Additional Information for 1st Global Capital LLC

The following describes a government action that has been resolved by either a settlement or a decision by a court or administrative agency. If the matter is being appealed, it will be noted below.

As of August 12, 2019, SEC Case 0:18-cv-61991-BB

The Securities and Exchange Commission settled a case with former 1st Global Capital CEO, Carl Ruderman. In an action granted by the U.S. District Court for the Southern District of the Florida, the Securities and Exchange Commission (SEC) obtained the following order and judgements:

C. Section 10(b) and Rule 10b-5 of the Securities Exchange Act of 1934 ("Exchange Act")Ruderman is permanently restrained and enjoined from violating, directly or indirectly, Section 10(b) of the Exchange Act (15 U.S.C. § 78j(b))
and Rule 10b-5 promulgated thereunder (17 C.F.R. § 240.10b-5), by using any means or instrumentality of interstate commerce, or of the mails, or of any facility of any national securities exchange, in connection with the purchase or sale of any security:
(a) to employ any device, scheme, or artifice to defraud;
(b) to make any untrue statement of a material fact or to omit to state a material fact necessary in order to make the statements made, in the light of the circumstances under which they were made, not misleading; or
(c) to engage in any act, practice, or course of business which operates or would operate as a fraud or deceit upon any person,
with respect to:
(A) any investment strategy or investment in securities,
(B) the prospects for success of any product or company,
(C) the use of investor funds,
(D) compensation to any person, or
(E) the misappropriation of investor funds or investment proceeds.

As provided in Federal Rule of Civil Procedure 65(d)(2), the foregoing paragraph also binds the following who receive actual notice of this Judgment by personal service or otherwise: (a) Ruderman's officers, agents, servants, employees, and attorneys; and (b) other persons in active concert or participation with Ruderman or with anyone described in (a).

DISGORGEMENT, PREJUDGMENT INTEREST, AND CIVIL PENALTY

Ruderman is liable to the Commission for disgorgement of $32,587,166, representing profits gained as a result of the conduct alleged in the Amended Complaint, together with prejudgment interest on disgorgement of $1,517,273.00, and a civil penalty of $15,000,000.00 pursuant to Section 20(d) of the Securities Act and Section 21(d)(3) of the Exchange Act, for a total of $49,104,439.00.

Ruderman shall partially satisfy the disgorgement and prejudgment interest payments due to the Commission within 30 days of entry of this Final Judgment by disgorging the following assets to the Commission or its designee:
(i) $4,951.63.00, representing the full amount now held in the Bank of America account in Ruderman's name ending in 6994;
(ii) $541,071.00 from the Annuity, Contract Number ending in 9843, held with the Lincoln Financial Group; and
(iii) $67,800.00 each in accounts ending in 0565, 0566, and 0567 held at UBS Group AG (for a total of $203,400.00 from the three accounts).

Upon receipt of this Final Judgment, Bank of America, the Lincoln Financial Group, and UBS Group AG shall each cooperate fully and take all necessary steps to expeditiously turn over the funds in the accounts set forth in (i), (ii), and (iii) above to the Commission or its designee directly, or, where necessary, to Ruderman, whereupon Ruderman shall promptly turn over the funds to the Commission.

Ruderman shall further partially satisfy the Final Judgment by agreeing to disgorge to the Commission or its designee 50 percent of any equity remaining in his condominium located at 20165 Northeast 39th Place, #TS-01, Aventura, Florida, 33180, Miami-Dade Office of the Property Appraiser Folio 28-1235-076-0450 ("Condominium"), upon sale of the Condominium as set forth below (after satisfaction of the mortgage and condominium association and any related fees).


For further assistance please contact
SECURITIES AND EXCHANGE COMMISSION
801 Brickell Avenue, Suite 1800
Miami, Florida 33131
Telephone: (305) 982-6300
Facsimile: (305) 536-4154
https://www.sec.gov/regional-office/miami

The following describes a government action that has been resolved by either a settlement or a decision by a court or administrative agency. If the matter is being appealed, it will be noted below.

As of August 27, 2021:

Two south Florida securities lawyers and the former Chief Operating Officer of 1 Global Capital LLC ("1 Global") were sentenced for their roles in a sprawling fraud scheme that affected more than 3,600 investors in 42 states.

Andrew Dale Ledbetter, 79, of Fort Lauderdale, Florida, pled guilty to a single count information, charging him with one count of conspiracy to commit wire fraud and securities fraud, in violation of Title 18, United States Code, Section 371 (Case No. 20-CR-60103), and was sentenced today to 60 months in prison by U.S. District Judge Roy K. Altman. Ledbetter was also ordered to pay over $148,976,248 million in restitution to the victims of the scheme.

Steven Allen Schwartz, 76, of Delray Beach, Florida, pled guilty to a single count information, charging him with one count of conspiracy to commit wire fraud and securities fraud, in violation of Title 18, United States Code, Section 371 (Case No. 20-CR-60003), and on July 9, 2021, U.S. District Court Judge Roy K. Altman sentenced Schwartz to a term of imprisonment of 24 months. Schwartz was also ordered to pay over $36 million in restitution to the victims of the scheme.

Jan Douglas Atlas, 76, of Fort Lauderdale, Florida, pled guilty to a single count information, charging him with one count of conspiracy to commit wire fraud and securities fraud, in violation of Title 18, United States Code, Section 371 (Case No. 19-CR-60258), and on August 20, 2021, U.S. District Court Judge Roy K. Altman sentenced Atlas to a term of imprisonment of 8 months. Atlas was also ordered to pay over $29 million in restitution to the victims of the scheme.

Alan G. Heide, the former 1 Global Chief Financial Officer, was previously charged via information and sentenced to 60 months (Case No. 19-CR-60231). Information about the related cases can be found here: https://www.justice.gov/usao-sdfl/1Global-Capital.

Related court documents and information may be found on the website of the District Court for the Southern District of Florida at www.flsd.uscourts.gov or at http://pacer.flsd.uscourts.gov under case number 20-cr-60103.

For further information, please contact:
United States Attorney's Office
Southern District of Florida
99 N.E. 4th Street
Miami, Fl. 33132
Main Phone: (305) 961-9001
Fax Line: (305) 530-7679
https://www.justice.gov/usao-sdfl

LINK: https://www.justice.gov/usao-sdfl/pr/two-south-florida-lawyers-and-former-chief-operating-officer-sentenced-roles-massive-1



As of July 21, 2021:

1 Global Capital, LLC
United States v. Alan G. Heide (19-CR-60231-RKA)
United States v. Jan D. Atlas (19-CR-60258-RKA)
United States v. Steven A. Schwartz (20-CR-60003-RKA)
United States v. Andrew D. Ledbetter (20-CR-60103-RKA)

Latest Update: On July 9, 2021 defendant Steven A. Schwartz was sentenced to 24 months' imprisonment to be followed by 1 year of supervised release. The court also ordered defendant Steven Schwartz to pay restitution in the amount of $36, 362, 392.00 with his co-conspirators.

On September 29, 2020 defendant Andrew Dale Ledbetter was charged by information with one count of conspiracy to commit securities fraud and wire fraud, in violation of 18 U.S.C. § 371. Ledbetter's sentencing hearing is currently scheduled to be held via ZOOM and has been reset for August 27, 2021 at 1:30pm before Judge Roy K. Altman. (Zoom VTC Meeting ID: 161 815 8203, Passcode: 7777)

The sentencing hearing for defendant Jan Douglas Atlas previously scheduled for August 23, 2021, has been reset for August 19, 2021 at 10:00 AM in the Miami Division, 400 North Miami Avenue, Courtroom 12-4 before Judge Roy K. Altman.

The sentencing hearing for defendant Steven Schwartz, previously scheduled for April 9, 2021 has been rescheduled for July 9, 2021 at 1:30 PM at Fort Lauderdale Division, United States Federal Building and Courthouse, 299 East Broward Blvd., Room 207B, Fort Lauderdale, FL 33301 before Judge Roy Altman.

On January 23, 2020, defendant Alan G. Heide was sentenced to 5 years imprisonment, followed by 3 years of supervised release. On November 18, 2020, the court ordered Heide to pay restitution in the amount of $57,671,799.29, joint and several with his co-conspirators.

Overview: 1 Global Capital LLC (1 Global) was a commercial lending business based in Hallandale Beach, Florida, that made the equivalent of "pay day" loans to small businesses at high interest rates, termed merchant cash advance loans ("MCAs"). To fund these loans, 1 Global obtained funds from investors nationwide, offering short-term investment contracts that promised to "place" the investors' money in MCAs. The investors would supposedly receive a proportionate share of the principal and interest payments as the loans were repaid. 1 Global raised money using investment advisors and other intermediaries, with promises to these advisors of significant commissions. 1 Global also represented to the investors that they could expect to receive high single digit and low double-digit returns. In total, from 1 Global's inception in 2013 through in or around July 2018, when the company declared bankruptcy, 1 Global raised hundreds of millions of dollars from thousands of investors.

Alan G. Heide, a resident of Palm Beach County, worked in several positions at 1 Global, including as Chief Financial Officer ("CFO"), Executive Vice President, and as Director of Syndicate Partner Relations. Heide reported to Individual #1 at 1 Global.

Steven A. Schwartz, a resident of Palm Beach County, was employed as a director of 1 Global. In marketing materials used to raise money from investors, Schwartz was sometimes identified as the Chief Operating Officer ("COO") of 1 Global. Schwartz was also the brother-in-law of Individual #1.

Dale Ledbetter, a resident of Broward County, was an attorney licensed in the State of Florida who worked at Law Firm #1. Starting in approximately 2015, Dale Ledbetter also acted in a fundraising capacity at 1 Global, in which he solicited potential investors and investment advisors. Dale Ledbetter had frequent contact with Individual #1, with whom he sometimes solicited investors together on 1 Global's behalf.

Jan D. Atlas, a resident of Broward County, was an attorney licensed in the State of Florida and a partner at Law Firm #1. Atlas purported to serve as outside legal counsel for 1 Global. Atlas had regular contact with Individual #1.

In order to attract investments, Individual #1, Alan G. Heide, Steven A. Schwartz, Dale Ledbetter, and others made false and misleading representations to investors and potential investors as to the profitability of 1 Global's business in marketing materials and periodic account statements. 1 Global promised investors that all or nearly all of that money would be applied to various MCA agreements with the investor supposedly receiving a portion of the proceeds paid back by the merchants. In reality, according to court documents, the 1 Global business was far less profitable than advertised. Furthermore, the conspirators misappropriated large amounts of cash for themselves, including, primarily, to support the lavish lifestyle of Individual #1 and his family members. 1 Global also paid substantial commissions and other expenses with investor funds without disclosing the extent of these payments.

According to court documents, 1 Global made false statements to investors that gave the impression that 1 Global had an independent auditor. These misrepresentations were allegedly made in monthly statements mailed to investors that falsely showed profitable investments. The statements gave the false impression that the finances had been independently verified by an outside audit firm. As 1 Global continued to lose money over time, the cash shortfall continued to increase, and 1 Global resorted to using new investor funds to pay older investors, before its eventual collapse in July 2018.

Court documents further revealed that 1 Global had received written legal advice authored by an outside law firm retained by 1 Global, and that in memoranda received from this outside law firm, the firm opined that 1 Global was improperly offering unregistered securities, in violation of federal law. Despite having received this advice in or around June and July 2016, Individual #1, Steven A. Schwartz, Alan G. Heide, Jan D. Atlas, Dale Ledbetter, and their co-conspirators continued to operate the business and hid the advice contained in the legal memoranda from investors, failing to disclose the risks it described. Moreover, instead of following this advice, Individual #1 and co-conspirators not only concealed it from the investors, but also sought false legal cover from Jan D. Atlas, who authored opinion letters based on false and fraudulent information, stating that 1 Global's offerings were not securities. These letters enabled 1 Global to continue operating and raising investor funds.

1 Global operated from 2013 through approximately July 27, 2018, when it filed for bankruptcy. As of that time, 1 Global had more than 3,600 investors and had raised more than $330 million, and its own internal documents showed a $50 million cash deficit. The bankruptcy case, In re: 1 Global Capital LLC, et al., No. 18-19121-RBR (S.D. Fla.), remains pending.

For further information, please contact:
United States Attorney's Office
Southern District of Florida
99 N.E. 4th Street
Miami, Fl. 33132
Main Phone: (305) 961-9001
Fax Line: (305) 530-7679
https://www.justice.gov/usao-sdfl

LINK: https://www.justice.gov/usao-sdfl/1Global-Capital

The following describes a pending government action that has been formally brought by a government agency but has not yet been resolved. We are providing a summary of the government's allegations, which have not yet been proven.

As of August 15, 2019, SEC Case 0:19-cv-62047

The Securities and Exchange Commission today charged 1 Global Capital LLC's former chief financial officer, Alan G. Heide, with defrauding retail investors. The now bankrupt Florida-based cash advance company allegedly fraudulently raised more than $322 million from 3,600 investors between 2014 and last year. The SEC previously charged 1 Global and former CEO Carl Ruderman with fraud and charged Henry J. "Trae" Wieniewitz, III for his allegedly unlawful sales of 1 Global securities. Ruderman and Wieniewitz have consented to final judgments.

According to the SEC's complaint, although 1 Global promised investors profits from its short-term cash advances to businesses, the company used substantial investor funds for other purposes, including paying operating expenses and funding Ruderman's lavish lifestyle. The SEC alleges that Heide, a certified public accountant, for nine months regularly signed investors' monthly account statements that he knew overstated the value of their accounts and falsely represented that 1 Global had an independent auditor that had endorsed the company's method of calculating investor returns.

"Heide's misrepresentations gave false comfort to investors, allowing them to be duped to invest in 1 Global's securities," said Eric I. Bustillo, Director of the SEC's Miami Regional Office. "We allege that as 1 Global's CFO, Heide played a significant role in 1 Global's fraud by overstating the value of investors' accounts and their rates of return and falsely representing the role of an auditor."

The SEC's complaint charges Heide with violations of the antifraud provisions of the federal securities laws. The SEC seeks a court-ordered injunction and a financial penalty. Heide agreed to settle the SEC's charges as to liability, without admitting or denying the allegations, and agreed to be subject to an injunction, with the court to determine the penalty amount at a later date.

Separately, the U.S. Attorney's Office for the Southern District of Florida today announced criminal charges against Heide.

For further assistance please contact
SECURITIES AND EXCHANGE COMMISSION
801 Brickell Avenue, Suite 1800
Miami, Florida 33131
Telephone: (305) 982-6300
Facsimile: (305) 536-4154
https://www.sec.gov/regional-office/miami

LINK: https://www.sec.gov/news/press-release/2019-154