2 years ago
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In a parallel action, the United States District Court for the Northern District of Georgia has frozen Woods’ assets after a hearing court on Tuesday.
The SEC believes Mr. Woods along with two entities he controls – investment adviser Southport Capital and investment fund Horizon Private Equity – has fleeced 400 investors out of $110 million.
Specifically, the authorities said in the indictment that the Georgia resident engaged in a fraudulent scheme that targeted victims in 20 states. While he was actually running a Ponzi scheme, Woods claimed that these funds would buy membership units in Horizon that yield returns of 6-7 percent in annual interest, guaranteed for up to three years.
“Investors felt comfortable investing in Horizon in large part because of their relationships with advisers at Southport. As alleged in the complaint, Woods and Southport preyed upon their clients’ 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,” said Nekia Hackworth Jones, Director of the SEC’s Atlanta Regional Office.
The documents submitted to the court also paint a fairly concise picture of his fraudulent scheme, outlining his interaction and contact with less experienced victims, including many elderly retirees. Woods also repeatedly lied to the SEC during regulatory examinations of Southport business.
Instead of using the investors’ funds for investment, the fraudster allegedly misappropriated all victims’ funds. As also charged, Woods used some new investors’ funds to pay back other investors in a Ponzi-like fashion, so that they would invest or refer additional money, thereby allowing the scam to continue for a longer period of time.
Most of the pool money was lost, according to the complaint that accuses the defendants of fraud and misappropriation. However, the SEC is seeking to retrieve the funds contributed to the scheme, alongside real assets that Woods and the entities claim to own. Woods’ attorneys also referenced other ongoing projects that once liquidated will “have significant value.”
The court granted a temporary restraining order, asset freeze and also granted the SEC an order that no records be destroyed.
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