Yesterday, Carl R. Ruderman, former chairman of 1 Global Capital LLC, was indicted for orchestrating a massive securities fraud scheme that impacted over 3,400 investors across 42 different states. Ruderman’s co-conspirators have already pleaded guilty for their involvement in this scheme. The indictment alleges that Ruderman and others made false and misleading representations to investors, promising high returns on their investments and falsely claiming that the business had audited financials. Instead, Ruderman allegedly used the investors’ money for personal expenses and diverted funds to benefit himself and his family. This indictment highlights the devastating consequences of securities fraud and the importance of holding individuals accountable for their actions.
Former Chairman Indicted for Running $250 Million Securities Fraud Scheme
Overview
Yesterday, Carl R. Ruderman, the former chairman of 1 Global Capital LLC (“1 Global”), was indicted for orchestrating a massive fraud scheme that affected over 3,400 investors in 42 different states. Four of Ruderman’s co-conspirators have already pleaded guilty for their role in the fraud. The indictment alleges that Ruderman and his associates made false and misleading representations to investors, misused investor funds for personal expenses, and raised questions about the legality of their securities offering.
Co-Conspirators’ Guilty Pleas
Several individuals involved in the fraud scheme have already pleaded guilty. Alan G. Heide, the former chief financial officer of 1 Global, pleaded guilty to conspiracy to commit securities fraud and was sentenced to 60 months in prison. Andrew Dale Ledbetter, an attorney and fundraiser for 1 Global, also pleaded guilty to conspiracy charges and received a 60-month prison sentence. Steven Allen Schwartz, a director and consultant at 1 Global, and Jan Douglas Atlas, a partner and outside counsel, both pleaded guilty to conspiracy charges and were sentenced to prison terms.
Background of 1 Global
1 Global was a commercial lending business based in Hallandale Beach, Florida, that offered “pay day” loans to small businesses at high interest rates, known as merchant cash advance loans (MCAs). Carl R. Ruderman served as the chairman of 1 Global, while Alan G. Heide was the chief financial officer. Steven Allen Schwartz was a director and consultant, and Andrew Dale Ledbetter acted as an attorney and fundraiser. Jan Douglas Atlas served as a partner and outside counsel.
False and Misleading Representations to Investors
The indictment alleges that Ruderman and his associates made false and misleading representations to investors and potential investors regarding the profitability of 1 Global’s business. Investors were falsely told that 1 Global had audited financials, that their money would be used for MCAs, and that they could expect significant returns on their investments. These deceptive marketing materials and account statements misled investors and contributed to the fraud scheme.
Misuse of Investor Funds
Ruderman allegedly misused investor funds for personal expenses, diverting the money to pay for credit card payments, vacation travel, insurance payments, drivers, nannies, housekeepers, mortgage payments, tuition, and luxury items such as valuable jewelry and a luxury car for his wife. Additionally, he redirected investor funds to businesses that benefitted himself and his family, without the knowledge or consent of the investors.
Questions about Securities Offering
Throughout the operation of 1 Global, questions arose about whether the company was offering or selling securities and whether they were required to be registered with the U.S. Securities and Exchange Commission (SEC). Investors, investment advisors, and regulators raised concerns about the nature of 1 Global’s offering, which could potentially impact the company’s fundraising and operations.
Opinion Letters
Jan Douglas Atlas, acting as outside counsel for 1 Global, authored two opinion letters containing false information that allowed the company to operate unlawfully. These letters omitted important details about the investment, such as its duration and the fact that it was targeted towards non-sophisticated investors. Ruderman and his associates used these opinion letters to continue raising money illegally, targeting investment advisors and investors.
Bankruptcy and Investigation Status
1 Global filed for bankruptcy in July 2018. At the time of the filing, the company had over 3,400 investors and had raised more than $250 million through the fraud scheme. The bankruptcy case, In re: 1 Global Capital LLC, is still ongoing. Additional information about related cases and updates can be found on the official website of the Southern District of Florida.
Announcement of Indictment
The indictment against Carl R. Ruderman was announced by U.S. Attorney Markenzy Lapointe for the Southern District of Florida, along with Special Agent in Charge Jeffrey B. Veltri of the FBI, Miami Field Office, Special Agent in Charge Matthew D. Line of the IRS Criminal Investigation, Miami Field Office, and Special Agent in Charge Kyle A. Myles of the Federal Deposit Insurance Corporation Office of Inspector General, Atlanta Region. The announcement highlighted the collaborative efforts of the investigative agencies in uncovering the fraud scheme.
Prosecution Team
Assistant U.S. Attorneys Elizabeth Young and Amanda Perwin are leading the prosecution team for this case. Assistant U.S. Attorney Nicole Grosnoff is handling the asset forfeiture process. Their involvement ensures that the individuals responsible for the securities fraud scheme are held accountable for their actions.
In conclusion, the indictment and guilty pleas in this case highlight the severity of the securities fraud scheme orchestrated by Carl R. Ruderman and his co-conspirators at 1 Global. The false and misleading representations made to investors, along with the misuse of investor funds, have had a significant impact on the victims of this fraud. The ongoing bankruptcy case and investigation aim to provide justice to the affected investors and shed light on the fraudulent activities of 1 Global.