Three former investment advisers who encouraged clients to put more than $62 million into a Marietta man’s alleged $110 million Ponzi scheme have been ordered by a federal judge in Atlanta to pay the U.S. Securities and Exchange Commission $1.4 million.
Michael Mooney, Britt Wright and Penny Flippen used to work for John Woods of Marietta, who in February 2024 was sentenced to nearly eight years in prison for running what prosecutors said was a $110 million Ponzi scheme through which more than 400 people lost their investments. Woods was also ordered to pay $33.5 million in restitution.
Mooney, a cousin of Woods, was ordered Tuesday by U.S. District Judge Steven Grimberg to pay $1.3 million to the SEC, including almost $800,000 he reportedly received through his participation in the alleged scheme. Mooney, who lives in Florida and represents himself in the case, said the judgment is “baloney” and “unacceptable.”
“I’m selling roofs,” Mooney told The Atlanta Journal-Constitution on Thursday. “I’m a disabled vet from the Marine Corps.”
Mooney said the majority of his clients who invested in Woods’ private equity fund, Horizon Private Equity III, got their money back. He said his clients included friends and fellow veterans.
Grimberg said Mooney expressed remorse to his former clients and explained his diminished finances during a February court hearing in Atlanta.
Wright and Flippen were ordered Tuesday to pay civil penalties of $84,000 and $36,000, respectively, representing their annual salary from Horizon, the judge said. Attorney Randy Chartash, who represents Wright and Flippen in the case, said the judgment is fair and much less than what the SEC asked for.
“They don’t have an ability to pay and the judge took that into consideration,” Chartash said Thursday of his clients, who both live in North Carolina. “We are satisfied and happy.”
The SEC sought a $230,464 penalty against both Wright and Flippen, who argued in response that the blame for investor losses mostly fell on the SEC, Woods, Mooney and the brokerage and investment bank Oppenheimer & Co., where Woods and Mooney worked.
Grimberg said in a court order that Mooney, Wright and Flippen recommended Horizon to clients for years despite red flags about it, while withholding the fact they were working for Woods’ investment adviser firm, Southport Capital, and being paid by Horizon.
“Many of the clients Mooney steered into Horizon III were elderly investors seeking safe investments for their retirement assets, yet Mooney staked their financial security on the (at best) questionable credibility of Woods,” Grimberg said. “Like Mooney, Wright and Flippen counseled their clients to invest tens of millions of dollars in Horizon III without doing any of their own due diligence into the fundamentals of the investment.”
The judgment comes after Mooney, Wright and Flippen entered into settlements with the SEC ending their work as investment advisers.
Chartash said his clients did not admit or deny any wrongdoing.
Grimberg said Mooney worked with Woods at Oppenheimer before joining Southport in 2010. He said Mooney began recommending Horizon to clients in 2008 while at Oppenheimer and continued to do so at Southport.
“Mooney’s sole source of information for this near-miraculous investment product was Woods, but Woods had also made several conflicting representations to Mooney about Horizon III,” Grimberg said.
As of July 2021, Mooney’s clients had more than $27 million invested in Horizon, the judge said. He said Mooney received annual salary-like payments of $150,000 and more than $878,000 in commissions from Horizon.
“Woods told Mooney and the other defendants that this compensation arrangement was made for Southport to avoid paying payroll taxes,” Grimberg said.
Wright joined Southport in 2013 and his clients had more than $25 million invested in Horizon when he left the firm in 2021, the judge said. He said Wright received $84,000 annually from Horizon and $30,000 each year he managed Southport’s office in Mount Airy, North Carolina. The judge said Wright is unemployed and his assets are vastly outweighed by his outstanding liabilities.
Flippen also joined Southport in 2013 and her clients had more than $10 million invested in Horizon by 2021, the judge said. He said Flippen received $36,000 annually from Horizon and is currently unemployed.
Woods pleaded guilty in March 2023 to a single count of wire fraud and is serving his sentence in a minimum security federal prison in Alabama. He and his companies were also sued by the SEC. Grimberg said the receiver appointed to oversee the assets of Woods’ companies reported in August that Horizon investors collectively suffered a net loss of over $68 million.
An SEC spokesperson declined to comment on the judgment against Mooney, Wright and Flippen.
Litigation is also pending against Oppenheimer, which is accused of hiding the truth about Woods’ investment program. Court records show that Oppenheimer has settled some civil claims by Horizon investors.
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