Most folks will understand that they own shares (of different classes) in the bankruptcy trust, and that the trust owns a bunch of real estate mostly in the Los Angeles area that they are trying to sell.

I believe the latest report filed shows some $365 million of real estate is left to sell, and about $100 million of cash.

What you may not easily appreciate is that the bankruptcy trust owns (so you own via your shares) many lawsuits, mainly against law firms and individual lawyers that Woodbridge and Shapiro used to create and run the Note program (and the Units some invested in).   It may be funny to describe a lawsuit as an asset – but when you see the numbers below I think you will agree these could be worth far far more than the real estate.

What follows is a summary of several of the large lawsuits that the trustee is pursuing against various law groups.  One thing to know is many of these lawyers and law firms have what is called ‘Errors and Omissions’ insurance that help cover the cost to settle these types of suits.  So the chance of at least some money coming in for each case is relatively good.

No one can say what dollars to all of us these suits will yield – but these suits are pursuing very large law firms and weren’t done loosely or casualty.

Goldberg v. Halloran & Sage LLP, et al., Case No. 19STCV42900 (Cal. Super. Ct., L.A. Cnty., filed Dec. 2, 2019), is an action by the Trust against nine law firms (Halloran & Sage LLP; Balcomb & Green, P.C.; Rome McGuigan, P.C.; Haight Brown & Bonesteel LLP; Bailey Cavalieri LLC; Sidley Austin LLP; Davis Graham & Stubbs LLP; Robinson & Cole LLP; and Finn Dixon & Herling LLP) and ten individual attorneys (Richard Roberts, Lawrence R. Green, Jon H. Freis, Brian Courtney, Ted Handel, Thomas Geyer, Neal Sullivan, S. Lee Terry, Jr., Shant Chalian, and Reed Balmer) for conduct in connection with their representation of Robert Shapiro, the Debtors or their affiliates before the commencement of the Bankruptcy Cases, as well as against up to 100 “Doe” defendants.

The conduct challenged in the complaint includes knowingly and/or negligently preparing loan documents and investment agreements with material misstatements and omissions, designing deceptive securities products, preparing incorrect legal opinion memoranda on which investors relied, and assisting in the creation of nominally third-party borrower entities that were in fact controlled by Robert Shapiro.

The first set of counts in the complaint are against law firm Halloran & Sage LLP, attorney Richard Roberts, and the “Doe” defendants for aiding and abetting securities fraud (First Count), aiding and abetting fraud (Second Count), aiding and abetting breach of fiduciary duty (Third Count), negligent misrepresentation (Fourth Count), professional negligence (Fifth Count), and aiding and abetting conversion (Sixth Count). These defendants are alleged to be jointly and severally liable for rescission of investors’ purchases of securities and for damages in an amount believed to be in excess of $500 million, as well as for punitive damages.

The second set of counts in the complaint are against law firm Balcomb & Green, P.C., attorney Lawrence R. Green, and the “Doe” defendants for aiding and abetting securities fraud (Seventh Count), aiding and abetting fraud (Eighth Count), aiding and abetting breach of fiduciary duty (Ninth Count), negligent misrepresentation (Tenth Count), professional negligence (Eleventh Count), and aiding and abetting conversion (Twelfth Count). These defendants are alleged to be jointly and severally liable for rescission of investors’ purchases of securities and for damages in an amount believed to be in excess of $500 million, as well as for punitive damages.

The third set of counts in the complaint are against attorney Jon H. Freis and the “Doe” defendants for aiding and abetting securities fraud (Thirteenth Count), aiding and abetting fraud (Fourteenth Count), aiding and abetting breach of fiduciary duty (Fifteenth Count), negligent misrepresentation (Sixteenth Count), professional negligence (Seventeenth Count), and aiding and abetting conversion (Eighteenth Count). These defendants are alleged to be jointly and severally liable for rescission of investors’ purchases of securities and for damages in an amount believed to be in excess of $500 million, as well as for punitive damages.

The fourth set of counts in the complaint are against law firm Rome McGuigan, P.C., attorney Brian Courtney, and the “Doe” defendants for aiding and abetting securities fraud (Nineteenth Count), aiding and abetting fraud (Twentieth Count), aiding and abetting breach of fiduciary duty (Twenty-First Count), negligent misrepresentation (Twenty-Second Count), professional negligence (Twenty-Third Count), and aiding and abetting conversion (Twenty-Fourth Count). These defendants are alleged to be jointly and severally liable for rescission of investors’ purchases of securities and for damages in an amount believed to be in excess of $500 million, as well as for punitive damages.

The fifth set of counts in the complaint are against law firm Haight Brown & Bonesteel LLP, attorney Ted Handel, and the “Doe” defendants for aiding and abetting securities fraud (Twenty-Fifth Count), aiding and abetting fraud (Twenty-Sixth Count), aiding and abetting breach of fiduciary duty (Twenty-Seventh Count), negligent misrepresentation (Twenty-Eighth Count), professional negligence (Twenty-Ninth Count), and aiding and abetting conversion (Thirtieth Count). These defendants are alleged to be jointly and severally liable for rescission of investors’ purchases of securities and for damages in an amount believed to be in excess of $20 million, as well as for punitive damages.

The sixth set of counts in the complaint are against law firm Bailey Cavalieri LLC, Thomas Geyer, and the “Doe” defendants for aiding and abetting securities fraud (Thirty-First Count), aiding and abetting fraud (Thirty-Second Count), aiding and abetting breach of fiduciary duty (Thirty-Third Count), negligent misrepresentation (Thirty-Fourth Count), professional negligence (Thirty-Fifth Count), and aiding and abetting conversion (Thirty-Sixth Count). These defendants are alleged to be jointly and severally liable for rescission of investors’ purchases of securities and for damages in an amount believed to be in excess of $500 million, as well as for punitive damages.

The seventh set of counts in the complaint are against law firm Sidley Austin LLP, attorney Neal Sullivan, and the “Doe” defendants for aiding and abetting securities fraud (Thirty-Seventh Count), aiding and abetting fraud (Thirty-Eighth Count), aiding and abetting breach of fiduciary duty (Thirty-Ninth Count), negligent misrepresentation (Fortieth Count), professional negligence (Forty-First Count), and aiding and abetting conversion (Forty-Second Count). These defendants are alleged to be jointly and severally liable for rescission of investors’ purchases of securities and for damages in an amount believed to be in excess of $500 million, as well as for punitive damages.

The eighth set of counts in the complaint are against law firm Davis Graham & Stubbs LLP, attorney S. Lee Terry, Jr., and the “Doe” defendants for aiding and abetting securities fraud (Forty-Third Count), aiding and abetting fraud (Forty-Fourth Count), aiding and abetting breach of fiduciary duty (Forty-Fifth Count), negligent misrepresentation (Forty-Sixth Count), professional negligence (Forty-Seventh Count), and aiding and abetting conversion (Forty-Eighth Count). These defendants are alleged to be jointly and severally liable for rescission of investors’ purchases of securities and for damages in an amount believed to be in excess of $200 million, as well as for punitive damages.

The ninth set of counts in the complaint are against law firm Robinson & Cole LLP, attorney Shant Chalian, and the “Doe” defendants for aiding and abetting securities fraud (Forty-Ninth Count), aiding and abetting fraud (Fiftieth Count), aiding and abetting breach of fiduciary duty (Fifty-First Count), negligent misrepresentation (Fifty-Second Count), professional negligence (Fifty-Third Count), and aiding and abetting conversion (Fifty-Fourth Count). These defendants are alleged to be jointly and severally liable for rescission of investors’ purchases of securities and for damages in an amount believed to be in excess of $5 million, as well as for punitive damages.

There are several more actions the trustee has cooking in the $5 million dollar range.

Another Large Case is against an FDIC bank called Comerica that Shapiro used; summary below:

Goldberg vs. Comerica Bank, Adv. Pro. No. 20-ap-50452-BLS (Bankr. D. Del., originally filed Apr. 26, 2019 in California and transferred on February 5, 2020 to Delaware), is an action by the Trust against Comerica Bank alleging fraudulent transfer liability under the California Civil Code. The Trust’s complaint also incorporates the claims asserted against Comerica Bank in the class action (referenced in paragraph (1) above) to the extent that such claims are ultimately determined to belong to the Trust rather than to individual former Noteholders and Unitholders.

11 thoughts on “What Do You Own …

  1. Thank you GREG , i appreciate your insight, since this was retirement savings and I have no other way to get my money I am very hopeful that these dollars are returned to us since it was suppose to be my secure investment! Joe

    Liked by 1 person

  2. i’m saying you own these via the BK trust, the trust will pursue these and hopefully get some major $ paid into the trust by the various lawyer defendants.
    lots of E&O insurance here to fish for

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  3. Greg – do you know if there is any way to track the progress of these lawsuits? Have they just started? Are they in court nearing a resolution? If they win, are these lawyers likely to appeal, thus dragging it out several more years? The whole timeline of these lawsuits just seems so nebulous. Thanks.

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    1. i don’t have a good way to follow these cases … I’ll work on that.

      as to ‘appeal’ there is very low probability these will ever see a court. the law firms know they lose if in front of a jury with the context of a (bankruptcy) court determination of a ponzi.
      These will go through mediation and settle – is my guess.

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      1. 10/19/2020 PRESS RELEASE – Woodbridge Liquidation Trust Announces Cash Distribution
        SHERMAN OAKS, California—October 19, 2020—Woodbridge Liquidation Trust (the “Trust”)
        announced that its Liquidation Trustee, with the approval of the Trust’s Supervisory Board, has declared
        an aggregate cash distribution of $30,000,000 on the Trust’s Class A Liquidation Trust Interests (the
        “Class A Interests”). This amount includes a reserve of approximately $469,000 for the issuance of
        additional Class A Interests based on estimated bankruptcy claims subject to future allowance pursuant to
        the First Amended Joint Chapter 11 Plan of Liquidation dated August 22, 2018 of Woodbridge Group of
        Companies, LLC and its Affiliated Debtors (the “Plan”).
        The distribution amounts to $2.56 per Class A Interest, and will be paid on or about November 6, 2020 to
        holders of record of Class A Interests as of close of business on Friday, October 30, 2020.
        Regarding the distribution, the Trust’s Liquidation Trustee Michael Goldberg said, “I am pleased to be
        able to announce this additional interim distribution to our holders. We continue to anticipate making
        additional distributions in the future from time to time.”

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