SEC Bars Three Brokers in Horizon Ponzi Scheme

Today the US Securities and Exchange Commission (SEC) announced it has settled charges with three former financial advisors who were involved with an alleged Ponzi scheme in Georgia. The advisors have reportedly been barred from working in the securities industry for life.

On June 10, 2022, the Securities and Exchange Commission (SEC) filed a civil lawsuit against Michael Mooney, Britt Wright, and Penny Flippen, former investment advisers for Southport Capital, in the U.S. District Court for the Northern District of Georgia. The charges stem from their alleged involvement in recommending investments in Horizon Private Equity, III, LLC (Horizon), a Ponzi scheme purportedly operated by John J. Woods, Southport’s former owner.

The SEC alleges that Mooney, Wright, and Flippen advised their clients, many of whom were elderly and seeking safe retirement investments, to put $62 million into Horizon. These advisers reportedly received undisclosed compensation for their recommendations and failed to disclose critical information, including Woods’ instruction to avoid using official Southport emails for Horizon-related communications.

Despite being aware of significant red flags and the dubious nature of Horizon’s operations, they allegedly continued to promote the fund based solely on Woods’ unverified claims.

Horizon, instead of investing the clients’ money as promised, purportedly used new investor funds to pay returns to earlier investors and to finance Woods’ personal ventures, such as purchasing a minor league baseball team. The complaint accuses Mooney, Wright, and Flippen of violating various antifraud provisions of the Securities Act of 1933, the Securities Exchange Act of 1934, and the Investment Advisers Act of 1940. It also charges them with aiding and abetting Woods, Southport, and Horizon in their previously established violations of federal securities laws.

The SEC was seeking injunctive relief to prevent further violations, the return of any ill-gotten gains with interest, and civil penalties against the defendants.

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