Retirees who invested their life savings in a Marietta man’s $110 million Ponzi scheme can’t blame their losses on his former employer, brokerage and investment bank Oppenheimer, the Georgia Court of Appeals has ruled.
On Tuesday, the court upheld a Fulton County judge’s decision to dismiss two lawsuits brought against Oppenheimer by 13 Georgia investors and 30 others from North Carolina. They alleged Oppenheimer and two of its supervisors aided the unlawful scheme run by investment adviser John Woods, who was sentenced in February 2024 to almost eight years in federal prison.
Oppenheimer, where Woods worked until late 2016, argued it had nothing to do with the plaintiffs’ investments in Woods’ company, Horizon Private Equity III.
The appeals court said the plaintiffs, who invested from 2017 onward, failed to show their losses were a direct result of any Oppenheimer action targeted at them, ending their claims under Georgia’s racketeering and securities laws.
“Because the appellants did not invest in Horizon until Oppenheimer was no longer affiliated with Woods or Horizon, it is unclear how they could have possibly been Oppenheimer’s intended victims,” the court write in its opinion. “The appellants’ injuries are, at best, an indirect result or ‘eventual consequence’ of Oppenheimer’s alleged facilitation or cover-up of Woods’s criminal Ponzi scheme.”
Craig Kuglar, an attorney for the investors, said they’re disappointed with the court’s ruling and plan to seek review by the Georgia Supreme Court. Kuglar said the cases pose important issues under Georgia’s racketeering law in relation to yearslong financial fraud involving many parties.
Lawyers for Oppenheimer said they’re pleased with the decision of the appeals court, which “applied well-settled law, making no new precedent.”
The plaintiffs are mostly retirees who lost the bulk of their life savings in Horizon, case records show. Some of the plaintiffs claimed they invested more than $500,000.
Prosecutors said Woods’ venture operated from 2008 until it was shut down by the federal government in 2021, when investors in at least 20 states were owed more than $110 million in principal. They said Woods, who was a registered broker and investment adviser, guaranteed high returns but failed to make the investments he promised and secretly used money from new investors to pay earlier participants.
Woods, who denied his venture was a Ponzi scheme, pleaded guilty in March 2023 to a single count of wire fraud. He and his companies had already been sued by the U.S. Securities and Exchange Commission.
The 60-year-old is serving a 95-month prison sentence in Alabama.
More than 400 investors collectively lost almost $50 million, prosecutors said. Court records show Oppenheimer settled some civil claims by Horizon investors, and some money was recovered for investors through the SEC and U.S. Department of Justice.
Woods said he did not line his own pockets with investor money, genuinely believing his investment program would generate a positive return. As part of his sentence, he must pay $33.5 million in restitution.
The plaintiffs in the dismissed lawsuits alleged Oppenheimer knew from 2008 about allegations made against Woods by investors who dealt with him at its Atlanta office. The company hid the allegations and Woods’ conduct — which it approved — from regulators, the plaintiffs alleged.
Oppenheimer profited from Horizon by charging associated fees and interest, according to the lawsuits. The plaintiffs alleged Oppenheimer allowed Woods to “quietly resign” in December 2016 to conceal his scheme from regulators and investors.
The lawsuits, filed in 2023, were dismissed by a Fulton County judge in April 2024.
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