A deal has been made to sell five Chattanooga retail locations, the site of a Ponzi scheme | Jobs Reply

Shares of five retail locations and an empty lot, which fell into a Ponzi scheme allegedly owned by former Chattanooga Lookouts owner John J. Woods, may be sold for $2.7 million.

Chattanooga developer Clint Wolford has a 50% interest in the facilities and has offered to pay the full amount of Woods’ 50% share in a proposed settlement with a federal court-appointed receiver in the case, according to the filing.

These facilities are located on Highway 153, Hixson Pike, East Brainerd Road and Battlefield Parkway in Georgia. This vacant lot is on East Brainerd Road and was an elementary school until it was torn down.

AA. Cotten Wright, receiver, sells investments that were part of a fund set up by Woods in a so-called Ponzi scheme. He revealed plans to return the funds sold to investors.

Wright said in court papers that while there are no liens binding the companies that own the shopping centers, there are liens against the underlying real property. He said loan balances are considered in determining interest rates.

Approval of the mall deal is required from US District Court Judge Steven D. Grimberg for the Northern District of Georgia.

Wolford did not return a call seeking comment on the proposed project. But he said he previously had “no earthly idea” what the Woods fund had done.

“As far as I know, it’s just John,” he said of the investments Woods, a Georgia resident, had made in the projects.

In a 2021 US Securities and Exchange Commission complaint, regulators accused Woods of running a scheme for more than a decade that defrauded more than 400 investors and continued to raise more money to try to pay off former investors.

The SEC accused Woods and a Chattanooga-based investment firm, Southport Capital, of handling six counts of mortgage fraud. The complaint said Woods’ scheme, which uses a fund called Horizon Private Equity III, raised more than $110 million from investors with promises of 6-7% returns.

The SEC said in court papers that the investment is “too important for there to be a realistic expectation that the Ponzi scheme will be able to return the existing investors their principal, let alone the promised return.”

Attorney David M. Chaiken of Atlanta, who represents Woods, said earlier in an email that the SEC’s claims do not meet the FBI’s definition of a Ponzi scheme.

He said federal regulators “used this bad word in their press release and in their complaint they misstated the real facts and misrepresented” Woods and others. Chaiken said Woods ran a private equity fund with real assets that would have been worth more than what the fund owed investors.

Half of the 28 real estate projects, companies or businesses identified as Horizon assets had Chattanooga connections, court records show. In addition to shopping centers, for example, Woods’ fund had interests in the former Sears and Penney stores at Northgate Mall.

In September, Grimberg approved the proposed sale of Horizon’s interests in the mall properties. Businesses owned by Chattanooga developer Bassam Issa and mall owner CBL Properties were each supposed to buy parts of two properties the fund already owned, according to court documents.

Late last year, a judge allowed the Lookouts to buy Wood’s 20.1% stake in the group for $1.87 million.

Contact Mike Pare at mpare@timesfreepress.com or 423-757-6318. Follow him on Twitter @MikePareTFP.

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