SEC Charges Former Girardi Adviser with Running Ponzi Scheme

The Securities and Exchange Commission charged Stephen Keith Woodard Sr. with running a Ponzi scheme in which he offered and sold securities to more than two dozen victims, many of whom he solicited through his church.

The SEC’s complaint alleges that, from 2016 to mid-2021, Woodard raised approximately $6 million from about 30 purchasers of promissory notes issued by Morganwood Ltd., an entity he controlled. Woodard had been a registered securities representative with multiple FINRA members from 1981 to 2005, when he was terminated by Girardi Securities for his failure to abide by its advertising compliance policies and practices.

According to the SEC complaint, Woodard told investors, some of whom were also his investment advisory clients, that he employed a risk-free trading strategy that focused on the preservation of capital but still yielded impressive returns. However, as alleged in the complaint, Woodard invested only a small amount of investor capital, made increasingly risky bets on the market and sustained heavy losses.

The complaint further alleges that Woodard used the majority of investor monies to pay investors phantom returns on their investments, and that instead of disclosing his mounting trading losses, Woodard provided his investors with false account statements showing illusory gains in the value of their investments.

The SEC complaint charged Woodard with violating the antifraud and registration provisions. The SEC seeks a permanent injunction, disgorgement with prejudgment interest and a civil penalty.

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