Today, a former consultant who also served as the Chief Operating Officer of 1 Global Capital, LLC pled guilty for his role in connection with a $287 million securities fraud scheme  involving a commercial payday loan business that operated from early 2014 through July 2018 and impacted more than 3,400 investors in 42 different states. 

Ariana Fajardo Orshan, United States Attorney, Southern District of Florida, George L. Piro, Special Agent in Charge, FBI Miami Field Office, and Michael J. De Palma, Special Agent in Charge, Internal Revenue Service, Criminal Investigation (IRS-CI), Miami Field Office made the announcement.  

Steven Allen Schwartz, 75, of Delray Beach, Florida, pled guilty before U.S. Magistrate Judge Patrick M. Hunt to the 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).  Schwartz is scheduled to be sentenced on March 13, 2020 at 3:00 p.m. before U.S. District Judge Roy K. Altman.  He faces a maximum statutory sentence of up to five years in prison and a fine up to $250,000 or double the gross proceeds of the offense.  

According to the court record, 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.  In many cases, the commissions were not fully disclosed to investors. 

Schwartz was a director and consultant at 1 Global, and also held out as a Chief Operating Officer in the company’s marketing materials.  Schwartz also served as the designated trustee for a purported family trust and an art trust for which Individual #1, the de facto owner of 1 Global, served as the grantor.  On or about June 5, 2014, 100% of the issued and outstanding shares of 1 Global were transferred under the umbrella of Individual #1’s purported family trust, and designated as the trust property.

In order to attract investments, Individual #1, Schwartz, Attorney #1, co-conspirator Alan G. Heide, 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, 1 Global business lost money and ultimately used new investor funds to pay back earlier investors who sought to cash out in a manner consistent with a Ponzi scheme.  Furthermore, the conspirators misappropriated large amounts of cash for themselves, including, primarily, to support the lavish lifestyle of Individual #1.  1 Global also paid substantial commissions and other expenses with investor funds without disclosing the extent of these payments. 

According to the court record, co-conspirators at 1 Global made false statements to investors that gave the impression that 1 Global had an independent auditor.  These misrepresentations were 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 was only able to continue operations by raising new investor funds before its eventual collapse in July 2018. 

According to the court record, Schwartz was also aware 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, Schwartz, Individual #1, 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 co-conspirator Jan Douglas Atlas, who authored opinion letters based on false and fraudulent information, stating that 1 Global’s offerings were not securities.

1 Global operated from early 2014 through approximately July 27, 2018, when it filed for bankruptcy.  As of that time, according to documents from related cases, 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.

In connection with a parallel civil enforcement action, the SEC announced the filing of civil fraud charges against Schwartz on January 6, 2020.  In related cases, the SEC previously filed civil fraud actions, captioned, SEC v. 1 Global Capital LLC and Carl C. Ruderman, Case No. 18-61991-CV-BB (S.D. Fla.); SEC v. Alan G. Heide, Case No. 19-62047-CV-FAM (S.D. Fla.); and SEC v. Jan Douglas Atlas, 19-62303-CV-WPD (S.D. Fla.).

Two co-conspirators have pled guilty to charges arising from their roles in the 1 Global fraud, in related criminal cases pending in the Southern District of Florida: United States v. Alan G. Heide, 19-60231-CR-RKA, and United States v. Jan Douglas Atlas, 19-60258-CR-RKA.

U.S. Attorney Fajardo Orshan commended the investigative efforts of the FBI’s Miami Field Office and the IRS-CI’s Miami Field Office.  She also thanked the SEC’s Miami Regional Office and Florida’s Office of Financial Regulation for their assistance.  This case is being prosecuted by Assistant U.S. Attorneys Jerrob Duffy and Lisa H. Miller, as well as Assistant Chief Rush Atkinson from the Criminal Division’s Fraud Section.  Assistant U.S. Attorney Nicole Grosnoff is handling asset forfeiture related to the matter.

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.

Former Consultant/Chief Operating Officer of 1 Global Capital LLC Charged with Conspiracy to Commit Wire and Securities Fraud In Relation to $287 Million Scheme

A former consultant who also served as the Chief Operating Officer of 1 Global Capital, LLC has been charged in connection with a $287 million securities fraud scheme that impacted more than 3,400 investors in 42 different states, in relation to a commercial payday loan business that operated from early 2014 through July 2018. 

Ariana Fajardo Orshan, United States Attorney, Southern District of Florida, George L. Piro, Special Agent in Charge, FBI Miami Field Office, and Michael J. De Palma, Special Agent in Charge, Internal Revenue Service, Criminal Investigation (IRS-CI), Miami Field Office made the announcement.  

Steven Allen Schwartz, 76, of Delray Beach, Florida, was charged today by information with one count of conspiracy to commit wire fraud and securities fraud, in violation of Title 18, United States Code, Section 371, in Case No. 20-CR-60003.  The defendant faces a maximum statutory sentence of up to five years in prison and a fine up to $250,000 or double the gross proceeds of the offense.  

According to the information, 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 iMCAs.  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.  In many cases, according to court documents, the commissions were not fully disclosed to investors. 

Schwartz was a director and consultant at 1 Global, and also held out as a Chief Operating Officer in the company’s marketing materials.  Schwartz also served as the designated trustee for a purported family trust and an art trust for which Individual #1, the de facto owner of 1 Global, served as the grantor.  On or about June 5, 2014, 100% of the issued and outstanding shares of 1 Global were transferred under the umbrella of Individual #1’s purported family trust, and designated as the trust property.

In order to attract investments, Individual #1, Schwartz, Attorney #1, co-conspirator Alan G. Heide, 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 allegations the information, the 1 Global business lost money, and ultimately used new investor funds to pay back earlier investors who sought to cash out in a manner consistent with a Ponzi scheme.  Furthermore, the conspirators misappropriated large amounts of cash for themselves, including, primarily, to support the lavish lifestyle of Individual #1.  1 Global also paid substantial commissions and other expenses with investor funds without disclosing the extent of these payments. 

According to allegations in the information, co-conspirators at 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 was only able to continue operations by raising new investor funds before its eventual collapse in July 2018. 

According to allegations in the information, Schwartz was also aware 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, Schwartz, Individual #1, 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 co-conspirator Jan Douglas Atlas, who authored opinion letters based on false and fraudulent information, stating that 1 Global’s offerings were not securities.

1 Global operated from early 2014 through approximately July 27, 2018, when it filed for bankruptcy.  As of that time, according to documents from related cases, 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.

A criminal information is a charging instrument containing allegations. All defendants are presumed innocent unless proven guilty in a court of law.

In connection with a parallel civil enforcement action, the SEC today announced the filing of civil fraud charges against Schwartz.  In related cases, the SEC previously filed civil fraud actions, captioned, SEC v. 1 Global Capital LLC and Carl C. Ruderman, Case No. 18-61991-CV-BB (S.D. Fla.); SEC v. Alan G. Heide, Case No. 19-62047-CV-FAM (S.D. Fla.); and SEC v. Jan Douglas Atlas, 19-62303-CV-WPD (S.D. Fla.).

Two co-conspirators have pled guilty to charges arising from their roles in the 1 Global fraud, in related criminal cases pending in the Southern District of Florida: United States v. Alan G. Heide, 19-60231-CR-RKA, and United States v. Jan Douglas Atlas, 19-60258-CR-RKA.

U.S. Attorney Fajardo Orshan commended the investigative efforts of the FBI’s Miami Field Office and the IRS-CI’s Miami Field Office.  She also thanked the SEC’s Miami Regional Office and Florida’s Office of Financial Regulation for their assistance.  This case is being prosecuted by Assistant U.S. Attorneys Jerrob Duffy and Lisa H. Miller.  Assistant U.S. Attorney Nicole Grosnoff is handling asset forfeiture related to the matter.

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.

A South Florida securities lawyer and former outside counsel for 1 Global Capital, LLC has been charged with securities fraud in connection with an investment fraud scheme that impacted more than 3,600 investors in 42 different states. 

Ariana Fajardo Orshan, U.S. Attorney for the Southern District of Florida, and George L. Piro, Special Agent in Charge of the FBI’s Miami Field Office made the announcement.  

Jan Douglas Atlas, 74, of Ft. Lauderdale, Florida, was charged today by information with one count of securities fraud, in violation of Title 15, United States Code, Sections 77q(a) and 77x, in Case No. 19CR60258.  The case is assigned to U.S. District Judge Beth F. Bloom in Fort Lauderdale.  If convicted, Atlas faces a maximum statutory sentence of up to five years in prison and a fine up to $10,000.  

            According to the information, 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.  To fund these merchant cash advance loans, 1 Global obtained funds from investors nationwide, offering short-term investment contracts.  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 of significant commissions.  In many cases, the commissions were not fully disclosed to investors.   According to court records, 1 Global operated from early 2014 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. 

            Substantial questions arose during 1 Global’s operations as to whether 1 Global was offering or selling a security and subject to federal and state securities laws, and whether the offering was required to be registered with the U.S. Securities and Exchange Commission.  These questions were raised by investors, investment advisors, and regulators.  Atlas acted as outside counsel for 1 Global and allegedly knew that if 1 Global’s investment offering were determined to be a security, it would undermine the ability of 1 Global to raise funds from retail investors and to continue to operate without substantial additional expenses and reporting requirements.  Such a classification would undermine the profits and fees that 1 Global and its principals would be able to obtain from 1 Global’s operations.

            Atlas was a long-time South Florida securities attorney who, in addition to his role as outside counsel for 1 Global, was a partner at Law Firm #1.  The information alleges that at the request of 1 Global’s principals, Atlas authored two opinion letters in 2016 containing false information that Atlas allegedly knew would be used by 1 Global to operate the business unlawfully.  The opinion letters falsely described how the 1 Global investment actually worked, describing the 1 Global investment inaccurately in order to achieve the opinion that Individual #1 and others at 1 Global desired.  The opinion letters falsely described the duration of the investment, among other things, omitting the automatic renewal aspect and that the investment was being targeted toward retail, non-sophisticated investors (such as IRA account holders).  Atlas intentionally made false and misleading statements in these opinion letters, according to the information, to give 1 Global, and its employees and agents, false legal cover to continue to conduct business unlawfully.

            Atlas’s opinion letters were used and relied upon by 1 Global employees and agents to continue to raise money illegally.  At or around the time that Atlas executed these letters he received payments from Attorney #1, an attorney who worked at Law Firm #1 and also had a fundraising role at 1 Global.  Atlas allegedly understood that the payments he received from Attorney #1 constituted a percentage of commissions received by Attorney #1 of money raised by 1 Global from new investors.  The funds totaled approximately $627,000 and were paid to Atlas’s personal checking account.  These funds were not disclosed to Law Firm #1, and Atlas and Attorney #1 allegedly knew that they were required to disclose and share all fees paid by clients of Law Firm #1, with Law Firm #1.

            Previously, on August 23, 2019, former 1 Global Chief Financial Officer Alan G. Heide entered a guilty plea to one count of conspiracy to commit securities fraud in connection with the 1 Global fraud scheme, in Case No. 19-60231-CR-RKA.  Sentencing for Heide is set for December 12, 2019, before U.S. District Judge Roy K. Altman in Ft. Lauderdale.

            In connection with a parallel civil enforcement action, the SEC today announced the filing of civil fraud charges against Atlas.  In related cases, the SEC previously has filed civil fraud actions, SEC v. 1 Global Capital LLC and Carl C. Ruderman, Case No. 18-61991-CV-BB (S.D. Fla.), and SEC v. Alan G. Heide, Case No. 19-62047-CV-FAM (S.D. Fla.).  The bankruptcy case, In re: 1 Global Capital LLC, et al., No. 18-19121-RBR (S.D. Fla.), remains pending.

An information is a charging instrument containing allegations.  A defendant is presumed innocent unless and until proven guilty in a court of law.

U.S. Attorney Fajardo Orshan commended the investigative efforts of the FBI’s Miami Field Office.  She also thanked the SEC’s Miami Regional Office, IRS Criminal Investigation’s Miami Field Office, and Florida’s Office of Financial Regulation for their assistance.  This case is being prosecuted by Assistant U.S. Attorneys Jerrob Duffy and Lisa H. Miller, and Assistant U.S. Attorney Nicole Grosnoff is handling asset forfeiture related to this matter.

            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.

A former Chief Financial Officer of 1 Global Capital, LLC has been charged in connection with a $330 million securities fraud scheme, related to a commercial payday loan business that operated from early 2014 through July 2018, that impacted more than 3,600 investors in 42 different states.

Ariana Fajardo Orshan, U.S. Attorney for the Southern District of Florida and George L. Piro, Special Agent in Charge of the FBI’s Miami Field Office made the announcement.  

Alan G. Heide, 61, of Lake Worth, Florida, was charged today by information with one count of conspiracy to commit securities fraud, in violation of Title 18, United States Code, Section 371, in Case No. 19-60231.  The case is assigned to U.S. District Judge Roy Altman in Fort Lauderdale.  If convicted, Heide faces a maximum statutory sentence of up to five years in prison and a fine up to $250,000 or double the gross proceeds of the offense.  

            According to the information, 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.  To fund these merchant cash advance loans (“MCAs”), 1 Global obtained funds from investors nationwide, offering short-term investment contracts.  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 of significant commissions.  In many cases, the commissions were not fully disclosed to investors. 

            Heide was the Chief Financial Officer of 1 Global from 2014 through 2016, when he became the Executive Vice President and Director of Syndicate Partner Relations.  In order to attract investments, Heide and his co-conspirators allegedly 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 loan agreements with the investor supposedly receiving a portion of the proceeds paid back by the merchants.  The information alleges that the 1 Global business lost money, and used new investor funds to pay back earlier investors who sought to cash out in a manner consistent with a Ponzi scheme.  Furthermore, the conspirators are alleged to have misappropriated large amounts of cash for their personal benefit.  In addition, the information alleges that 1 Global paid substantial commissions and other expenses with investor funds without disclosing the extent of these payments. 

            According to the allegations in the information, Heide and others at 1 Global also made false statements to investors that gave the impression that 1 Global had an independent auditor.  These misrepresentations were allegedly made in monthly-mailed statements that falsely showed profitable investments.  As 1 Global continued to lose money over time, the cash shortfall continued to increase and 1 Global was only able to continue operations by raising ever-increasing amounts of new investor funds, before its eventual collapse in July 2018. 

            According to court records, 1 Global operated from early 2014 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.

            In connection with a parallel civil enforcement action, the SEC today announced the filing of civil fraud charges against Heide.  In a related case, the SEC previously filed a civil fraud action, SEC v. 1 Global Capital LLC and Carl C. Ruderman, Case No. 18-61991-CV-BB (S.D. Fla.). 

An information is a charging instrument containing allegations.  A defendant is presumed innocent unless and until proven guilty in a court of law.

U.S. Attorney Fajardo Orshan commended the investigative efforts of the FBI’s Miami Field Office.  She also thanked the SEC’s Miami Regional Office, IRS Criminal Investigation’s Miami Field Office, the Federal Housing Finance Authority, Office of Inspector General, and Florida’s Office of Financial Regulation for their assistance.  This case is being prosecuted by Assistant U.S. Attorney Jerrob Duffy and Assistant U.S. Attorney Nicole Grosnoff is handling asset forfeiture related to this matter.

            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.