(CN) - Federal prosecutors on Tuesday secured the 25-year sentence they wanted for the head of the colossal Woodbridge Group real estate investment fraud scheme, which stretched from Florida to California and bilked more than 7,000 victims.
A federal judge handed down the prison sentence for Los Angeles-area developer Robert Shapiro, 61, in the Southern District of Florida, where Shapiro pleaded guilty to fraud and tax evasion.
U.S. District Judge Cecilia Altonaga showed little leniency in response to Shapiro's forfeiting a treasure trove of assets funded by his now-failed Woodbridge Group of Companies.
Shapiro and his wife have handed over artwork by Pablo Picasso and Auguste Renoir, more than 600 bottles of wine, hundreds of diamonds and a vintage Mercury convertible, among other riches.
Prosecutors argued in their sentencing memo that Shapiro funded his lavish lifestyle in part by draining more than 2,000 investors' retirement funds.
"These plainly personal expenses were financed on the backs of elderly investor victims’ nest eggs, for whom their investments – which were modest, in comparison to Shapiro’s expenditures – meant everything. Some of these elderly victims worked for decades for their hard-earned dollars, and – because of the substantial financial losses Shapiro caused them – they will now have to go back to work in their own retirement age in order to afford living expenses," the memo states.
When police searched storage facilities that had been acquired by Shapiro's wife shortly after his arrest, they found a Marc Chagall painting and $250,000 in gold coins, according to prosecutors. The location of the facilities had been released to prosecutors following Shapiro's plea agreement.
Shapiro asked for a 12-year sentence, with his attorneys pointing to his advanced age and health problems. They argued Shapiro cooperated with federal authorities after his April arrest, and acknowledged the failure of his investment network when he facilitated bankruptcy proceedings in December 2017.
The defense attorneys also tried to convince the judge that Shapiro learned his profligate spending habits in his early childhood, from a mother who lived "a lifestyle substantially beyond her means" and exhibited an "insatiable desire to impress others."
In all, Woodbridge is believed to have taken in nearly $1.3 billion from investors.
"Of that, Shapiro misappropriated approximately $25 million to $95 million in investor money for himself and for the benefit of his immediate family members," the Department of Justice claims.
The operation had offices in Florida, California, Colorado, Tennessee and Connecticut, according to prosecutors.
By phone and email, sales agents would aggressively market investments in Woodbridge's real-estate lending portfolio, telling victims they would receive generous interest payments.
Victims were told underlying properties were owned by third parties, when in reality, Shapiro owned them through a large network of companies. In some instances, properties that were supposedly part of the Woodbridge portfolio were never acquired.
As Shapiro's properties failed to generate cash flow to pay off investor loans, he and his associates resorted to siphoning off new investors' money to cover the deficiency.
Shapiro continued to solicit new investors despite knowing he was on the verge of bankruptcy, the DOJ claims.
"Woodbridge received more than $52 million of investor money from October 2017 through the filing of its bankruptcy on December 4, 2017," the sentencing memo states.
Financial planners across the country promoted Woodbridge products as safe investments, and many of them have been sued in the litigation fallout from the fraud.
Shapiro's alleged cohorts Dane Roseman and Ivan Acevedo are scheduled for trial in the criminal case in the summer of 2020.
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