June 25, 2024

The aftermath of a Ponzi scheme saw an investment adviser from East Cobb sentenced to jail for wire fraud this week. He had pleaded guilty to the crime almost a year ago.

John Woods, a significant figure in the Walton High School sports and East Cobb’s civic undertakings is to serve over seven years in federal prison, followed by a supervised probation spanning three years. This decision was announced by the U.S. Attorney’s Office for North Georgia.

Within a 13 year period, Woods had swindled over 400 investors, costing them a combined total of $49 million. This information emerged during the federal prosecutors’ presentation.

In 2021, this Ponzi scheme functioning via the Horizon Private Equity fund, was shut down by the U.S. Securities and Exchange Commission. The funds guaranteed returns between six and seven percent.

In a recent release, the U.S. Attorney’s Office highlighted that Horizon promised to channel the funds into government bonds, stocks or minor real estate initiatives. Clients were provided assurances of their investment’s safety as Horizon held a diverse portfolio.

Contrary to these claims, last year the courtroom heard from prosecutors that these funds were utilized to repay other investors. Horizon could only ensure guaranteed returns to investors by accruing and applying fresh investor money.

Victim investors did not receive monthly statements informing them that their investments were not reaping adequate return to cover the interest cost.

Even though Woods didn’t splurge these funds excessively on his lifestyle, it was revealed that he misused investor money for personal ventures which were not condoned by the investors such as buying shares in a hometown baseball team.

The Chattanooga born Woods was a minority stakeholder in the Chattanooga Lookouts minor league baseball team. He was an executive board member of the Walton Touchdown Club and in 2019 belonged to the primary East Cobb Cityhood committee.

Following the shutdown of the Ponzi scheme, the Securities and Exchange Commission estimated an outstanding amount of $110 million in principal payments towards Horizon investors.

U.S. District Judge Sarah E. Geraghty has also ruled that Woods should pay restitution for his fraudulent actions. The court hearing for restitution is arranged for April 15.

U.S. Attorney Ryan Buchanan in his press statement expressed that Woods exploited the trust of his victims which included seniors, military veterans and pensioners who lost out on their retirement and life savings owing to his dishonest actions.

Frequently Asked Questions

What is a Ponzi scheme?

A Ponzi scheme is a fraudulent investment operation where the operator, an individual or organization, pays returns to its investors from new capital paid to the operators by new investors, rather than from profit earned through legitimate sources.

Who are some notorious individuals involved in Ponzi schemes?

Bernie Madoff is probably the most notorious figure, his scheme is considered the largest in U.S history. Charles Ponzi, after whom the scheme is named, was a swindler who promised high returns on international reply coupons.

What are some signs that an investment operation may be a Ponzi scheme?

High investment returns with little or no risk is a classic sign. Overly consistent returns, unregistered investments, secretive or overly complex strategies, and issues with paperwork or difficulties receiving payments can also be red flags.