A cosmetologist who lives in The Villages is being tied to one of the biggest Ponzi schemes in history.
According to a Florida Office of Financial Regulation report, an administrative complaint was filed April 30 in connection with a U.S. Securities and Exchange Commission probe against 10 unregistered firms and individuals, including Lynnette Robbins, of Virginia Trace. She is being accused of offering and selling unregistered securities of Woodbridge Capital Investments, Inc., and other associated companies while not registered as required by Chapter 15 of Florida Statutes.
Robbins, along with Theordore F. Leutz, are listed with the State of Florida as officers/directors with Knowles Systems Inc. and Knowles Systems Foundation, which are run out of their home at 873 Bancroft Place in The Villages.
According to a Wall Street Journal article earlier this week, Knowles Systems Inc. and Robbins, its chief executive and co-owner, was the highest-earning external agent for Woodbridge, which filed for chapter 11 bankruptcy protection in December 2017 shortly before the SEC filed suit. Knowles received at least $8.1 million in commissions, an SEC filing said.
While Robbins has a cosmetology license, the 72-year-old isn’t registered as a broker or investment adviser with either the SEC or the Financial Industry Regulatory Authority, the article says.
Knowles Systems also has filed for Chapter 11 bankruptcy, saying it lost two-thirds of its revenue when Woodbridge collapsed, the article states, adding that Knowles “denies it was negligent in providing leads to Woodbridge” in a court filing.
Records at the Sumter County property appraiser’s office show that Leutz and Robbins own two homes in The Villages. The Bancroft Place house is valued at $440,000, while another home at 731 Evans Way in the Village of Bridgeport at Lake Sumter is valued at $730,000.
The couple purchased the Bancroft Place home in April 2015, then bought the Evans Way home in March 2017.
The three-bedroom Evans Way house has a heated salt-water pool with an outside kitchen covered by a caged enclosure, according to realtor.com.
The 2,000-square-foot Bancroft Place home is in the Village of Virginia Trace. It is a three-bedroom single-family Designer Home within walking distance of Lake Sumter Landing. It features vaulted ceilings, plantation shutters, an oversized golf cart garage and a screened lanai overlooking a private backyard, according to realtor.com.
Meanwhile, the Florida Office of Financial Regulation complaint alleges that the named sales agents – including Robbins – and companies violated the Florida Securities and Investor Protection Act by unlawfully offering unregistered securities for sale to Floridians. The agency also alleges that more than 3,300 violations took place, with sales agents being accused of selling investments offered by Woodbridge to more than 800 Florida victims, who collectively invested more than $100 million.
Investments in Woodbridge First Position Commercial Mortgages were touted as very safe and promised interest rates as high as six percent to investors, the report says. But in a separate civil complaint filed by the Securities and Exchange Commission in December 2017, they alleged that most of the investors’ money was used to pay commissions to sales agents, interest to already existing investors and the personal expenses of the company’s president.
“The Florida Office of Financial Regulation is committed to protecting Floridians from financial crime,” said Commissioner Drew J. Breakspear. “Illegal financial activity will not be tolerated, and we will continue fighting for victims. Thank you to our investigators and our state and federal partners who are working to move this case forward.”
In November 2017, the Florida Office of Financial Regulation sent a questionnaire to more than 800 Floridians believed to be Woodbridge investors. Those people are encouraged to return the completed questionnaire as soon as possible. And any Woodbridge investor who has not received a questionnaire should contact the Florida Office of Financial Regulation at (850) 487-9687.
The investigation is ongoing.
A Ponzi scheme typically is a financial scam where early investors are paid returns with money from later investors rather than legitimate investment activities. The most well-known Ponzi scheme involved New York financier Bernard Madoff, who in 2009 pleaded guilty to masterminding a decades-long, $65 billion swindle. The Ponzi scheme is named for Charles Ponzi, who in 1920 bilked thousands of people out of close to $10 million before he was caught.
