Austin Insurance Agent Indicted for Alleged $9 Million Fraud on Elderly
Brett Pittsenbargar, an Austin insurance agent who allegedly sold $9.3 million in fraudulent investments, was arrested Feb. 19 to face first-degree felony charges of securities fraud, money laundering, and theft.
A Travis County grand jury’s Feb. 4 indictment of Pittsenbargar was made public when he was arrested and booked into Travis County jail.
According to the indictment, Pittsenbargar sold the investments to 43 clients, most of whom are older than 65 years of age.
Pittsenbargar’s alleged fraud is rooted in his sale of promissory notes issued on behalf of a network of more than 280 entities collectively referred to as the Woodbridge Group of Companies.
Woodbridge purportedly made loans to third parties that were secured by real estate. It was actually a Ponzi scheme that raised an estimated $1.3 billion from approximately 9,000 victims.
Although Pittsenbarger has never been registered to sell securities, he allegedly began working as a sales agent for Woodbridge. Beginning 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.
The Texas enforcement actions resulted in the offer of millions of dollars of restitution to Texas investors. The Securities Commissioner also barred Pittsenbargar from continuing to illegally offer securities such as those offered by Woodbridge.
According to the indictment, even after the entry of an enforcement action against him, Pittsenbargar continued to illegally sell securities. However, he 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 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.
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 the Woodbridge Group in 2015, one by the Texas State Securities Board and another by Massachusetts regulators that found Woodbridge’s main investment product was an unregistered security.
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.
Enforcement attorneys with the Texas State Securities Board have been appointed special prosecutors to assist the office of Travis County District Attorney Margaret Moore in the case.