After several victims of his $1.3 billion Ponzi scheme described him as a financial predator, Robert H. Shapiro was sentenced to a maximum 25 years in prison on Tuesday for committing investment fraud and tax evasion.
Shapiro, the former CEO of the Woodbridge Group of Companies, masterminded a nationwide real estate investment scheme from his two bases in South Florida and Southern California that swindled his mostly elderly investors out of $470 million.
“[His crime] has destroyed thousands of lives of elderly folks and retired military who were specifically targeted,” U.S. District Judge Cecilia Altonaga said. “I think we need to punish [him] severely because the harm was so severe.”
Before his sentencing, the 62-year-old Shapiro apologized for his wrongdoing and suggested that a “tough childhood” may have contributed to his life of financial scams. But then he said: “I had free will and blame no one but myself.”
In August, Shapiro cut a plea deal admitting that he “misappropriated” between $25 million and $95 million of the investors’ money to himself and his family to pay for an estate in the Los Angeles area, chartered planes, global travel, jewelry, diamonds and vintage wines. Shapiro also collected artworks by Pablo Picasso, Marc Chagall, Pierre-Auguste Renoir and Alberto Giacometti.
“What I didn’t realize like the other victims was this was a scam from the beginning,” retired military pilot James Weber, who lost $800,000 to Shapiro, told the judge. “He was living a life of Hollywood. ... I may have to sell my house. Thank God for Medicare and Social Security, or we’d be out in the street.”
“We worked two lifetimes for the money we earned,” retired business owner James McAllister said, describing how he and his wife, Dixie, worked 80-hour weeks over nearly four decades to save $600,000 — all lost to Shapiro. “Our happy retirement as we know it is over. We have been sentenced to life, and we don’t deserve this.”
As part of a $100 million forfeiture, Shapiro must turn over whatever assets the feds recover to pay back some of the losses of his victims. His Woodbridge firms have since gone bankrupt.
Among the roughly 10,000 Woodbridge victims of Shapiro’s oft-described Ponzi scheme: retired doctors, teachers and at least one high-profile investor — ABC News anchor George Stephanopoulos — who were promised 5 to 10 percent returns while financing high-end properties purchased in Beverly Hills, Aspen and other wealthy enclaves. Of the total number of Woodbridge investors, about 700 reside in Florida.
Woodbridge investors said they felt deceived by the company’s team of representatives who persuaded them to invest their retirement savings at sales pitches at South Florida hotels and restaurants. They thought their investments would be safe because they were backed by hard assets — real estate.
But that was far from the truth.
That’s when Shapiro zeroed in on elderly investors, who were looking to earn a decent return on their nest eggs. “He knew this, and it was by design,” said federal prosecutor Lisa Miller.
At his earlier plea hearing, Shapiro not only admitted siphoning millions to himself but also used bank accounts and credit cards opened in his wife’s name to divert millions more to his family. His wife, however, won’t be prosecuted as part of his plea deal with the U.S. Attorney’s Office.
Before his arrest, Shapiro was living in a California mansion where he ran his real estate investment company, which was originally founded in Boca Raton. Woodbridge collapsed amid allegations of securities fraud as well as a bankruptcy filing in late 2017.
Shapiro and two Woodbridge senior executives, Dane Roseman, a former managing director, and Ivan Acevedo, who had also once held that position, were charged with conspiring to commit wire and mail fraud as well as money laundering. All three businessmen were arrested in April by FBI and Internal Revenue Service agents in Los Angeles.
Shapiro’s defense attorney, Ryan O’Quinn, sought a quick resolution of the case with a guilty plea that lowered his client’s potential prison sentence. At Tuesday’s hearing, O’Quinn tried to persuade the judge to give Shapiro less than 25 years, to no avail.
“Robert Shapiro has accepted responsibility for the losses suffered by Woodbridge investors,” O’Quinn said after the sentencing. “By doing so, Mr. Shapiro hopes that the bankruptcy estate [of the Woodbridge companies] will be able to focus its efforts and resources to maximize recoveries through the sale of the real estate portfolio.”
Roseman and Acevedo, who pleaded not guilty, are scheduled for trial in June.
Woodbridge’s real estate dealings crumbled as Shapiro and his company ran out of money to pay old investors with funds from new ones, leading to a bankruptcy filing in Delaware, a crackdown by the Securities and Exchange Commission and a federal indictment filed by prosecutors in Miami.
“There was no way to support this thing without bringing in new investor funds,” said federal prosecutor Roger Cruz, describing how Shapiro turned his business into a Ponzi scheme between 2012 and 2017.
The scope of Shapiro’s scheme was not unlike the racket run by convicted Fort Lauderdale lawyer Scott Rothstein, who sold fabricated legal settlements to rich investors totaling $1.2 billion before the scheme unraveled a decade ago. Rothstein’s victims, however, were a much smaller group of wealthy investors from Florida, New York and Texas.