A road warning sign against a stormy sky with words Fraud Alert, Warning of Fraud

1st Global Capital investors continue to inquire about the status of 1st Global’s bankruptcy and loss recovery options.

First, 1st Global’s situation is very serious: the company and its principal have been charged by the Securities and Exchange Commission with perpetrating a Ponzi scheme and misappropriating tens of millions of dollars of investor money. The SEC has asked the Court to freeze 1st Global’s assets and appoint a Receiver, and the Court has done so.

As such, the bankruptcy pending in Florida is likely to be put on hold and will be superseded by the receivership action. In view of the allegations of Ponzi payments and misappropriation of tens of millions of dollars of investor money, we expect that the Court-appointed Receiver is likely to take steps to liquidate 1st Global and distribute the remaining proceeds to the investors, in proportion to their losses. The receivership process is likely to take years, given (1) the size of 1st Global’s scheme; (2) the number of investors; (3) the number of small businesses that received loans; and (4) the substantial amounts of money that were apparently stolen, misdirected to other businesses, or paid back to earlier investors in Ponzi-like fashion, according to the SEC. The Receiver is likely to try and get back money that was improperly transferred, including possibly the sales commissions paid to the agents that recklessly sold this toxic, fraudulent investment product to their customers.

According to the SEC, 1 Global and Carl Ruderman paid hefty commissions to a network of brokers – many of whom had been barred from the securities industry – as well as unregistered investment advisers and sales agents who recruited more than 3,400 investors to invest in 1st Global’s unregistered and unlawful securities.

While 1st Global assured investors that their money would be invested in low-risk cash advances to small businesses, in reality it “used substantial investor funds for purposes other than the cash advances, including paying operating expenses and purchasing already-distressed, long-term credit card debt,” the SEC charged.

1ST GLOBAL CAPITAL AND ITS PRINCIPAL STAND ACCUSED OF MISAPPROPRIATING TENS OF MILLIONS OF DOLLARS OF INVESTOR MONEY

1st Global and its principal, Ruderman, allegedly misappropriated and misused at least $35 million of investor money. Of that amount, $28 million went directly to Ruderman, and to his and his family’s businesses, which had nothing to do with 1 Global’s cash advance business, according to the SEC. Part of the investor money that was misappropriated was used to pay for Ruderman’s lavish lifestyle, luxury cars, and exotic international vacations.

By October 2017, 1st Global already had a shortage in investor funds of $23 million. This shortfall apparently got significantly worse since then: the SEC alleged that approximately $50 million of investor money was missing by June 30, 2018, a month before the scheme’s collapse.

WHAT 1ST GLOBAL CAPITAL INVESTORS SHOULD DO

1st Global Capital investors should reach out to a lawyer of their choice to discuss about their legal options. Waiting until the receivership or bankruptcy winds down is hardly a good option, as the 1st Global’s liquidation process is likely to take years. Investors who choose to wait run the risk that applicable statutes of limitations will render their claims void by the time they’re ready to file.

The Goldman Scarlato & Penny investor rights lawyers Alan Rosca, Paul Scarlato, and Doug Bench have been contacted by numerous 1st Global investors across the country. They are preparing claims against multiple investment advisors and financial service firms that sold the 1st Global notes to investors without conducting adequate due diligence as to 1st Global or the notes.

The Goldman Scarlato & Penny attorneys’ goal is to supplement whatever recovery may be available through the receivership, by going after third-party financial service entities that recommended and promoted the 1st Global investment products to investors, without first conducting adequate due diligence and having a reasonable basis to recommend those investments.

They take cases of this type on a contingency fee basis, advance the case costs, and only get paid for their fees and costs if and when they recover money for their clients. To learn more about your legal options if you invested in 1st Global Capital, contact attorneys Alan Rosca, Paul Scarlato, or Doug Bench at 888-872-6975, 888-998-0530, via email at rosca@lawgsp.com, or through the contact form on this website.

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