Chattanooga Lookouts investor Woods denies Ponzi scheme claims, requests jury trial

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November 3 – A Georgian best known as an investor in the Chattanooga Lookouts denies allegations by federal regulators that federal authorities directed a Ponzi scheme and robbed more than 400 investors, and seeks a jury trial in the case.

Responding to a complaint filed in federal court in August, attorneys for John J. Woods denied all six counts of securities fraud brought by the United States Securities and Exchange Commission. The allegations relate to $ 110 million that the agency claims to have collected from investors with little chance of repayment.

Woods, an investor in Lookouts and a number of other entities in Chattanooga, has acted “in fair and reasonable reliance on the advice and experience of others, including legal professionals, on the matters within of their expertise and experience, “his lawyers mentioned.

But Woods’ lawyers admit that he didn’t tell all investors in the Horizon Private Equity III fund that their money would or could be used to make payments to previous investors for interest or principal repayment.

Woods told some investors that Horizon will pay a fixed rate of return and that they could get their capital back without penalty subject to a waiting period, Atlanta attorneys Stephen Council and David Chaiken said.

However, the man from Marietta, Georgia, denied claims that when he solicited investors he told them the investments were “very safe,” his lawyers said.

“The accused denies having directed any Ponzi scheme, including a massive and ongoing Ponzi scheme,” the court documents said.

But the SEC said many of the victims of the alleged program are elderly retirees who fell prey to investment advisers at Livingston Group Asset Management Co., doing business as Southport Capital.

The SEC said Chattanooga-based Southport is a registered investment advisory firm owned and controlled by Woods. The regulators’ complaint also named Southport in the alleged scheme, although his lawyer denies he was part of it.

The story continues

“Woods and his cohorts in Southport have generally told investors that Horizon will earn a return by investing their money, for example, in government bonds, stocks or small real estate projects,” the SEC said in August.

The SEC said investors were not told their money would or could be used to pay returns to past investors, but the defendants did, according to the SEC.

The agency said that “they were only able to pay the guaranteed returns to existing investors by raising and using new investor funds. Horizon did not make significant profits on legitimate investments; instead, a very large percentage of the “returns” assumed to previous investors were simply paid out of new investors’ money. “

Investors have trusted Woods and the Southport investment advisers working under his leadership, “and they stand to lose a significant portion of their retirement savings when the Ponzi scheme inevitably collapses,” the SEC said in its statement. complaint. “The longer the program continues, the greater the losses will be for those who remain in possession of the bag.”

The receiver of the alleged scheme said it plans to deal with the liquidation of assets in the case as soon as possible, including more than $ 55 million in entities in the Chattanooga area.

Woods, who grew up in East Ridge, has invested heavily in entities ranging from the Lookouts minor league baseball team to real estate businesses involving strip centers and the former Sears and JC Penney stores of the Northgate Mall.

U.S. District Court Judge Steven J. Grimberg in Atlanta recently approved Lookouts ‘request to buy Woods’ share of the team for $ 1.87 million. Woods held a 20.1% stake in the team, according to court documents.

Contact Mike Pare at [email protected] or 423-757-6318. Follow him on Twitter @MikePareTFP.

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