UNITED STATES SECURITIES AND EXCHANGE COMMISSION

SEC Admin Release 34-85010, January 31, 2019: The Securities and Exchange Commission ("Commission") deems it appropriate and in the public interest that public administrative proceedings be, and hereby are, instituted pursuant to Section 15(b) of the Securities Exchange Act of 1934 ("Exchange Act") against Barry M. Kornfeld. On January 10, 2019, a final judgment was entered by consent against Kornfeld, permanently enjoining him from future violations of Sections 5(a) and 5(c) of the Securities Act and Sections 15(a)(1) and 15(b)(6)(B)(i) of the Exchange Act, in the civil action entitled Securities and Exchange Commission v. Barry M. Kornfeld, Civil Action Number 18-cv-23369, in the United States District Court for the Southern District of Florida. The Commission's complaint alleged that, among other things, Kornfeld, through FEK Enterprises, Inc., d/b/a First Financial Tax Group ("First Financial"), offered and sold securities of Woodbridge Group of Companies, Inc. ("Woodbridge"). Neither First Financial, Kornfeld, nor Woodbridge were Commission-registered broker dealers, nor were they associated with Commission-registered broker dealers, and none of Woodbridge's securities offerings were registered with the Commission. Kornfeld sold investors two primary types of securities, a twelve-to-eighteen month term promissory note bearing 5%-8% interest that Woodbridge described as First Position Commercial Mortgages("FPCM"), and seven different private placement fund offerings with five-year terms ("Fund Offerings"). For the FPCMs, Kornfeld, through First Financial, received a transaction-based commission from Woodbridge equivalent to the difference of the 9% wholesale annual interest rate Woodbridge offered to First Financial and Kornfeld and the 5% to 8% annual interest First Financial and Kornfeld offered to investors. For the Fund Offerings, Kornfeld, through First Financial, received a 5% sales commission that Woodbridge purposefully mischaracterized as a "marketing bonus," to avoid the appearance of paying transaction-based commissions. Kornfeld and his wife, through First Financial, received approximately $3.7 million in transaction-based commissions from Woodbridge earned as a result of raising more than $60 million through the sale of Woodbridge securities to almost 500 investors.

Order

Bar (Permanent)

broker, dealer, investment adviser, municipal securities dealer, municipal advisor, transfer agent, or NRSRO

Indefinite

1/31/2019

Participating in any offering of a penny stock

Indefinite

1/31/2019

Penny Stock Bar

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

The Securities and Exchange Commission ("Commission") alleges that from at least April 2013 through December 2017, the Defendants in this action served as unregistered brokers on behalf of Woodbridge Group of Companies LLC and its affiliates ("Woodbridge"), raising almost $100 million from the offer and sale of unregistered securities to over 1,100 retail investors located throughout the United States. The Defendants, all based in Florida, collectively earned more than $5.8 million in transaction-based sales commissions. The Defendants utilized several marketing techniques, including advertising on television, radio, newspapers, email, social media, and pitching investors at in-person meetings and investment seminars, routinely touting Woodbridge's securities as "safe and secure." Unbeknownst to the Defendants' customers, many of whom had invested their retirement savings in response to the Defendants' marketing techniques, Woodbridge was actually operating a massive Ponzi scheme, raising more than $1.2 billion before collapsing in December 2017 and filing for bankruptcy. Once Woodbridge filed for bankruptcy, investors stopped receiving their monthly interest payments, and have not received a return of their investment principal. At all relevant times, the Defendants held no securities licenses, were not registered with the Commission, and were not associated with registered broker-dealers, nor did they qualify for an exemption. The Defendants were thus not permitted to sell securities. In addition, Defendant Barry M. Kornfeld was subject to a Commission order barring him from associating with a broker. By engaging in this conduct the Defendants each violated Sections 5(a) and 5(c) of the Securities Act of 1933 ("Securities Act"), and Section 15(a)(1) of the Securities Exchange Act of 1934 ("Exchange Act"). Defendant Barry M. Kornfeld also violated Section 15(b)(6)(B)(i) of the Exchange Act.

Judgment Rendered

Civil and Administrative Penalty(ies)/Fine(s)

Disgorgement

$3,693,359.00

Monetary Penalty other than Fines

Injunction

Prohibition

Florida Office of Financial Regulation

Offer and sale of unregistered securities; sale of securities by unregistered dealer, associated person or issuer

Order

Bar (Permanent)

All Capacities

Cease and Desist

Idaho Department of Finance

Mr. Kornfeld, owner of First Financial Tax Group, Inc., was not registered to sell securities at the time he acted as an independent contractor to solicit and sell unregistered securities for Woodbridge Mortgage Investments Funds.

Agreement and Order

Civil and Administrative Penalty(ies)/Fine(s)

$500.00

Restitution

$5,250.00

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

SEC RELEASE 34-62466/IA RELEASE 40-3049/JULY 7, 2010: THE SECURITIES AND EXCHANGE COMMISSION ("COMMISSION") DEEMS IT APPROPRIATE AND IN THE PUBLIC INTEREST THAT PUBLIC ADMINISTRATIVE PROCEEDINGS BE, AND HEREBY ARE, INSTITUTED PURSUANT TO SECTION 15(B) OF THE SECURITIES EXCHANGE ACT OF 1934 ("EXCHANGE ACT") AND SECTION 203(F) OF THE INVESTMENT ADVISERS ACT OF 1940 ("ADVISERS ACT") AGAINST BARRY M. KORNFELD ("KORNFELD" OR "RESPONDENT"). ON SEPTEMBER 9, 2009, A JUDGMENT WAS ENTERED BY CONSENT AGAINST KORNFELD, PERMANENTLY ENJOINING HIM FROM FUTURE VIOLATIONS OF SECTION 17(A) OF THE SECURITIES ACT OF 1933 ("SECURITIES ACT"), AND SECTION 10(B) OF THE EXCHANGE ACT AND RULE 10B-5 THEREUNDER IN THE CIVIL ACTION ENTITLED SECURITIES AND EXCHANGE COMMISSION V. BARRY M. KORNFELD, ET AL., CIVIL ACTION NUMBER 9:09-CV-80803, IN THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF FLORIDA.

Order

Bar (Permanent)

ASSOCIATION WITH ANY BROKER, DEALER, OR INVESTMENT ADVISER

Indefinite

7/7/2010

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

SEC LITIGATION RELEASE 21061, MAY 28, 2009: SECTION 17(A) OF THE SECURITIES ACT AND SECTION 10(B) OF THE EXCHANGE ACT AND RULE 10B-5 THEREUNDER - THE SECURITIES AND EXCHANGE COMMISSION CHARGED TEN BROKERS WITH FRAUD RELATED TO MORTGAGE BACKED SECURITIES KNOWN AS COLLATERALIZED MORTGAGE OBLIGATIONS ("CMOS"). THE TEN BROKERS HAD ALL WORKED FOR A NOW DEFUNCT BROKER-DEALER. THE BROKERS ALLEGEDLY REPRESENTED TO THEIR CUSTOMERS THAT THE SECURITIES WERE SAFE AND SUITABLE FOR RETIREES AND CONSERVATIVE INVESTORS, WHEN IN FACT THEY WERE NOT. THE COMMISSION ALLEGES THAT BARRY M. KORNFELD AND OTHERS DEFRAUDED OVER 750 CUSTOMERS BY SELLING THEM RISKY TYPES OF CMOS BETWEEN 2004 AND 2007. ACCORDING TO THE COMMISSION'S COMPLAINT, THE DEFENDANTS TOLD THEIR CUSTOMERS THAT THE CMOS IN WHICH THEY WOULD INVEST WERE SAFE, SECURE, LIQUID INVESTMENTS THAT WERE SUITABLE FOR RETIREES AND INVESTORS WITH CONSERVATIVE INVESTMENT GOALS. THE COMPLAINT ALLEGES THAT CONTRARY TO THESE REPRESENTATIONS, THE DEFENDANTS INVESTED IN RISKY TYPES OF CMOS THAT: (1) WERE NOT ALL GUARANTEED BY THE UNITED STATES GOVERNMENT; (2) JEOPARDIZED CUSTOMERS' YIELD AND PRINCIPAL; (3) WERE LARGELY ILLIQUID; AND (4) WERE ONLY SUITABLE FOR SOPHISTICATED INVESTORS WITH A HIGH-RISK INVESTMENT PROFILE. THE COMPLAINT ALLEGES THAT THE DEFENDANTS RECEIVED $18 MILLION IN COMMISSIONS AND SALARIES RELATED TO CMO INVESTMENTS. THE COMPLAINT ALSO ALLEGES THAT SOME DEFENDANTS TOLD CUSTOMERS THAT THEY WOULD USE MARGIN, OR THE ABILITY TO BORROW MONEY TO PURCHASE CMOS, ONLY SPARINGLY, WHEN IN FACT THEY HEAVILY MARGINED CUSTOMERS' ACCOUNTS, RESULTING IN LOSSES OF OVER $36 MILLION.

Judgment Rendered

Injunction

PERMANENTLY RESTRAINED

FINRA

NASD RULES 2110 AND 8210: RESPONDENT FAILED TO APPEAR TO GIVE SWORN TESTIMONY IN CONNECTION WITH A FINRA INVESTIGATION.

Acceptance, Waiver & Consent(AWC)

Bar

WITHOUT ADMITTING OR DENYING THE FINDINGS, RESPONDENT CONSENTED TO THE DESCRIBED SANCTION AND TO THE ENTRY OF FINDINGS; THEREFORE, HE IS BARRED FROM ASSOCIATION WITH ANY FINRA MEMBER IN ALL CAPACITIES.

ALLEGED: MISREPRESENTATION; UNAUTHORIZED TRADING; ACCOUNT RELATED- NEGLIGENCE ON COMMON STOCK; MUTUAL FUNDS-ALLEGED DAMAGES: $1,935.00

$1,935.00

$835.44

ACTUAL/COMPENSATORY DAMAGES, RELIEF HAS BEEN AWARED IN THE AWARD AMOUNT OF $835.44 JOINTLY AND SEVERALLY. NOT PROVIDED