A former Marietta, Ga., investment advisor who pleaded guilty to a 13-year Ponzi scheme that defrauded investors of more than $49 million has been sentenced to nearly eight years in prison, according to the U.S. Attorney’s Office, Northern District of Georgia.
John J. Woods, 59, who pleaded guilty to the charges in March 2023, was sentenced by U.S. District Judge Sarah E. Geraghty to seven years and eleven months in federal prison, to be followed by three years of supervised release. He also was ordered to pay restitution to the victims. A hearing on the amount owed to victims has been scheduled for April 15.
In a parallel civil case, Woods in August consented to a settlement with the Securities and Exchange Commission that permanently barred him from the securities industry.
More than 400 investors fell victim to Woods's scheme, prosecutors said.
“Woods abused the trust of his victims, including retirees, seniors, and military veterans, who lost their life savings and retirement accounts due to his greed.” U.S. Attorney Ryan K. Buchanan said in a statement.
Woods, the former president of Southport Capital in Atlanta and manager of a fund called Horizon Private Equity III, ran a Ponzi scheme from 2008 until 2021, when it was shut down by the SEC, prosecutors said. Woods was a registered representative with Oppenheimer & Co. from 2003 to 2016, according to BrokerCheck.
In May, a Financial Industry Regulatory Authority arbitration panel ordered Oppenheimer & Co. to pay $13.98 million in compensatory and punitive damages to ex-clients of Woods.
The SEC complaint accused Woods of running a Ponzi scheme that impacted investors in at least 20 states, including many retirees who were preyed upon by advisors at Southport.
The investors were promised returns of 6% to 7% interest, guaranteed for two to three years, for non-specific investments in Horizon Private Equity, the SEC complaint said. Woods and his Southport cohorts, which included a brother and a cousin, told the Horizon investors that they would earn a return by investing their money in vehicles such as government bonds, stocks, or small real estate projects that they would pay a fixed rate of return.
“Woods, and others acting at his direction, also assured investors that Horizon investments carried minimal risk and were safe because Horizon maintained a diverse portfolio,” prosecutors said.
But prosecutors said none of that was true. They said the money received from new investors was used to pay previous investors. Horizon was able to pay guaranteed returns to investors only by raising and using new investor money, prosecutors said.
In June 2022, the SEC charged three more advisors of Southport Capital in connection with the Ponzi scheme.
Prosecutors said Woods used the investors’ money in part to become a minority owner of the Chattanooga Lookouts, a minor league baseball team.
Woods started in the securities industry with Lehman Brothers in 1989 and has been the majority owner and in control of the operations of Southport since about 2008, the SEC noted. The firm’s place of business is in Chattanooga, Tenn. But from 2008 to 2018, the SEC said he concealed his ownership of and control over Southport because, during that time, he was a registered representative at Oppenheimer & Co.