Chicago-based Stoltmann Law Offices is representing investors who’ve suffered losses from getting fleeced in Ponzi schemes. All too often, financial advisors assign fancy names to “investments” that turn out to be swindles. The Securities and Exchange Commission (SEC) filed suit against Michael Mooney, Britt Wright, and Penny Flippen in connection with their participation in a Ponzi scheme that raised more than $110 million from approximately 400 investors.
The former representatives of Livingston Group Asset Management Company (doing business as Southport Capital), “recommended clients invest at least $62 million in `Horizon Private Equity III.’ Horizon was billed as a private fund controlled by John Woods, Southport’s former owner and manager.” In August 2021, the SEC charged Woods and Southport with multiple counts of securities fraud for operating Horizon as a Ponzi scheme, according to thediwire.com.
As with many, if not most, Ponzi schemes, the fake investments were marketed heavily to older clients, who thought they were legitimate. According to the SEC, “many of the defendants’ clients were elderly and inexperienced investors who communicated that they wanted safe investment opportunities for their assets, a large percentage of which were earmarked for retirement.”
The SEC further alleges that “the defendants falsely told their clients that Horizon would use their funds to purchase safe investments; that Horizon would pay them a guaranteed rate of return of 6 percent to 8 percent; and that they could get their principal back without penalty. In reality, Horizon earned very few profits from investments, and investor proceeds were used primarily to make principal and interest payments to earlier investors and to fund Woods’ personal projects, such as his purchase of a minor league baseball team.” The defendants, who reportedly received commissions from Horizon, recommended that their clients invest in the fund based solely on Woods’ “unsubstantiated claims about Horizon’s investment objectives, source of returns, and operations. They are also accused of ignoring significant red flags, such as Woods instructing the defendants not to use their Southport email addresses when communicating about Horizon.”
The complaint charges Mooney, Wright, and Flippen with violating the antifraud provisions of various federal securities laws, as well as aiding and abetting Woods, Southport, and Horizon. The SEC seeks injunctive relief, disgorgement plus prejudgment interest, and civil penalties.
Have you invested with brokers who have sold you money-losing, fraudulent or overpriced investments or traded without your permission? FINRA and the SEC have strict rules on disclosing risk profiles on all investments sold by brokers and investment advisers. If they fail to fully inform you of downside risk or vet shady companies offering investments, you may have a case in arbitration. Brokers must fully disclose all relationships they have with other investment companies.
Firms are also legally required by FINRA to supervise what their brokers are selling – their investments must be vetted and authorized by the firms – and have an obligation to investors to fully reveal true risk and return information about the investments sold. Broker-dealers and advisors are also required to fully vet all of the investments they are selling to determine if they are suitable for your age and risk tolerance. Investors can file FINRA arbitration complaints if these rules are broken. You can often avoid rogue broker-advisors by checking their backgrounds through BrokerCheck,
If you invested with a broker-advisor and lost money as a result, you may have a claim to pursue through FINRA Arbitration. Please contact Stoltmann Law Offices, P.C. at 312-332-4200 for a free, no obligation consultation with a securities attorney. Stoltmann Law Offices is a contingency fee law firm which means we do not get paid until you do!
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