WILMINGTON, Del. (Reuters) - The U.S. Securities and Exchange Commission urged a federal judge on Wednesday to appoint a trustee to manage the Woodbridge Group of Companies, a bankrupt property developer the regulator accused of being a $1.2 billion Ponzi scheme.

FILE PHOTO: The seal of the U.S. Securities and Exchange Commission hangs on the wall at SEC headquarters in Washington, DC, U.S., June 24, 2011. REUTERS/Jonathan Ernst/File Photo

Woodbridge filed for bankruptcy in December and weeks later the SEC sued to freeze its assets, accusing it of selling unregistered securities to raise funds to repay earlier investors.

The regulator has said investors are owed more than $961 million, and has alleged the company’s owner, Robert Shapiro, used at least $21 million for private jets, luxury cars, wine and political donations.

Shapiro has denied the allegations. Larry Perkins, who was hired as a chief restructuring officer in October, said the company is investigating the allegations.

More than 40 lawyers attended the U.S. Bankruptcy Court hearing in Wilmington, Delaware, on Wednesday as creditors, investors and authorities sought to protect their interest in the company assets, including the Owlwood estate in Los Angeles once owned by singer Cher.

The SEC and an official creditors committee wants an independent trustee, while the company and lawyers for some investors argued for sticking with Perkins.

The judge, Kevin Carey, said in similar situations he has benefited from having an independent examiner.

“My concern was if there were improprieties I want to hear about them publicly rather than have them buried in settlements,” he said.

Carey continued the hearings until Jan. 18.

Perkins was grilled on Wednesday about deals worth millions of dollars to Shapiro that Perkins said were necessary to convince Shapiro to cede management of Woodbridge prior to the bankruptcy. Shapiro also contributed property to the company.

Beginning in 2012, Woodbridge raised about $1.2 billion from 8,400 investors, many of them senior citizens, through the sale of securities that promised interest of up to 8 percent, according to a federal complaint by SEC.

Woodbridge told investors the funds would be loaned to commercial property developers for up to 15 percent interest, according to the SEC. The company also said it was investing in high-end property.

In reality, the developers that were borrowing from Woodbridge were actually entities controlled by Shapiro, according to the SEC.

Woodbridge skirted scrutiny by avoiding licensed broker-dealers and instead distributing its securities through insurance agents and unregistered investment advisers, incentivized with large commissions, according to the SEC. The company also sold securities through seminars and television advertising, the SEC said.