Investors File Suit Over Alleged Misrepresentations of Woodbridge ‘Ponzi Scheme’

New to ClassAction.org? Read our Newswire Disclaimer

A group of investors has filed a proposed class action lawsuit on behalf of all those who purchased investments from Woodbridge Group of Companies, LLC or its affiliates, claiming proposed class members were unaware that the companies’ business model was a Ponzi scheme destined for failure.

The lawsuit was filed against Woodbridge financial advisor GBH CPAs, PC, as well as a salesforce made up of First Financial Tax Group, Inc., its parent company, and two individuals who control the businesses. The plaintiffs claim the defendants misled them into purchasing promissory notes and fund equity units, which the suit claims were unregistered securities, while concealing that the investment enterprise was a fraud.

Woodbridge and the defendants allegedly represented to potential investors that their money would be lent to third-party borrowers who purchased real estate and would be repaid to them with interest earned on each mortgage. “In reality,” the lawsuit explains, “…the vast majority of the purported third-party borrowers were hundreds of [LLCs owned by Woodbridge’s CEO], which had no source of income, no bank accounts, and never made any loan payments to Woodbridge, all facts Woodbridge and [its CEO] concealed from investors.” The complaint adds that the scheme was supported entirely by raising new investor funds, “in classic Ponzi scheme fashion.”

According to the case, the scheme collapsed in December 2017, causing investors such as the plaintiffs to suffer an estimated $961 million in losses.