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August 23, 2018 – The U.S. Securities and Exchange Commission filed charges against 1 Global Capital LLC (“1 Global”) and its former CEO Carl Ruderman for allegedly defrauding at least 3,400 retail investors, more than one-third of whom had invested retirement funds. The charges, filed under seal on August 23, 2018 and presented by a court-appointed receiver to a Missouri court on September 5, 2018, allege that 1 Global and Ruderman fraudulently raised more than $287 million since 2014 in unregistered securities sold through a network that included barred brokers. On August 23, 2018, the U.S. District Court for the Southern District of Florida granted the SEC’s request for a temporary asset freeze against Ruderman and other Ruderman companies charged by the SEC as relief defendants. The Court also granted the SEC’s request to appoint a receiver over certain of the relief defendants: Bright Smile Financing, LLC, BRR Block, Inc., Digi South, LLC, Ganador Enterprises, LLC, Media Pay LLC, and Pay Now Direct LLC. Investors in 1 Global allegedly were given bogus account statements and were falsely told that it had an independent auditor, and that its secured loans, typically for small amounts, had low default rates. According to the complaint, in contrast to what it told investors, 1 Global marketed itself to business borrowers as a low-hassle way to access cash quickly, often made large, unsecured loans, and had significant problems with collections. 1 Global declared bankruptcy in July and Ruderman resigned from the company. The SEC’s complaint charges 1 Global and Ruderman with violations of Sections 5(a), (c) and 17(a) of the Securities Act of 1933, Sections 10(b) and 15(a)(1) and Rule 10b-5 thereunder of the Securities Exchange Action of 1934. Additionally, the complaint charges Ruderman with aiding and abetting 1 Global’s violations of Section 10(b) and Rule 10b-5, and with violating Section 20(a) of the Exchange Act. The SEC seeks disgorgement of allegedly ill-gotten gains and prejudgment interest from the defendants and relief defendants, and financial penalties against the defendants.
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