The allegations read: The securities and exchange commission (the "commission"), for its complaint against john j. Woods, livingston group asset management company d/b/a southport capital ("southport"), and horizon private equity, iii, llc ("horizon"), alleges that woods has been running a massive ponzi scheme for over a decade. Investors in the ponzi scheme were owed over $110,000,000 in principal. There are more than 400 investors, residing in at least 20 different states, who currently hold investments in the ponzi scheme, which goes by the name horizon. Many of the victims are elderly retirees who were preyed upon by investment advisers at southport, a registered investment adviser firm owned and controlled by woods. The defendants' ponzi scheme is ongoing and continues to raise money from new investors each month. Woods and other investment adviser representatives at southport told clients that they would receive returns of 6-7% interest, guaranteed for two to three years, for non-specific investments in a fund called "horizon private equity." woods and his cohorts at southport generally told investors that horizon would earn a return by investing their money in, for example, government bonds, stocks, or small real estate projects; investors were not told that their money would or could be used to pay returns to earlier investors. But that is exactly what the defendants did, they were only able to pay the guaranteed returns to existing investors by raising and using new investor money. 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 assets owned by woods and the entities under his control, including southport and horizon, are worth far too little for there to be any realistic prospect that the ponzi scheme will be able to pay back existing investors their principal, let alone the promised returns. Because the scheme has been going on for so long, and because woods, southport, and horizon did not use any of the typical recordkeeping practices one would expect from a legitimate investment fund, millions of dollars' worth of investor funds are currently unaccounted for. The defendants have engaged in acts or practices, or aided and abetted, and, unless restrained and enjoined by this court, will continue to engage in acts and practices that constitute and will constitute or will aid, abet and cause violations of sections 17(a)(1), 17(a)(2), and 17(a)(3) of the securities act of 1933 ("securities act"). The defendants have engaged in acts or practices, or aided and abetted, and, unless restrained and enjoined by this court, will continue to engage in acts and practices that constitute and will constitute, or will aid, abet and cause violations of section 10(b) of the securities exchange act of 1934 ("exchange act") and subsections (a), (b), and (c) of rule 10b-5 thereunder. The defendants have engaged in acts or practices, or aided and abetted, and, unless restrained and enjoined by this court, will continue to engage in acts and practices that constitute and will constitute or will aid, abet and cause violations of sections 206(1), 206(2) and 206(4) of the investment advisers act of 1940 ("advisers act") and rule 206(4)-8 thereunder.
