Colorado Springs investment adviser Laurent Carrier and his company, Carrier Financial Services, have surrendered their Colorado securities licenses in an agreement with state regulators over their involvement in a $1.2 billion Ponzi scheme.
A Colorado Division of Securities investigation found Carrier and his company allegedly sold $5.1 million in unregistered securities for the Woodbridge Group of Companies to at least 50 investors between January 2016 and August 2017, according to a division news release. Woodbridge was charged in a December lawsuit by the Securities and Exchange Commission with bilking more than 8,400 investors, many of them senior citizens promised annual returns of up to 10 percent, in a $1.22 billion Ponzi scheme that began in 2012.
Under a Feb. 23 agreement announced Thursday, Carrier and his company had to surrender their securities licenses within 10 days and not reapply for such licenses. Carrier and his company had held Colorado securities licenses since 2005. He also worked for New England Securities in New York from 1996-2002.
"The Woodbridge case highlights the important role financial advisers play as gatekeepers to the securities markets," Colorado Securities Commissioner Gerald Rome said in the release. "Customers rely on their adviser's superior knowledge, training and experience, and expect sound investment advice. When recommending a financial product, the adviser says to the customer that he has done the necessary background work to ensure that the product is appropriate. Failure to live up to these important responsibilities can cause significant harm to their customers."
Carrier said in an email that he was unaware that "the Woodbridge investments were securities and I invested a substantial sum of my own money into these investments thinking them to be a good investment. I also did not realize that the Colorado Division of Securities would take the position that the Woodbridge investments were securities or I would not have been involved." The statement said the division wouldn't tell him last summer that it believed the Woodbridge investments were securities "when this issue arose for me."
Carrier also said he agreed to give up his Colorado license because he no longer manages "client brokerage money, and the fact that economically it made little sense to litigate any violation when I can continue to service my clients without interruption." The one-paragraph statement said Carrier has "always conducted myself and my firm with the utmost integrity and I have always intended to comply with all legal requirements" during more than 40 years in the investment industry, during which he said he had never received any complaints.
As part of its lawsuit, the SEC won a court order in a Miami federal court freezing the assets of Boca Raton, Fla.-based Woodbridge and its former CEO Robert Shapiro to prevent "further dissipation of investor assets." Investors were allegedly told their funds would be used to make high-interest real estate loans.
The money was used instead to pay interest and returns to previous investors, used $64.5 million to pay commissions to sales agents and Shapiro allegedly diverted at least $21 million to pay for charter aircraft, country club fees, luxury vehicles and jewelry.
The SEC lawsuit charged Shapiro, Woodbridge and several affiliated companies with fraud and violations of federal securities laws, and sought return of investor funds along with interest and financial penalties. The suit alleged Shapiro "used a web of layered companies to conceal his ownership interest" in Woodbridge's borrowers.
The agency's lawsuit was filed 17 days after the company filed for protection in Delaware from its creditors under Chapter 11 of the federal bankruptcy code, seeking to restructure $750 million in debts and citing "unforeseen costs associated with ongoing litigation and regulatory compliance."
Woodbridge reached a settlement last month with its creditors and the SEC in which it named a new CEO to steer it out of bankruptcy. Frederick Chin, a real estate advisor and business consultant, became chief executive, while Bradley Sharp was named chief restructuring officer. Sharp previously headed the Los Angeles offices of Development Specialists Inc.
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