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SEC Bars Ex-Oppenheimer & Co. Advisor As More Investors Sue

The Securities and Exchange Commission has barred a Georgia-based advisor who swindled hundreds of investors across 20 states out of at least $25 million while raising much more. 

John J. Woods previously pleaded guilty to federal charges related to the scheme. The industry bar comes as dozens of investors in North Carolina state court sued Oppenheimer & Co., the firm Woods was affiliated with, alleging they were also victims of the scheme, according to the Atlanta-Journal Constitution.

The SEC bar settles charges filed against Woods in August 2021. According to the commission (and DOJ charges), Woods had owned a fund since 2006 called Horizon Private Equity III, which purchased the RIA Southport Capital in 2008. 

He appointed a family member as the firm’s manager before taking full control in 2017. Woods was also a minority owner in the Chattanooga Lookouts, a Minor League Baseball Class AA affiliate for the Cincinnati Reds, though the team cut ties with him after the Ponzi scheme came to light.

Federal prosecutors said the scheme began in 2008, when Woods and other Southport advisors promised 7% interest on low-risk investments in monthly installments. But these returns were largely coming from the influx of new and existing investors, many of whom were retirees. The fund never earned “any significant profits from legitimate investments,” according to the DOJ. 

By the time the SEC shut down the scheme in August 2021, the fund’s investors were in the hole for more than $110 million in funds raised, having lost more than $25 million. Four hundred investors were affected in total, and even when the commission shut down the scheme, it was continuing to bring in about $600,000 per month.

Woods also pleaded guilty to wire fraud charges related to the scheme in March of this year, and he has not yet been sentenced. Though his affiliated firms weren’t named in the DOJ or SEC filings, he worked for Oppenheimer & Co. from 2008 to 2016, according to his IAPD profile, part of the period in which the Ponzi scheme occurred.

Last week, 30 North Carolina investors filed a suit in state court accusing Oppenheimer & Co. and several of its managers in Georgia of hiding Woods’ conduct from his clients during the time he worked there, according to the Atlanta-Journal Constitution. 

The plaintiffs in the suit claimed they didn’t know about the firm’s “direct involvement in and knowledge of” the issues with the Horizon fund, according to the publication. But they doubted the company’s claims that it didn’t know anything about the scheme, as previous Horizon investors had already made claims against the firm and forced executives and employees to testify about their knowledge of Woods’ actions.

FINRA arbitrators have already ruled against Oppenheimer & Co. in several actions brought by harmed investors. Last September, arbitrators ordered the firm to pay $35 million in damages to plaintiffs who claimed the firm violated their fiduciary duties and Georgia’s Racketeer Influenced and Corrupt Organizations (RICO) statute. (Oppenheimer & Co. later lost its appeal of this fine.) 

Earlier this month, FINRA arbitrators ordered the company pay more than $13 million in penalties to another set of aggrieved Horizon investors.

A spokesperson for Oppenheimer & Co. did not respond to a request for comment prior to publication.

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