SEC Alleges Cash Advance Company Defrauded Investors out of $287M
The Securities and Exchange Commission filed civil fraud charges against Hallandale Beach-based 1 Global Capital and former CEO Carl Ruderman, of Aventura, for allegedly defrauding over 3,400 investors out of about $287 million.
Read the SEC Press Release here: SEC Charges Florida Cash Advance Company, Former CEO With Defrauding Retail Investors
According to the Sun Sentinel, the U.S. Attorney’s Office in Miami is also investigating the company, although there has been no word from federal prosecutors that they intend to file criminal charges. The SEC complaint contains 10 counts of violating securities laws. It’s seeking disgorgement of ill-gotten gains and civil penalties.
According to the SEC complaint, starting in 2014, 1 Global Capital raised money from small investors throughout the country and promised to use the proceeds to make short-term cash advance loans to small- and medium-sized businesses. The SEC alleged that millions were raised through the sale of unregistered securities; that investors were told false information; and the company used brokers that had previously been banned from selling securities or who were not registered to sell securities.
Ruderman allegedly moved money to several other companies he controlled, and also misappropriated $35 million to finance a vacation to Greece, buy a Mercedes-Benz, and pay for a personal chef, according to the complaint. The company also paid Ruderman’s wife a $116,000 salary, although she had no listed job with the company and didn’t have an office there, the SEC said.
The monthly account statements that 1 Global Capital sent to investors contained false financial information about their balances and rate of return, according to the SEC. Investors were falsely told that the company had an independent auditor overseeing its business, the SEC alleged.
By October 2017, 1 Global Capital was $23 million short of funds for its business loans. That shortage grew to $50 million by June 2018, according to the SEC. That eventually led to the bankruptcy filing in July.