SEC Charges 3 more Advisors in Alleged $110 Million Ponzi-Scheme
According to a litigation release on June 14, the Securities and Exchange Commission filed a civil action in a Georgia district court against investment advisors Michael Mooney, Britt Wright, and Penny Flippen in connection with their alleged participation in an purported Ponzi scheme that raised more than $110 million from close to 400 investors.
The former investment advisors who were reportedly affiliated with Livingston Group Asset Management Company (Southport Capital), purportedly recommended that their clients invest at least $62 million in Horizon Private Equity III, a private fund allegedly controlled by Southport’s former owner and manager.
In August 2021, the SEC reportedly charged the former manager and Southport with multiple counts of securities fraud involving the alleged Horizon Ponzi scheme. (See: Horizon Private Equity III Investors Lawsuits – SEC Charges Southport with $110 Million Ponzi…)
The charges claim that the defendants’ clients were “elderly and inexperienced investors” who were looking for “safe investment opportunities” for their assets, a large percentage of which were earmarked for retirement.
The defendants purportedly recommended that their clients invest in the fund based solely on the former manager’s unsubstantiated claims about Horizon’s investment objectives, source of returns, and operations. The complaint further alleged that the representatives ignored “significant red flags,” such as when the manager allegedly instructed the defendants not to use their Southport email addresses when communicating about the Horizon fund.
According to the SEC, the defendants allegedly 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.
Instead, Horizon purportedly earned very few profits from investments, and investor proceeds were used primarily to make principal and interest payments to earlier investors and to fund the former manager’s personal projects, such as his alleged purchase of a minor league baseball team.
The complaint reportedly charges Mooney, Wright, and Flippen with violating the antifraud provisions of various federal securities laws, as well as aiding and abetting Southport, and Horizon and its former manager.
The SEC seeks injunctive relief, disgorgement plus prejudgment interest, and civil penalties.
Potential Lawsuits to Recover Financial Losses
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