Michael Jeremiah Mooney of Mount Airy, North Carolina, a former investment adviser representative of Southport Capital and stockbroker of Oppenheimer Co. Inc., is the subject of an enforcement action initiated by Securities and Exchange Commission (SEC) in which the regulator is seeking sanctions against Mooney based upon allegations that Mooney violated federal securities laws by recommending investments in Horizon Private Equity, a Ponzi scheme. Securities and Exchange Commission v. Michael Mooney et al., Civil Action No. 1:22-cv-02320 (June 10, 2022).
According to the Complaint, for at least 10 years, a major Ponzi scheme had been operated by John Wood, the owner and controller of an investment advisory called Southport Capital. The Complaint states that more than 400 investors collectively contributed $100,000,000.00 into this scheme, with most investors being solicited at Livingston Group Asset Management Company (Southport Capital).
SEC alleges that misleading and false statements were made by Southport advisors, including Mooney, regarding Horizon III investments. The advisors and Woods purportedly did not tell investors about the millions of funds that Woods and advisors received from them for personal gain. SEC alleges that Woods and the advisors breached a fiduciary duty to investors by making omissions about the use of investor funds.
Mooney was allegedly one of the main advisors involved in collectively steering $62,000,000.00 in Horizon III investment purchases by advisory customers. The Complaint states that customers were advised that they would receive between six and eight percent interest by investing in Horizon III. The investors were purportedly told that this interest was guaranteed for at least two years, and that Horizon III aimed to generate a return through investing in real estate projects, stocks, and government bonds. SEC contends that the investors were not told that their money would be used to pay prior investors.
According to SEC, guaranteed returns were only made possible through Horizon III raising money from new investors to pay existing investors. No genuine profits were made by Horizon III, according to SEC.
SEC alleges that most investors who were solicited for Horizon III investments did not want to take more than a slight amount of risk. The investors were told that their funds were safe and were advised to put a large amount of their investable assets in Horizon III investments.
SEC alleges that Mooney also knew of information that conflicted with the information that Woods disclosed to investors regarding Horizon III’s operations. Mooney allegedly did not act on those red flags.
The Complaint states that Mooney violated Securities Exchange Act of 1934 Section 10(b), SEC Rule 10b-5, Securities Act of 1933 Section 17, and Investment Advisers Act of 1940 Section 206.
SEC Public Disclosure shows that Mooney is referenced in twenty eight total customer initiated investment related disputes concerning Mooney’s conduct while associated with securities broker dealers, including Oppenheimer Co. Inc. Mooney is referenced in a customer initiated investment related FINRA securities arbitration claim in which the customer requested $1,372,000.00 in damages based upon allegations that Mooney defrauded the customer in a Ponzi scheme when Mooney was associated with Oppenheimer Co. Inc. FINRA Arbitration No. 22-00904 (Apr. 27, 2022).
On July 28, 2022, a different customer filed an investment related FINRA securities arbitration claim involving Mooney’s activities in which the customer requested $2,000,000.00 in damages based upon allegations that Mooney took part in a fraudulent scheme. FINRA Arbitration No. 22-01687.
On August 17, 2022, another customer filed an investment related FINRA securities arbitration claim involving Mooney’s conduct in which the customer requested $104,100.00 in damages based upon allegations that Mooney took part in a Ponzi scheme when he was associated with Oppenheimer Co. Inc. FINRA Arbitration No. 22-01844.
These FINRA Arbitration claims were justicable before FINRA since they included events allegedly occurring during Mooney’s association with Oppenheimer (which could include theoretically liability for the failure to warn in connection with Mooney’s termination in 2010).
From 2010 to 2021, Mooney was associated with Southport Capital.