Dive Brief:
- The Securities and Exchange Commission charged 1 Global Capital LLC's former chief financial officer, Alan Heide, Thursday with defrauding investors. The now-bankrupt Florida-based cash advance company allegedly fraudulently raised more than $322 million from 3,600 investors between 2014 and 2018.
- According to the SEC's complaint, 1 Global promised investors profits from its short-term cash advances to businesses, but the company used substantial investor funds for other purposes, including paying operating expenses and funding the lavish lifestyle of Carl Ruderman, 1 Global Capital's then-CEO.
- The SEC alleges that over a span of nine months, Heide, a certified public accountant, regularly signed investors' monthly account statements, despite knowing that they overstated account values and falsely claimed that 1 Global had an independent auditor endorsing their investor returns calculations.
Dive Insight:
"Heide's misrepresentations gave false comfort to investors, allowing them to be duped to invest in 1 Global's securities," said Eric 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 anti-fraud 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 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.
The SEC previously charged Ruderman with fraud and charged Henry Wieniewitz, who sold Global 1 securities without first registering with the SEC, with broker-dealer registration violations.
