A Chattanooga-based investment company, named in a Ponzi scheme along with former chief executive John J. Woods, is denying allegations of wrongdoing made by federal regulators.
Attorneys for Livingston Group Asset Management Co., which does business as Southport Capital, also said in court papers that the firm denies any liability related to investors in a fund used in the alleged Ponzi scheme.
They said the regulators' asserted claims and damages were caused, if at all, "by intervening events over which Southport had no control in, was not involved in and for which it is not responsible."
In August, the U.S. Securities and Exchange Commission accused Woods, 56, and Southport Capital of six counts of securities fraud in "a massive Ponzi scheme." The complaint said the scheme went by the name Horizon Private Equity and collected more than $110 million from over 400 investors with promises of 6-7% rates of return.
The SEC said the investments "are worth far too little for there to be any realistic prospect that the Ponzi scheme will be able to pay back existing investors their principal, let alone the promised returns."
Southport attorneys Gerald B. Kline and Anthony L. Cochran, both of Atlanta, said on Tuesday in court papers that the company denies it has violated any statutes. It's also seeking a jury trial as did Woods in an earlier filing in which he denied wrongdoing.
The firm's lawyers said Woods, who lives in Marietta, Georgia but grew up in East Ridge, was Southport's majority owner at previous times and was involved in its operations. But Woods is not now in charge of the company nor a direct majority owner of the business that is said to manage more than $824 million in client investments, according to attorneys and regulators.
"Southport has not engaged in the alleged transactions, dealings, acts and/or omissions of third parties that have allegedly caused the liabilities and damages described in the complaint," its attorneys said in a filing in federal court in Atlanta.
Earlier this month, Woods' attorneys said he acted "in honest and reasonable reliance on the advice and experience of others, including legal professionals, as to matters within the area of their expertise and experience."
Woods heavily invested in Chattanooga entities ranging from the Chattanooga Lookouts minor league baseball team to real estate ventures involving strip centers and the former Sears and Penney's stores at Northgate Mall.
According to the court-appointed receiver in the case, Woods held a 66% interest in Livingston Group Asset Management which he has valued at $34 million. Earlier, a judge denied an SEC request to place Southport into receivership and freeze its assets.
The receiver reported that Woods valued the remainder of his share of the Chattanooga area assets, invested in 13 ventures, at $21.2 million.
The receiver has asked U.S. District Court Judge Steven J. Grimberg to approve a Lookouts request to buy the share of the team owned by Woods for $1.87 million. Woods owned a 20.1% interest in the team, court papers showed. The judge has agreed to the transaction but there's a 30-day period to enable anyone to file an appeal.
Contact Mike Pare at mpare@timesfreepress.com or 423-757-6318. Follow him on Twitter @MikePareTFP.