Securities Commissioner considering sanction on Woodbridge Mortgage Investment Funds
DENVER (Oct. 12, 2017) — The Colorado Securities Commissioner has ordered Woodbridge Mortgage Investment Funds 1, 2, 3, and 3A, collectively known as “the Woodbridge Funds” to show cause as to why he should not issue a sanction against them for Colorado Securities Act violations. Respondents also include James Campbell, Jr. of Woodland Park, Timothy McGuire of Highlands Ranch, and Ronald Caskey of Firestone.
The Division of Securities, part of the Department of Regulatory Agencies, provided the Commissioner with the results of an investigation into the funds that allege Securities Act violations in the form of the sale of unregistered securities, soliciting of securities by unlicensed representatives, and fraudulent statements and omissions of fact related to the sale of securities. To date, the Division alleges that the Respondents have raised approximately $57 million from 450 Colorado investors, and continue to solicit investors through online and radio advertising.
According to the Division, the respondents utilize a method whereby investors are issued promissory notes in exchange for investments that go toward backing hard money loans that are secured by commercial property, called “First Position Commercial Mortgages.” Investors are guaranteed fund payments even in the instance of a hard money loan default.
According to the Division, the Woodbridge Funds hired James Campbell, Timothy McGuire and Ronald Caskey as sales agents in Colorado, who are not licensed to solicit or sell securities. Further, the First Position Commercial Mortgages being secured by notes to investors are neither registered nor exempt from registration with the Commissioner.
Additionally, the Division alleges that in the pursuit of these investments, the respondents and their agents have made misleading statements to investors regarding: the lack of proper registration and licensure; qualifications of the fund managers; the company’s ability to pay back investors should the loans default; the risks involved in the investments; and the fact that the Woodbridge Funds and companies have already been sanctioned by securities divisions in Massachusetts and Texas for similar violations.
Following the order, the Respondents will have the opportunity to show cause as to why the Commissioner should not issue a sanction.