Former H.D. Vest Investment Services CEO Penny Gail Flippen Accused in SEC Complaint for Ponzi Scheme



INVESTORS: Penny Gail Flippen, a former broker at H.D. Vest Investment Services, has been accused by the SEC of running a huge Ponzi scheme.

Ponzi scheme run by Penny Gail Flippen

The SEC has filed a complaint against her. Ponzi scheme run by Penny Gail FlippenFrom 1998 until 2013, Penny Gail Flippen (CRD#: 2742088) worked as a broker with H.D. Vest Investment Services. Flippen is inexperienced in the securities industry.

On her BrokerCheck report, Flippen makes four disclosures. Flippen has had one customer issue that was ultimately dismissed.
Judgment Status: Pending (Civil) as of June 2022
U.S. Securities and Exchange Commission’s Initiative

The United States Securities and Exchange Commission (“Commission” or “SEC”), as Plaintiff, alleges in its complaint against Defendants Michael Mooney (“Mooney”), Britt Flippen (“Flippen”), and Penny Flippen (“Flippen”) that John Woods (“Woods”) ran a massive Ponzi scheme, soliciting investments totaling over $100 million from more than 400 investors across the country to fund Horizon Private Equity, III, LLC (“Horizon III”).

The complaint alleges that Mooney, Flippen, and Flippen, all formerly of Livingston Group Asset Management Company, d/b/a Southport Capital (Southport), advised clients to invest or maintain at least $62 million in John J. Woods’s private equity fund, Horizon Private Equity, III, LLC (Horizon).

The SEC filed various securities fraud charges against Woods and Southport in August 2021, alleging that they ran Horizon as a Ponzi scheme. Several of the defendants’ clients were elderly and unskilled investors who specifically requested conservative investment options for their retirement savings. Nonetheless, despite the defendants’ knowledge that Woods’ statements about Horizon’s investment goals, return sources, and business practices were unproven, they still advised their customers to invest in the fund.

It is also claimed that the defendants disregarded critical warning signs, such as Woods’s order that they not use their Southport email addresses for Horizon-related correspondence. The defendants, according to the lawsuit, reportedly promised investors a high rate of return on their money and said they may withdraw their principal at any time without incurring a penalty.

Horizon did not generate much return for its investors, and the money was mostly funneled back into the company to pay off debt and finance Woods’ pet projects, like a minor league baseball franchise. According to the complaint, Flippen violated the Securities Act of 1933 by engaging in acts or practices that violated Sections 17(a)(1), 17(a)(2), and 17(a)(3); the Securities Exchange Act of 1934 by engaging in acts or practices that violated Section 10(b) of the Exchange Act and subsections (a), (b), and (c) of Rule 10b-5 thereunder; and the federal securities laws.
Status of the September 2015 Regulatory Decision: Complete
FINRA’s Initiative

Flippen has agreed to the sanctions and the entry of findings that she falsely claimed that she was the registered representative of her member firm on accounts serviced by another registered representative and held by clients of the firm, but she has not admitted or denied the allegations. Flippen accomplished this so that the other registered representative could make recommendations to and collect commissions from those consumers, all of whom resided in states where the representative had been denied registration as a result of complaints from unrelated customers.

Flippen did follow the representative’s instructions while placing transactions for clients, but she never made recommendations or conducted business on behalf of the firm. Flippen was given a flat salary plus bonuses on top of commissions earned from trading for clients.

Since the agent was unable to secure registrations for Flippen in other countries, he admittedly only registered in the United States. According to the investigation, Flippen lied on several firm records, such as customer account statements, to make it seem like she was the registered representative for those accounts, which led to the creation and maintenance of faulty books and records.

The agreement, Waiver, and Consent to Resolve the Issue (AWC)
– Punishment(s): financial fine and/or civil penalty
– Sum: $5,000.00
– Suspension as a sanction
– Capabilities of Registration Any potential is in jeopardy.
– Timeframe: 30 calendar days
– Launch Date: September 21, 2015
– Time limit: October 30, 2015
The customer dispute resolution process was completed in July 2012.
Customers claimed their representatives failed to advise them to diversify their holdings of firm stock they had been given as compensation for their services.
Payoff Amount: $125,000.00

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