Division of Securities continues pursuit of those who unlawfully sold investments tied to $1.2 billion Ponzi scheme
DENVER - The Colorado Division of Securities announced today that an Order of Permanent Injunction has been signed in Denver District Court against Gerald Ortiz and his company, Colorado Retirement Specialists, LLC for the unlicensed sale of securities that were part of a nationwide $1.2 billion Ponzi scheme. As part of the order, Ortiz was required to pay restitution for the money he received as commission for the sale of Woodbridge securities.
According to the Division, part of the Department of Department of Regulatory Agencies (DORA), Woodbridge utilized a method whereby unlicensed representatives issued promissory notes to investors in exchange for funds that went toward backing hard money loans. These loans were purportedly secured by commercial property, called “First Position Commercial Mortgages.” Investors were guaranteed fund payments even in the instance of a hard money loan default. The Woodbridge Group of Companies was charged by the U.S. Securities and Exchange Commission with operating a Ponzi scheme in 2017 and declared bankruptcy the following year.
Investigation by the Division revealed that Ortiz and his company allegedly offered to sell and sold the First Position Commercial Mortgage Notes from Woodbridge to Colorado investors, but these securities were never registered with the Division, nor were they exempt from registration. The notes sold by the Respondents were among the approximately $60 million in funds taken from more than 450 investors in Colorado that the Division has discovered in recent years.
“The Division of Securities continues to see fallout from the Woodbridge scheme, which caused Colorado investors alone to lose tens of millions of dollars,” stated Acting Securities Commissioner David Cheval. “The fact that many of the salespeople offering Woodbridge products were unlicensed is a perfect example of why checking the credentials of any person peddling investments is extremely important.”
As part of the Order of Permanent Injunction, the Respondents have agreed to refrain from all unlicensed securities activity, and will not engage in any other conduct in violation of the Colorado Securities Act. Failure to comply could result in contempt of court charges.