Helping Investors Who Have Suffered Losses in the Alleged Ponzi Scheme Involving Horizon Private Equity III Fund and Oppenheimer Financial Advisors John J. Woods, Michael Mooney, and Arthur Brown
On August 20, 2021, the Securities and Exchange Commission (SEC) filed a Complaint against John J. Woods, Michael Mooney and Arthur Brown, former financial advisors at Oppenheimer & Co. Inc. in Atlanta, and Livingston Group Asset Management d/b/a Southport Capital.
The SEC alleges that, for over 10 years, John Woods ran a $110 million “Ponzi” scheme through Horizon Private Equity III Fund (Horizon), and that he invested numerous customers in Horizon which was a fraud.
According to the SEC’s allegations, John Woods, a former broker with Oppenheimer & Co., Inc. (“Oppenheimer”) and founder of Livingston Group Asset Management Company d/b/a Southport Capital (“Southport Capital”) ran a Ponzi scheme for more than a decade. The alleged Ponzi scheme involved a fund called Horizon Private Equity III, for which Woods allegedly solicited more than $110 million from more than 400 investors.
About the Alleged John Woods Ponzi Scheme
Woods allegedly told investors that Horizon Private Equity III would generate returns through investments in stocks, government bonds and real estate projects. According to the SEC, he targeted elderly investors, and promised a “guaranteed” return of six to seven percent over a two-to-three-year period.
However, the SEC claims Horizon Private Equity III did not generate any significant returns from its investment activities, and that Woods used later investors’ principal to pay “returns” to earlier investors. The SEC also claims that Woods retained millions of dollars’ worth of investors’ funds through his Horizon Ponzi scheme.
How Oppenheimer Fits In to the Ponzi Scheme
In addition to filing a complaint against Woods and Southport, the SEC has also filed a complaint against Oppenheimer. While the SEC is not alleging an Oppenheimer Ponzi scheme, it is alleging that Oppenheimer was aware of the Woods and Southport Capital Ponzi scheme—and yet failed to do anything about it. According to the SEC, Oppenheimer failed to adequately supervise Woods; and, once it learned of Woods’ improper conduct, it allowed him to resign voluntarily rather than terminating his contract and reporting his misconduct to the appropriate authorities.
What is the Timeline?
The John Woods Ponzi scheme allegedly began in 2008 while he was a broker with Oppenheimer. It appears that he may have continued to run the scheme through much or all of his tenure with Oppenheimer, which ended in 2016.
The SEC filed its complaint related to the Horizon Ponzi scheme against Woods, Southport Capital and Oppenheimer on August 20, 2021. Three days later, Woods was fired from Southport Capital. On August 31, several investors initiated a class against Oppenheimer, and the same day the first claims involving the Horizon Ponzi scheme in FINRA arbitration.
What Makes This Fraud?
Based on the SEC’s allegations, investors may have several fraud claims related to the John Woods Ponzi scheme. These claims include:
- John Woods’ False Promise of “Guaranteed” Returns – As noted above, John Woods allegedly promised “guaranteed” returns to the elderly investors whom he solicited to invest in Horizon. There is no such thing as “guaranteed” returns in the investment world, and these types of false promises are hallmarks of investment fraud scams such as Ponzi schemes.
- John Woods’ False Representations Regarding the Horizon Investment Strategy – Based on the SEC’s allegations, it appears that Woods knowingly misrepresented Horizon’s investment strategy to prospective and participating investors. At some point, Woods knew that he was not investing as promised and that Horizon was not generating legitimate returns. Yet, he continued to falsely represent that Horizon’s investment strategy was working according to the SEC.
- John Woods’ Operation of the Horizon Ponzi Scheme– Reports indicate that John Woods operated the alleged Horizon Ponzi scheme by selling away during his time with Oppenheimer. A Ponzi scheme is a type of securities fraud that involves using later investors’ funds to pay “returns” to earlier investors—precisely as alleged in the SEC’s complaint. The operation of Ponzi schemes is prohibited under federal law, and Ponzi scheme operators can be held liable for investment fraud.
- Oppenheimer’s Failure to Supervise John Woods – Federal securities laws and FINRA rules require investment firms to supervise their brokers. As alleged, Oppenheimer failed to properly supervise Woods, allowing him to operate his Ponzi scheme by selling away Horizon. If Oppenheimer shares responsibility for the John Woods Ponzi scheme, then investors who lost money investing in Horizon may have grounds to pursue claims against Oppenheimer as well.
What are the Losses for the Investors?
According to the SEC’s Complaint, “As of the end of July 2021, investors in the Ponzi scheme were owed over $110,000,000 in principal. There are more than 400 investors, residing in at least 20 different states . . . .” At this point, it has not been made public how much each individual investor lost in the Horizon Ponzi scheme.
How Our Ponzi Scheme Lawyers Can Help You Recover Your Losses
Investors who lost money investing in the Southport Capital Ponzi scheme with John Woods can seek to recover their losses through FINRA arbitration. At present, our firm is investigating potential claims against Woods, Southport Capital and Oppenheimer. Investors may be able to join class action lawsuits as well; however, filing for FINRA arbitration is likely to offer a faster route to recovery, and it affords greater opportunities for investors to fully recover their fraudulent losses.
Through FINRA arbitration, investors who have lost money investing with John Woods and Southport Capital can seek to recover their principal as well as interest, fees and other costs. Our firm has had significant success helping defrauded investors recover compensation in FINRA arbitration proceedings nationwide.
What Are The Next Steps?
If you lost money in the John Woods Ponzi scheme (or if an aging loved one lost money investing with Woods or Southport Capital), your next steps are as follows:
First, you should gather all relevant documentation. Collect your (or your loved one’s) Oppenheimer and Southport Capital statements dating as far back as possible, and gather any other letters or documentation as well.
Second, you should schedule an appointment with an investment loss attorney at Zamansky LLC to discuss filing for FINRA arbitration. If you (or your loved one) has a claim against John Woods, Southport Capital or Oppenheimer, it will be important to get started as soon as possible. Our attorneys will promptly conduct an investigation; and, if it appears that you (or your loved one) has a claim, we will use our experience to fight for just compensation. While the SEC is pursuing a case against Woods, Southport Capital and Oppenheimer in federal court, even if it is successful, this case will not result in full compensation being awarded to defrauded investors.
Contact Investment Fraud Attorney Jake Zamansky Today for Immediate Assistance
Our law firm is investigating claims for victims to recover losses against Oppenheimer & Co. Inc. for its failure to supervise Woods, Mooney and Brown, who allegedly sold Horizon to their customers. The claims involve Oppenheimer’s failure to supervise Woods’, Mooney’s and Brown’s involvement in Horizon as an outside business activity, and their unlawful “selling away” of Horizon to their customers.
Please call our investment fraud law firm at (212) 742-1414 or firstname.lastname@example.org for a free evaluation of your potential legal rights in this ongoing Southport Capital and John Woods Ponzi Scheme investigation.