Did 1st Global Capital Defraud Investors?
The Business Trial Group is investigating claims regarding possible improper investment practices and fraudulent activity on the part of 1st Global Capital, LLC, entities associated with company, and the company’s owner, Carl Ruderman. The Securities and Exchange Commission has alleged that 3,400 investors nationwide may have lost a combined $287 million when the company declared bankruptcy in July 2018.
Entities associated with 1st Global that may have engaged in fraudulent activity include:
- 1st West Capital, LLC
- KNR Consulting Group, Inc
- American Alternative Investments, LLC
- Carl Ruderman and The Ruderman Family Trust
1st Global and its associated entities allegedly “used a network of barred brokers, registered and unregistered investment advisers, and other sales agents” to raise money for the company through the sale of unregistered and fraudulent promissory notes, according to a recently unsealed complaint filed by the SEC.
The Business Trial Group wants to help investors defrauded by 1st Global Capital or one of its associated entities get their money back. Contact us today for a free case evaluation to learn more.
Investors were told their money would be used exclusively to make short-term cash advances called Merchant Cash Advances (“MCAs”) to small and medium sized businesses that could not obtain financing through a bank loan. The company supposedly promised investors a high-return, low-risk investment, and many of those who invested used their retirement savings, according to the SEC complaint.
The reality was much different.
1st Global allegedly used a significant amount of investor money for purposes other than issuing MCAs, including operating expenses and purchasing long term credit card debt, the SEC complaint says.
Furthermore, Ruderman and his company are said to have misappropriated at least $35 million of investor funds, including $28 million for the Ruderman family trust, other companies not associated with 1st Global owned by Ruderman’s relatives and acquaintances, and Ruderman himself.
Additionally, the company is accused of sending false account statements to investors that misrepresented their portfolio balances, rates of return, and the funds 1st Global had on hand to issue MCAs. The company also claimed that an independent auditor had audited the company’s statements, but that never happened, according to the SEC complaint.
In October 2017, 1st Global experienced a $23 million shortage of funds for MCAs, largely due to the misappropriation of investor funds outlined above. This shortage only increased, and by the end of June 2018, 1st Global was missing nearly $50 million of investor funds.
Just one month later, 1st Global and one of its associated entities, 1st West Capital, LLC, filed for Chapter 11 bankruptcy protection, placing investors at risk of losing significant funds.
Today, Ruderman no longer controls 1st Global, but he was the company’s chairman and CEO the entire time it was in operation. He continues to control or have access to entities that received misappropriated investor funds from 1st Global, according to the SEC.
Don’t Spend More Money Trying To Get Your Investment Back
If you’ve been defrauded by 1st Global or one of its associated entities, the Business Trial Group would like to try and help you get your investment back.
We believe you shouldn’t have to spend money on an attorney with no guarantees they’ll get your investment back. That’s why we work on a contingency fee basis, meaning you pay nothing unless we recover your investment losses.
We have a history of helping victims of securities fraud, and have recovered tens of millions of dollars on behalf of defrauded investors. Contact us today for a free, no-obligation case evaluation to find out more about how we may be able to help.