Three senior citizen residents of Howard County and four from Clinton County who are suing Gangwer Insurance and its Russiaville branch, alleging it should not have sold them securities linked to a national $1.3 billion Ponzi scheme.
Reba Casler, Ted and Janet Miller, of Howard County, and Richard and Dorothy McCarty and Robert and Kathy Lane, of Clinton County, are suing Ashley Wyrick, the local agent for the insurance company’s Russiaville location, and Gary and Cathy Gangwer, owners of Gangwer Insurance Agency, for damages due to lost retirement investments.
The plaintiffs allege that both Wyrick and Gangwer were not licensed to sell securities in the state of Indiana. Despite that, though, the plaintiffs allege that Wyrick invested, collectively, hundreds of thousands of dollars into Woodbridge Group, an investment firm that promised high returns on mortgage-related notes but ended up being a Ponzi scheme.
According to a complaint filed March 11 in Howard County Superior County II, Casler invested $152,000, the Millers $25,000, the Lanes $26,000 and the McCathrys $25,000 into Woodbridge, all at the recommendation of Wyrick. According to the complaint, all plaintiffs have “lost the majority” of their investments after Woodbridge filed for bankruptcy in 2017.
At no point, the complaint alleges, did Wyrick tell the plaintiffs that she was not registered to sell securities. The complaint also alleges that the plaintiffs were told there was little risk on the investments, were safe for seniors, that Wyrick would not be compensated for selling the securities, and that the investments were protected against loss.
All those claims, the plaintiffs allege, were wrong.
Multiple counts are alleged in the suit, including three violations of the Indiana Securities Act, constructive fraud, breach of fiduciary duty, negligence and financial exploitation of senior consumers.
Both Wyrick and the Gangwers asked and were granted more time to respond to the complaint. They now have through May 8 to respond.
Woodbridge, led by Robert H. Shapiro, defrauded about 8,400 total investors from 2012 to 2017, including high profiled names, such as ABC’s George Stephanopoulos. The pitch was simple: invest in historically safe mortgage securities and earn a guaranteed return – ranging from 5% to 8% annually.
Woodbridge invested its money into almost 200 commercial and residential properties. Investors were told their returns would be paid out by the profits of the high-interest loans given to third-party borrowers for the properties. Instead, a Securities and Exchange Commissioner investigation found, the loans were given to various LLCs that didn’t have any revenue and never paid any interest on the loans. As is typical with a Ponzi scheme, Woodbridge used new investors’ money to pay returns to existing investors, regulators found.
The investigation also found that Shapiro had used at least $35 million of the total $1.3 billion invested into Woodbridge for personal use, spending it on jewelry, luxury cars, political contributions and payments to his ex-wife. He was found guilty on charges related to the Ponzi scheme and sentenced to 25 years in prison.