The Securities and Exchange Commission (SEC) sued two entities and their owner for operating a multimillion-dollar Ponzi scheme.
On August 20, the SEC filed a civil complaint against Livingston Group Asset Management Company d/b/a as Southport Capital and Horizon Private Equity, III LLC. The Commission included the entities’ owner, John Woods in the lawsuit.
The Commission requested the United States District Court for the Northern District of Georgia to issue a temporary restraining order against the defendants and to freeze their assets to protect investors.
Details of the SEC lawsuit against the alleged Ponzi scheme operators
In the complaint, the SEC alleged that Woods, Southport Capital, and Horizon operated a huge Ponzi scheme for more than a decade.
The defendants allegedly defrauded a total of over $110 million from more than 400 investors in 20 states. Most of the victims are elderly retirees, who currently own investments in Horizon.
Woods and other representatives from Southport Capital allegedly told investors that their investments in Horizon were safe. They allegedly promised investors that they would receive returns of 6 to 7% interest, guaranteed for two to three years.
In addition, they allegedly told investors that Horizon will generate income by investing their funds in government bonds, stocks, or small real estate properties. In reality, Horizon did not generate any substantial profits from legitimate investments.
Instead, the defendants raised money from new investors to pay returns to earlier investors, a classic Ponzi scheme.
“The assets owned by Woods and the entities under his control, including Southport and Horizon, are worth far too little for there to be any realistic prospect that the Ponzi scheme will be able to pay back existing investors their principal, let alone the promised returns. Investors trusted Woods and the Southport investment advisers working at his direction, and they stand to lose significant portions of their retirement savings when the Ponzi scheme inevitably collapses. The longer the scheme continues, the larger the losses will be for those left holding the bag,” according to the SEC in the lawsuit.
In a statement, SEC Atlanta Regional Office Director Nekia Hawke said the defendants exploited their “client’s fears of losing their hard-earned savings and convinced them to place millions of dollars into a Ponzi scheme by falsely promising them a safe investment with steady returns.”
The Commission accused the defendants of violating the anti-fraud provisions of the federal securities laws. It is seeking a court order imposing preliminary and permanent injunctions, disgorgement, prejudgment interest, civil penalties, an asset freeze against the defendants. It is also requesting the court to appoint a receiver to take charge of the defendants’ remaining assets for the benefit of their victims.
On August 24, the court granted a temporary restraining order and asset freeze against the defendants. The court also ordered an expedited discovery.
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