Dive Brief:
- Alan Heide, former CFO of 1 Global Capital in Hallandale Beach, Florida, was sentenced to five years in federal prison on Thursday for his role in a $287 million investment fraud scheme, the Miami Herald reported.
- Heide pleaded guilty last August to one count of conspiracy to commit securities fraud.
- He’s expected to serve at least 85% of the sentence under federal rules, which would mean a minimum sentence of 51 months, the Miami Herald reported.
Dive Insight:
1 Global Capital, which made money on short-term, merchant cash advance loans, was charged with lying about its financial health and its revenue use.
Among other things, it failed to disclose to investors losses from companies not paying back loans and its use of funds to cover personal expenses of chairman and CEO Carl Ruderman.
The personal expenses of Ruderman, who once owned Playgirl Magazine through a separate business entity, included a trip to Greece and monthly payments on a Mercedes Benz.
Heide acknowledged he was aware of the misappropriation of investor cash and signed statements to investors mischaracterizing how money was being used.
“Heide signed the account statements knowing they overstated the value of the investors’ accounts,” the Securities and Exchange Commission said in its complaint. “Heide knew all the investors’ monthly account statements were false because they misrepresented the amount of ‘cash to be deployed.’”
In the charge against him, Heide lied to investors about what an independent audit by Daszkal Bolton L.L.P., said about 1 Global’s financial situation, and then lied to the FBI about what he told the investors.
“Heide knew Daszkal Bolton never endorsed or agreed with 1 Global’s rate of return formula,” the SEC said.
Heide was sentenced in U.S. District Court, Southern District of Florida, in Fort Lauderdale. Others in the case are still to be sentenced.
