Marietta former investment advisor pleads guilty to multimillion-dollar Ponzi scheme
The Justice Department announced that a Marietta man, John J. Woods, the former President of Southport Capital and manager of Horizon Private Equity, III, LLC, has pleaded guilty to operating a Ponzi scheme that defrauded hundreds of investors out of more than $25 million.
“Woods promised investors low-risk investments, profitable returns, and a diversified portfolio, all while secretly using money raised from new investors to primarily pay earlier investors,” said U.S. Attorney Ryan K. Buchanan. “Investors should respond with caution to financial offers that sound too good to be true and are cloaked in the promise of low risk and high rates of return.”
According to information presented in court, Woods operated a Ponzi scheme until being shut down by the U.S. Securities and Exchange Commission in 2021. Woods solicited investors to invest in a fund called, “Horizon Private Equity.”
Woods, and other investment adviser representatives acting under his direction, promised potential Horizon investors rates of return of six to seven percent on their investment and that Horizon would earn a return by investing their money in, for example, government bonds, stocks, or small real estate projects. Woods and his confederates also assured investors that Horizon investments carried minimal risk and were safe because Horizon had a diverse portfolio.
“It is the FBI’s hope that today’s guilty plea will provide some sense of relief to those victims that have suffered so much by Mr. Woods’ greed- fueled conduct,” said Keri Farley, Special Agent in Charge of FBI Atlanta. “This case serves as another reminder that investors need to be careful, and do their research, when deciding who to trust with their hard-earned money.”
Contrary to these representations, the money received from new investors was not invested in a diverse portfolio; and money collected from new investors was used largely to pay returns to previous investors.
In fact, Horizon was able to pay guaranteed returns to investors only by raising and using new investor money. As a part of the scheme, Woods caused Horizon to issue monthly statements to investors that fraudulently misled investors by failing to disclose that the Horizon investments had not generated a positive percentage of return sufficient to cover the interest.
As of the end of July 2021, Horizon investors were owed more than $110,000,000 in principal investment amounts. And over 400 investors, residing in at least 20 different states, held investments in Horizon. Losses are still being calculated, but investors have lost more than $25 million because of Woods’s scheme to defraud.
Sentencing for John J. Woods, 58, of Marietta, Georgia, has not yet been scheduled. He pleaded guilty to a criminal information charging a single offense of wire fraud, in violation of Title 18, U.S. Code, Section 1343.
The case is being investigated by the Federal Bureau of Investigation. The SEC provided valuable assistance. The SEC’s separate civil case is SEC v. Woods et al., No. 1:21-CV-03413-SDG (N.D. Ga.).
Assistant U.S. Attorneys Angela Adams and Stephen H. McClain are prosecuting the case.