Investment Adviser

An Atlanta, Georgia area investment adviser, John Woods, was recently sentenced to 8 years in prison for his role in operating a ponzi scheme. Operating over a staggering 13-year period, Woods defrauded more than 400 individuals, including retirees, seniors, and military veterans, resulting in a loss exceeding $49 million. Under the guise of his fund, “Horizon Private Equity,” Woods promised lucrative returns of six to seven percent to potential investors, claiming minimal risk and a diverse portfolio. However, investigations revealed that the money collected from new investors was used to pay returns to earlier investors, constituting a classic Ponzi scheme.

The case underscores the importance of regulatory vigilance in the investment industry. Despite assurances of safety and profitability, Woods’s actions demonstrated a flagrant abuse of trust, ultimately causing financial ruin to hundreds of victims across 20 different states.

Investment Advisers are fiduciaries, and as such they owe their customers duties of care and loyalty, both of which were flagrantly breached in this situation. Mr. Woods was a longtime investment adviser representative at Oppenheimer & Co., Inc.

The Securities and Exchange Commission (SEC) has taken significant action against Bruderman Asset Management, now known as Gary Goldberg Planning Services, LLC (BAM), and its founder, Matthew J. Bruderman. The SEC has instituted public administrative and cease-and-desist proceedings against these entities, with a final Order found here, citing violations of the Investment Advisers Act of 1940. The proceedings revolve around the alleged misuse of client funds by BAM, which raised over $6.1 million from investment advisory clients and directed these funds towards entities with ties to Bruderman. The SEC alleges that these actions violated various sections of the Advisers Act, including Sections 206(2) and 206(4), and Rule 206(4)-7.

According to the SEC Order, between February 2017 and August 2021, BAM, under Bruderman’s direction, persuaded at least thirteen investment advisory clients to invest substantial amounts totaling $6.1 million in entities where Bruderman had significant ownership and decision-making authority. Shockingly, these clients were not informed that their investments would temporarily be diverted to cover expenses unrelated to their intended investments or to repay loans made by Bruderman himself.

One particularly concerning example involved a $500,000 equity investment, where $400,000 was transferred to Bruderman’s personal bank account to repay a loan owed by one of the entities. The clients invested based on BAM’s advice, unaware of the temporary diversion of their funds. Despite BAM’s written policies requiring disclosure of material conflicts of interest, these conflicts remained undisclosed, leaving clients in the dark about the use of their investments.

Articles Tagged with Investment Adviser

Atlanta Investment Adviser Sentenced for Ponzi Scheme

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