East Cobb investment advisor accused of $110M Ponzi scheme

An investment advisor who’s been active in youth sports and community activities in East Cobb is being accused of running an extensive Ponzi scheme by the U.S. Securities and Exchange Commission. East Cobb man convicted

According to an SEC complaint filed on Aug. 20, John J. Woods and others are accused of raising more than $110 million from more than 400 investors in 20 states over the last decade by selling investments in several investment funds, but that turned out to be fraudulent.

Woods is a former chairman of the Walton Touchdown Club and was a member of the original East Cobb Cityhood committee in 2019. He is is not listed among the current group of committee members leading a revived cityhood effort for the 2022 Georgia legislative session.

A native of Tennessee, Woods is the owner of the Chattanooga Lookouts minor league baseball team and also has been the head of the Friends of Chastain Park Foundation in Atlanta, according to an older Southport Company biography.

That appears to be the only mention of him, as he is no longer listed on its leadership team.

Woods and others are accused of violating provisions of the Securities Act of 1933, the Securities and Exchange Act of 1934 and the Investment Advisers Act of 1940.

In an emergency action, the SEC on Tuesday received a temporary restraining order from the U.S. District Court for Northern Georgia to freeze the assets of Woods and two entities he controls: Livingston Group Asset Management Company, d/b/a Southport Capital, and investment fund Horizon Private Equity III, LLC.

Those are investment funds SEC investigators say that investors, many of them retirees, placed their money and where they were told it would be ” safe, would be used for different investment activities, would pay a fixed rate of return, and that investors could get their principal back without penalty after a short waiting period,” according to an SEC release.

However, the release continued, “these statements were false and misleading: Horizon did not earn any significant profits from legitimate investments, and a very large percentage of purported ‘returns’ to earlier investors were simply paid out of new investor money. The complaint also alleges that Woods repeatedly lied to the SEC during regulatory examinations of Southport.”

According to the SEC complaint, Woods and his team promised investors returns of 6-7 percent interest, and that the money would be invested in government bonds, stocks and small real estate projects.

The SEC alleges that the investors were not being told that their money was being used to pay previous investors, and said Horizon “has not earned any significant profits from legitimate investments; instead a very large percentage of purported ‘returns’ to earlier investors were simply paid out of new investor money.”

The SEC concluded that the assets of Southport and Horizon are worth too little to have any realistic chance of paying back investors.

The SEC said at the end of July 2021, Horizon had liquid assets of only $16 million.

In seeking emergency relief, the SEC said Woods and Horizon through Southport’s advisors have raised more than $600,000 a month in new investments “during the most recent months for which the Commission has been able to obtain bank records. The Commission believes that additional victims are being defrauded on a daily basis.”

The SEC also accuses Woods of concealing his ownership of Southport from 2008-2018 because he was working at another investment firm.

David Chaiken, an attorney for Woods, told East Cobb News that “we were pleased with the Court’s decision not to place Southport into receivership or restrain its assets. Going forward, we are going to let the judicial process play out and limit any further comments or information to the courtroom at this time.”

The SEC said the investigation is continuing.

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