to the complaint, Nilosek was among Woodbridge's top revenue producers.

The SEC previously charged Woodbridge and its former owner, Robert H. Shapiro, and Woodbridge's other highest-earning unregistered brokers. In January, a federal court in Florida ordered Woodbridge, related companies, and Shapiro together to pay $1 billion for operating this Ponzi scheme. The SEC also charged Woodbridge's two former directors of investments for their roles in Woodbridge's Ponzi scheme.

According to the SEC's complaint, from at least September 2013 to September 2015, Nilosek and his alter-ego company, Position Benefits LLC, raised more than $23 million by selling Woodbridge securities to more than 200 retail investors located in at least four states. Nilosek was not registered in any capacity with the SEC, and allegedly received more than $1.4 million in transaction-based compensation. The SEC amended its Complaint in the Central District of California and added Nilosek as a defendant.

The SEC's amended complaint charges Nilosek with violating the registrations provisions of Sections 5(a) and 5(c) of the Securities Act of 1933 and Section 15(a)(1) of the Securities Exchange Act of 1934 and seeks disgorgement of allegedly ill-gotten gains, with interest, and financial penalties.

The SEC's investigation, which is continuing, was conducted by Scott A. Lowry, Russell Koonin, Christine Nestor, and Mark Dee in the Miami Regional Office, with assistance from David Baddley, and supervised by Jason R. Berkowitz, Fernando Torres, Thierry Olivier Desmet, and Glenn Gordon. The litigation will be led by Ms. Nestor and Mr. Koonin under the supervision of Andrew O. Schiff. The SEC appreciates the assistance of the Florida Office of Financial Regulation, the U.S. Attorney's Office for the Southern District of Florida, the Federal Bureau of Investigation, and the Internal Revenue Service, Criminal Investigations.

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 website to check the backgrounds of people selling them investments to quickly identify whether they are registered professionals.