Florida Pensions Investigate Potential Discriminatory Behavior by Airbnb

Allegations could lead to a state-wide prohibition on purchasing shares of the company.

The Florida State Board of Administration (SBA) initiated a 90-day review period of Airbnb concerning allegations from the state’s governor, members of non-profit organizations, and state citizens citing that the company has in some shape or form practiced or encouraged discriminatory practices against Israel.

Florida state legislation directed the SBA in 2016 to draft a “scrutinized companies” list, comprised of companies “that participate in a boycott of Israel including actions that limit commercial relations with Israel of Israeli-controlled territories in a discriminatory manner,” according to a report from the $201 billion pension.

If the SBA cannot find compelling evidence that Airbnb is not participating in such practices against Israel at the conclusion of its investigation, retirement systems based in the sunshine state will be prohibited from directly acquiring securities of the company if it goes public, and all Florida state employees will be barred from purchasing Airbnb listings during official business trips, a spokesperson for the SBA told CIO. Indirect holdings are exempt from the prohibition (such as commingled accounts, index funds, etc.), but the pension will submit letters to the fund managers requesting they divest their holdings from the company and avoid buying shares from the company in the future.

In a letter in response to the allegations presented to the SBA during its January board meeting, a representative of Airbnb argued that the company “is not boycotting Israel, Israeli businesses, nor the more than 20,000 Israeli hosts who are active on the Airbnb platform. Airbnb has a significant investment in Israel and will continue to invest in Israel.”

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“Over the last five years, Airbnb has invested $20 million in support of our community and businesses activities in Israel. To the best of Airbnb’s knowledge, the company is one of the leading investors in Israel travel and tourism,” the company argued in a prepared statement.

The company’s November 2018 decision to ban future reservations for listings located in the West Bank is founded on its continued stance on permitting reservations in homes that are based in disputed territories. The company’s framework involves evaluating whether the “existence of listings is contributing to existing human suffering,” and determining whether the existence of listings in the occupied territory has a direct connection to the larger dispute in the region.

Other companies on the list of scrutinized companies that boycott Israel include Luxembourg-based Betsah Invest, Cactus, UK-based Co-operative Group, and Turkey-based Guloguz Dis Deposu Ticaret Ve Pazarlama.

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Court Orders $1 Billion Judgment Against Woodbridge Ponzi Operators

Former CEO Robert Shapiro must pay $100 million civil penalty.

A federal court in Florida has ordered Woodbridge Group of Companies LLC and its former owner to pay $1 billion in penalties and disgorgement for operating a Ponzi scheme that targeted retail investors.

Judge Marcia Cooke of the US District Court for the Southern District of Florida approved judgments against Woodbridge and its 281 related companies, ordering them to pay $892 million in disgorgement. The court also ordered former owner and CEO Robert Shapiro to pay a $100 million civil penalty, and to disgorge $18.5 million in ill-gotten gains, plus $2.1 million in interest.

In December 2017, the SEC charged the company and other defendants with operating a $1.2 billion Ponzi scheme that defrauded 8,400 retail investors, many of them senior citizens  who had invested in retirement funds. The SEC’s complaint alleged that Shapiro made Ponzi payments to investors and used a web of shell companies to conceal the scheme.

According to the SEC, Woodbridge advertised its primary business as issuing loans to third-party commercial property owners paying Woodbridge 11% to 15% annual interest for short-term financing.  In return, Woodbridge allegedly promised to pay investors 5% to 10% interest annually.  Woodbridge and Shapiro allegedly sought to avoid investors cashing out at the end of their terms.  While Woodbridge claimed it was making high-interest loans to third parties, the SEC alleged that the vast majority of the borrowers were Shapiro-owned companies that had no income and never made interest payments on the loans.

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“This resolution accomplishes one of the SEC’s core missions to protect retail investors,” Stephanie Avakian, co-director of the SEC’s Division of Enforcement, said in a release. “Mr. Shapiro and other defendants will be held accountable and required to pay substantial penalties for their misconduct.”

The SEC said that the court’s disgorgement order against Woodbridge and related corporate defendants will be deemed satisfied by a liquidation trust being formed under a plan in the Woodbridge Chapter 11 case. The liquidation trust will be obligated to make distributions of net proceeds from the disposition of the defendants’ assets in bankruptcy. The amount to be distributed will depend on the amounts collected by the liquidation trust.

The defendants and relief defendants neither admitted nor denied the SEC’s allegations, however, they consented to the entry of final judgments which also permanently prohibit them from violating the antifraud and other provisions of the federal securities laws.

RS Protection Trust, of which Robert Shapiro was the trustee and his family members the sole beneficiaries, as well as several relief defendants were collectively ordered to pay $5.3 million in ill-gotten gains and interest. Shapiro also consented to an SEC administrative order that permanently bars him from association with any broker, dealer, investment adviser, municipal securities dealer, municipal advisor, transfer agent, or nationally recognized statistical rating organization, and from participating in any offering of a penny stock.

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