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An alleged $110 million Ponzi scheme based in Georgia and New York — but with influence reaching as far as Mount Airy — took another step toward resolution for some of its victims earlier this month.
Oppenheimer & Co., a New York-based brokerage and investment bank, has been ordered to pay nearly $37 million in damages to 11 investors who lost money in the scheme allegedly operated by two firms under John Woods’ control , a Marietta, Georgia, resident.
Woods, a longtime broker at Oppenheimer, had controlling interests in two other investment firms: Horizon Private Equity, III LLC and Livingston Group Asset Management Company, operating as Southport Capital.
Southport Capital had an office in Mount Airy, but it was soon closed after the Securities and Exchange Commission (SEC) cracked down on Woods and his firms in August 2021. No one from the local firm acknowledged requests for comment or information from The Mount Airy News, but at the time of the SEC’s lawsuit, Woods was listed as a partner and chief investment adviser to the firm. Clay Parker was listed as President and CEO.
According to the SEC’s original lawsuit, filed in August 2021 in the US District Court for the Northern District of Georgia, the defendants raised more than $110 million from more than 400 investors in 20 states by offering membership shares in Horizon and sold.
Woods, Southport and other Southport investment advisers reportedly told investors — including many older retirees who feared stock market volatility — that their Horizon investments were safe and would pay a fixed rate of return, and that investors could get their capital back even without a penalty after a short one Waiting time, according to the SEC filing.
However, according to the complaint, these statements were false and misleading: Horizon made no significant profits from legitimate investments, and a large percentage of the alleged “returns” to previous investors were paid simply from new investor money. The complaint also alleges that Woods repeatedly lied to the SEC during Southport’s regulatory investigations.
“Investors felt comfortable investing in Horizon in large part because of their relationships with advisors at Southport,” said Nekia Hackworth Jones, director of the SEC’s Atlanta regional office. “As alleged in the complaint, Woods and Southport took advantage of their clients’ fears of losing their hard-earned savings and convinced them to pour millions of dollars into a Ponzi scheme, falsely offering them a safe investment with steady returns.” promised.”
Another SEC filing dated June 10 this year hit investors from the region closer. That filing, filed in US District Court in Atlanta, pointed the finger at three other people, including a Mount Airy resident.
Penny Flippen, aged 59 at the time of filing, of Mount Airy; Britt Wright, 49 years old at the time of filing, of Pfafftown, and Michael Mooney, 52 years old at the time of filing, of Sarasota, Florida, were all involved in the complaint. The three are said to have advised investors from the region to invest a total of 62 million dollars in the Horizon fund. According to this June 10 filing, the three are said to have told clients that the money would be invested in safe securities such as government bonds and would be paid a guaranteed return of 6% to 8% without jeopardizing the principle.
“…Horizon III was only able to pay the guaranteed returns to existing investors by raising and using new investor funds,” the complaint alleges. “Horizon III has not made significant returns from legitimate investments; Instead, a very large percentage of previous investors’ purported “returns” were simply paid from new investor money.”
The three were charged with multiple violations of federal securities laws, the SEC said. This filing has yet to be resolved.
The more recent lawsuit, filed this month and settled by an Atlanta arbitration panel Sept. 5, asks Oppenheimer to pay $36.75 million to 13 plaintiffs as part of the case. This compensation covers the money they allegedly lost, court and filing fees and in some cases treble damages, increasing their compensation to 3 times the money lost.
According to a previous complaint filed on her behalf in Georgia, Woods worked as an Oppenheimer investment advisor while allegedly running his Ponzi scheme, funneling clients – and their money – from Oppenheimer into his Horizon fund.
“Applicants are among more than 300 people who have been victims of the $110 million scheme,” said Chapman – Albin LLC attorney John Chapman’s filing. “The SEC recently filed a complaint against Horizon and Woods, freezing the Horizon fund and its assets. The SEC’s complaint alleges that the plaintiffs lost all or substantially all of their invested capital in Horizon. Respondent Oppenheimer has completely failed in its duty. The plaintiffs have suffered the consequences of the defendant’s failure,” the filing on the claim for damages reads.
In the Georgia case, according to local court filings, several of the victims were led to believe that Horizon was an Oppenheimer-approved investment vehicle and part of Oppenheimer’s mutual fund portfolio.
“Oppenheimer employed, held the securities license, and was obligated to supervise at all times the securities-related activities of its registered agent, John Woods,” said the Atlanta filing, which alleged Oppenheimer was required to repay the losses suffered by customers there. “Oppenheimer’s lax regulatory structure, in which brokers are essentially self-regulatory, has … led Oppenheimer to 97 regulatory actions and 173 arbitrations, including those involving, among other things, failure to oversee the outside business activities and private securities transactions of registered agents ‘ Chapman said in his filing.
Although Woods left Oppenheimer in December 2016, the court filing alleges that Oppenheimer knew of his wrongdoing and was complicit in hiding it from regulators.
“In December 2016, fully aware of the numerous securities law violations being committed at its Atlanta, Georgia office, Oppenheimer attempted to hide the Horizon program from regulators and the investing public by allowing Woods to tacitly hear from Oppenheimer resign without reporting the wrongdoing to regulators and the investing public as required by law. This allowed Woods to continue raising money from unsuspecting investors, allowing the pyramid scheme to continue for many more years through August 2021,” the September filing reads.
The arbitrators ruled in favor of the Georgia plaintiffs, with a lengthy review of damages and penalties paid to each of the victims totaling nearly $37 million.