Austin insurance agent indicted for alleged $9 million fraud on the elderly
Austin TX Feb 23 2020 An Austin-area insurance agent was arrested on Wednesday under allegations that he tricked the elderly into giving him millions.
A Travis County grand jury indicted Brett Pittsenbargar on Feb.4. He is facing first-degree felony charges of securities fraud, money laundering and theft.
According to the indictment, Pittsenbargar sold $9.3 million in fraudulent investments to 43 clients, most of whom were older than the age of 65.
The alleged fraud is connected to his sale of promissory notes issued on behalf of a network of more than 280 entities referred to as the Woodbridge Group of Companies. Woodbridge allegedly made loans to third parties that were secured by real estate. In reality, it was a Ponzi scheme that raises an estimated $1.3 billion from around 9,000 victims.
According to a press release from the Texas State Securities Board, although Pittsenbarger was never registered to sell securities, he allegedly started working as a sales agent for Woodbridge. Starting in 2015, the Texas Securities Commissioner brought enforcement actions against Woodbridge and its unlicensed sales agents, including Pittsenbargar and his company, BP Financial & Tax Design Group of Austin.
Enforcement actions resulted in offering millions of dollars in restitution to Texas investors. The Securities Commissioner also blocked him from continuing to illegally offer securities, such as those by Woodbridge.
According to the indictment, Pittsenbargar continued to sell securities despite his barring. However, he started selling promissory notes issued by a different entity called Ironbridge Asset Fund LLC, a company he founded and solely owned. Pittsenbargar reportedly failed to tell potential investors he owned Ironbridge.
Unknown to his investors, he allegedly transferred money meant for Ironbridge funds into Woodbridge investments. In many of these cases, he allegedly moved funds that clients already had in Woodbridge investments into the Ironbridge funds, then back to Woodbridge.
According to the release, Woodbridge filed for bankruptcy protection in December 2017. In October 2019, the court approved a plan to liquidate the company. Its founder, Robert Shapiro, was then sentenced to 25 years in federal prison.
In November of that year, the Securities and Exchange Commission sued Pittsenbargar claiming that he raised at least $18 million for Woodbridge investments from 2012 through 2016. The release states he earned $1 million in commissions by selling the unregistered investments.
The board said Pittsenbargar did not disclose material facts to investors. The indictment states he did not inform investors of two state regulatory orders against Woodbrdinge in 2015, one by the TSSB and another by Massachusetts regulators that discovered Woodbridge’s main investment product was an unregistered security.
Reports state Pittsenbargar also did not disclose commissions and other payments from Woodbridge and its affiliates. Additionally, he failed to tell potential investors that he filed for bankruptcy protection in 2008 in the state of Colorado.
TSSB enforcement attorneys have been appointed as special prosecutors to assist the office of Travis County District Attorney Margaret Moore in the case.
