AUSTIN (KXAN) — Brett Pittsenbargar was arrested Wednesday for allegedly selling $9 million in fraudulent investments, mainly to the elderly.
He faces first-degree felony charges of securities fraud, money laundering and theft.
Pittsenbargar sold investments to 43 clients, most of them over 65-years-old. His alleged fraud is rooted in the sale of promissory notes issued on behalf of a network of 280 entities known as the Woodbridge Group of Companies.
Woodbridge made loans to third parties secured by real estate, but it was actually a Ponzi scheme that raised an estimated $1.3 billion from around 9,000 people.
In 2015 the Texas Securities commissioner took action against Woodbridge and its unlicensed sales agents, which included Pittsenbargar, and his company BP Financial & Tax Design Group of Austin.
Despite the indictment, Pittsenbargar continued to illegally sell securities, this time through a company called Ironbridge Asset Fund LLC, according to the Texas State Securities Board. It said he was the founder and sole owner and didn’t tell investors he owned Ironbridge.
Pittsenbargar allegedly transferred money meant for Ironbridge to Woodbridge Investments. His most common practice was sending money already invested from Woodbridge to Ironbridge and then back to Woodbridge.
Woodbridge filed for bankruptcy protection in December 2017 and in October 2018, a plan to liquidate the company was approved by the court. In 2019, Woodbridge’s founder, Robert Shapiro, was sentenced to 25 years in federal prison as a result of the fraud case.
The Securities and Exchange Commission sued Pittsenbargar in November, saying he raised at least $18 million for Woodbridge from 2012 through 2016. From the $18 million in investments, he took home just over $1 million in commission.
According to the Travis County indictment, Pittsenbargar didn’t tell investors about material facts, or the two state regulatory orders against the Woodbridge Group in 2015.
Pittsenbargar also never told investors about bankruptcy protection in Colorado filed in 2008.
Attorneys with the Texas State Securities Board appointed special prosecutors to assist the office of Travis County in this case.