The Woodbridge Group of Companies, LLC
Investors who purchased Woodbridge FPCMs through a stockbroker or financial advisor may have viable FINRA arbitration claims if the brokerage firm did not perform adequate due diligence before recommending the Woodbridge investment.
Woodbridge Wealth, a California-based firm, sells structured financial products to investors, often through intermediary brokers. Woodbridge has reportedly raised over $1 billion by selling investors instruments known as First Position Commercial Mortgages (“FPCMs”). The Woodbridge Funds advertise that their management team’s substantial experience lets them maintain a successful lending model and find lending opportunities that are favorable for investors. Investors do not have any role other than providing money. An FPCM consists of a promissory note from a Woodbridge Fund, a loan agreement, and a non-exclusive assignment of the Woodbridge Fund’s security interest in the mortgage for the underlying hard-money loan. The Woodbridge Funds pool money from multiple investors for each hard-money loan. The Woodbridge Funds’ promissory notes effectively guarantee the underlying hard-money loans, and the Woodbridge Funds’ advertising materials state that the Woodbridge Funds are obligated to make payments to FPCM investors even if the hard-money borrower defaults.
However, the viability of Woodbridge’s FPCMs is called into question by Woodbridge’s filing for Chapter 11 bankruptcy protection in Delaware Bankruptcy Court (Case No. 17-12560-KJC). Woodbridge has asserted that a restructuring of its debt was necessary due to increased operating and development costs, in addition to expenses associated with ongoing litigation and regulatory compliance. It appears that Woodbridge believes its FPCM holders are unsecured creditors who will lose most if not all of their invested assets.
Woodbridge’s FPCM sales have resulted in certain actions and/or investigations by regulators, including state regulators in Pennsylvania, Michigan, Massachusetts, and Colorado, as well as the U.S. Securities and Exchange Commission (“SEC”). In May of 2015, Massachusetts state regulators charged an individual with fraud based on the regulators’ allegations that he was marketing and selling unregistered securities to vulnerable elderly investors. The SEC is also reportedly investigating the Woodbridge Group of Companies for possible violations ongoing violations of Sections 5(a), 5(c), and 17(a) of the Securities Act, and Section 15(a) and Section 10(b) of the Exchange Act and Rule 10b-5 thereunder, by Woodbridge and other persons and entities. The SEC is reportedly 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.
Some of the Woodbridge entities or Woodbridge Funds include the following:
- 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 PA, LLC
- Woodbridge Group of Companies, LLC (DBA Woodbridge Wealth)
If you are an investor that lost more than $100,000 in Woodbridge FPCMs you should consider all legal options. If you wish to discuss your particular situation and the potential for the recovery of your investment losses, or you have information concerning Woodbridge, please contact us for an evaluation of your potential case.