A grand jury in Texas’ 147th District Court has indicted an Austin investment advisor, Brett Pittsenbargar, for first-degree felony charges of securities fraud, money laundering, and theft.
Prosecutors allege that Pittsenbarger sold $9.3 million in fraudulent investments, mostly aiming to rip off elderly investors. Officers arrested him Feb. 19 after investigations by the U.S. Securities and Exchange Commission and Texas State Securities Board.
Pittsenbargar’s alleged fraud is linked to a $1.3 billion Ponzi scheme run by a firm called Woodbridge Securities, which went bankrupt in 2017.
Pittsenbargar worked as a sales agent for Woodbridge, according to enforcement attorneys with the State Securities Board, who are acting as special prosecutors to assist the Travis County District Attorney’s Office.
“Although Pittsenbarger has never been registered to sell securities, he allegedly began working as a sales agent for Woodbridge,” the State Securities Commission said in a press release.
According to the indictment, the Securities Commission ordered Pittsenbarger to stop illegally selling these securities, but he continued to do so despite the order.
He also began selling promissory notes issued by an entity called Ironbridge Asset Fund LLC, a company he founded and solely owned. Pittsenbargar didn’t tell potential investors that he owned Ironbridge.
“Unbeknownst to the investors, Pittsenbargar allegedly transferred money meant for Ironbridge funds into Woodbridge investments. In most cases, Pittsenbarger allegedly moved funds that clients already had in Woodbridge investments into the Ironbridge funds, then back into Woodbridge,” the Securities Commission said.
Woodbridge filed for bankruptcy protection in December 2017 and in October 2018 the court approved a plan to liquidate the company. Woodbridge’s founder, Robert Shapiro, was sentenced to 25 years in federal prison in 2019.
The Securities and Exchange Commission sued Pittsenbargar in November, alleging that he raised at least $18 million for Woodbridge investments from 2012 through 2016. He earned $1 million in commissions by selling the unregistered investments, according to the SEC, which was assisted by the Texas State Securities Board in the investigation.
Pittsenbargar failed to disclose material facts to investors, according to the Travis County indictment. He didn’t inform investors of two state regulatory orders against Woodbridge. Nor did Pittsenbargar disclose commissions and other payments from Woodbridge and its affiliates.
Pittsenbargar also failed to tell potential investors that he filed for bankruptcy protection in Colorado in 2008.
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