SEC Brings Ponzi Scheme Charges to John Woods and RIA Southport Capital
Posted on 08/25/2021
On August 20, 2021, the Securities and Exchange Commission (SEC) filed an emergency action to stop a fraudulent Ponzi scheme allegedly perpetrated by Marietta, Georgia resident John Woods and two entities he controls: registered investment adviser Livingston Group Asset Management Company, d/b/a Southport Capital (Southport), and investment fund Horizon Private Equity, III LLC (Horizon). On Aug. 24, 2021, the United States District Court for the Northern District of Georgia granted a temporary restraining order and asset freeze with respect to defendants Woods and Horizon and ordered expedited discovery with respect to Southport, among other relief.
Many of the investors felt comfortable investing in Horizon in large part because of their relationships with advisers at Southport Capital. Horizon has no offices or employees of its own; all of its activities have been conducted by Woods and Southport employees. The complaint says, “Southport is an SEC-registered investment adviser with reported assets under management of $824 million. John Woods is the President and majority owner of Southport.”
The SEC wrote in its press release, “according to the SEC’s complaint, filed in the United States District Court for the Northern District of Georgia, the defendants have raised more than $110 million from over 400 investors in 20 states by offering and selling membership units in Horizon. Woods, Southport, and other Southport investment adviser representatives allegedly told investors – including many elderly retirees – that their Horizon investments were safe, would be used for different investment activities, would pay a fixed rate of return, and that investors could get their principal back without penalty after a short waiting period. According to the complaint, however, these statements were false and misleading: Horizon did not earn any significant profits from legitimate investments, and a very large percentage of purported “returns” to earlier investors were simply paid out of new investor money. The complaint also alleges that Woods repeatedly lied to the SEC during regulatory examinations of Southport.”
The Chattanooga Lookouts are a Minor League Baseball team of the Double-A South and the Double-A affiliate of the Cincinnati Reds. They are located in Chattanooga, Tennessee, and are named for nearby Lookout Mountain. John J. Woods is an owner of the Chattanooga Lookouts.