1 Global Capital and 1 West File for Bankruptcy Amid SEC Investigation

1st Global Capital

News reports and publicly available records provided by the US courts indicate that 1st Global Capital and 1 West Capital filed for bankruptcy in July 2018 amid investigations by the Securities and Exchange Commission and the US Attorneys’ Office into an alleged $283 million loan fraud. Fitapelli Kurta is interested in hearing from investors whose brokers solicited investments in 1 Global Capital or 1 West Capital. Investors may have claims for fraud, unsuitable or negligence and may be able to recover damages.

According to Investment News, “unsecured, short-term commercial financing,” according to a filing in the United States Bankruptcy Court for the Southern District of Florida, Fort Lauderdale Division. The company has served business in industries including “automotive, construction, e-commerce, events, franchise, hospitality, healthcare, manufacturing, retail, restaurant/bar, spa/salon, and transportation.” Its platform can provide up to $500,000 for working capital, which loan recipients can repay through “daily, weekly or other periodic automated clearing house transactions or merchant credit card receivable splits.” It also provides collateral-based funding and accounts-receivable funding services.

The court filing states further that before the bankruptcy filings were made, the SEC launched an investigation into alleged “possible securities law violations” by the company, including allegations that it: offered and sold unregistered securities, sold securities by unregistered brokers, and committed fraud in connection with the offer, purchase and sale of securities. Roughly concurrently, according to that filing, the Office of the United States Attorney for the Southern District of Florida launched an investigation into the same and additional activities the company participated in. The company is reportedly cooperating with both investigations. In response to the investigations, it has reportedly seen the resignation of two of its executives, Carl Ruderman and Steven A. Schwartz.

The company’s “unaudited books and records” for the quarter closing June 30, 2018, describe about $283 million in unsecured lending claims, according to the court filing. Many of its creditors are individual unsecured creditors who provided loans for merchant cash advances. The filing states further that that the company’s 20 largest general unsecured credits are “individuals” or “individual retirement accounts” who made loans that were documented by a promissory note, a memorandum of indebtedness and/or a loan agreement. One securities attorney told InvestmentNews, “The company seems to be following the Woodbridge model,” referring to Woodbridge Group of Companies, which filed for bankruptcy last year and was charged by the SEC with operating a Ponzi scheme to the tune of $1.2 million. “It was using unregistered brokers around the country to sell to retail investors,” he said. While there have not been any charges filed in connected to these investigations, according to Debanked, the charges have “prevented the company from being in a position to raise new capital.”

If you made an investment in 1 Global Capital or 1 West Capital, you may have a claim for fraud, unsuitability or negligent conduct by your broker and you may be able to recover losses. Call Fitapelli Kurta at 877-238-4175 for a free consultation. Fitapelli Kurta accepts every case on contingency: we only get paid if and when you collect money. Time to file your claim may be limited, so we recommend you avoid delay. Call 877-238-4175 now to speak to an attorney for free.