Securities and Exchange Commission v. Woods, Livingston Group Asset Management Company d/b/a Southport Capital, and Horizon Private Equity, III, LLC was filed in the United States District Court for the Northern District of Georgia on August 20, 2021. The SEC alleges that Defendants defrauded investors, many of whom were elderly, with illusory promises of guaranteed returns for their investment in the Defendants’ affiliated fund.
Defendants are Georgia resident John Woods (“Woods”) and the two entities he controls: registered investment adviser, Southport Capital (“Southport”), and investment fund, Horizon Private Equity, III, LLC (“Horizon”). According to the SEC’s complaint, Defendants raised more than $110 million from over 400 investors in 20 states by offering and selling membership units in Horizon. Woods and other Southport representatives told investors they would receive returns of 6%-7% guaranteed for two to three years if they invested in the Horizon fund. However, Woods apparently used the fund for the sole purpose of raising money from investors. Woods then paid existing investors their guaranteed returns with money raised from new investors, many of whom were elderly retirees preyed upon by representatives of the Defendants.
The nature of the scheme became apparent after a series of SEC examinations and litigation between Woods and the founder of Southport Capital, as well as after Woods’ failure to disclose his affiliation with Southport Capital and Horizon to his subsequent employer and the SEC.
The complaint charges Woods, Southport, and Horizon with violating the antifraud provisions of the Securities Act and the Securities and Exchange Act. Additionally, the complaint charges Woods and Southport with violating antifraud provisions of the Investment Advisers Act, and each of the defendants with aiding and abetting the violations of the other defendants. The complaint seeks preliminary and permanent injunctions, disgorgement, prejudgment interest, civil penalties, an asset freeze, and the appointment of a receiver. As of the end of July 2021, Horizon owed investors more than $110 million in principal and had liquid assets worth less than $16 million.