Horizon Private Equity: Oppenheimer & Co., Advisers Hit with $100M Ponzi Scheme Lawsuit Days After SEC Action

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A proposed class action aims to represent the victims of an alleged $110 million Ponzi scheme supposedly conceived and perpetrated by investment advisers at Oppenheimer & Co., Inc.’s Atlanta office. 

According to the 49-page lawsuit, defendant John J. Woods, the alleged mastermind of the Ponzi scheme, worked as an investment adviser at Oppenheimer from January 2003 through December 31, 2016 and “made no effort” to hide the grift from the investment firm’s management, going so far as to rent an office space for the scheme next to Oppenheimer’s Atlanta branch, the case says.

The case claims Oppenheimer management, from 2008 through December 31, 2016, “actively aided” Woods; his brother, defendant James Wallace Woods; and their cousin, defendant Michael J. Mooney, each an investment adviser at the firm, with funneling investor money into what the suit calls the Horizon Private Equity Ponzi scheme. The lawsuit alleges Oppenheimer, in December 2016 and with “full knowledge” that Woods was running a secret and illegal “private equity fund,” engaged in conduct to conceal the Ponzi scheme from regulators and the investing public, including by allowing Woods to quietly resign from the firm without sharing word of the alleged wrongdoing with regulators. 

“Oppenheimer did so to protect itself from the substantial liability it knew it would face if it disclosed the selling away scheme,” the filing alleges. 

As the suit tells it, the Horizon Private Equity Ponzi scheme continued to raise money from unsuspecting investors through Southport Capital, a registered investment advisory firm, for nearly five more years. 

On August 20, the Securities and Exchange Commission (SEC) filed an emergency action against Woods, Southport Capital and Horizon Private Equity, III, LLC for alleged violations of federal securities fraud, with the intent of freezing the parties’ assets, appointing a receiver and gaining a full accounting of the finances involved, the lawsuit goes on. The SEC’s complaint, based on “sworn affidavits from FBI agents and insiders, a review of bank statements, and interviews with investors,” alleges Woods, Southport and Horizon have defrauded more than 400 investors across 20 states, including many elderly retirees, to the tune of more than $110 million. 

Per the lawsuit, investors were falsely and fraudulently told by Woods and other advisers that they would receive returns of six to seven percent interest, guaranteed for two to three years, and that their money would be put into “government bonds, stocks, or small real estate projects.” In reality, the alleged Ponzi scheme, according to the case, made no significant profits from legitimate investments, and “returns” to investors came instead from new investor money: 

“The SEC analyzed in detail Horizon Private Equity’s investments and transactions from January 1, 2019 to the present and concluded that ‘as of the end of July 2021, Horizon had liquid assets worth less than $16 million’ and ‘owed investors more than $110 million in principal.’” 

The case alleges that other Oppenheimer advisers, in addition to Woods, improperly urged customers to invest in the alleged Horizon Private Equity Ponzi scheme over the course of a decade. According to the complaint, defendants Woods, Mooney and Britt Wright, as well as other yet-to-be-identified advisers, were paid “huge commissions” in exchange for selling customers on the scheme. Moreover, the suit alleges Woods utilized outside accountants, namely defendants William V. Conn, Jr.; Conn & Co. Tax Practice, LLC; Conn & Company Consulting, LLC; and Kathleen Lloyd, to hide his involvement in Horizon Private Equity from the SEC. 

The suit charges the advisers’ selling of the scheme “violated a host of securities laws, constituted wire and mail fraud, and constituted a breach of the fiduciary duties owed to all of their customers.”

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