Andrew Dale Ledbetter, Charged By Feds For Wire, Securities Fraud
A Florida attorney and former outside counsel for 1 Global Capital LLC (1 Global), has been charged today with conspiring to commit wire fraud and securities fraud in connection with an investment fraud scheme that, as alleged, impacted more than 3,600 investors in 42 different states, and involved him personally and fraudulently raising more than $100 million from investors.
Ariana Fajardo Orshan, United States Attorney, Southern District
of Florida, George L. Piro, Special Agent in Charge, FBI Miami Field Office,
Michael J. De Palma, Special Agent in Charge, Internal Revenue Service,
Criminal Investigation (IRS-CI), and Kyle A. Myles, Special Agent in Charge,
Federal Deposit Insurance Corporation (FDIC) Office of Inspector General, made
the announcement.
Andrew Dale Ledbetter, 78, of Fort Lauderdale, Florida, is
charged in an information with conspiracy to commit wire fraud and securities
fraud. The case is assigned to U.S.
District Judge Darrin P. Gayles of the Southern District of Florida.
According to the allegations in the information, 1 Global
was a commercial lending business based in Hallandale Beach, Florida, that made
the equivalent of “pay day” loans with high interest rates to small businesses,
termed merchant cash advance loans (MCAs).
To fund these loans, 1 Global obtained funds from investors nationwide,
offering short-term investment contracts that promised to “place” the investors’
money onto MCAs. The investors would
supposedly receive a proportionate share of the principal and interest payments
as the loans were repaid. 1 Global
raised money using investment advisors and other intermediaries, with promises
to these advisors of significant commissions.
In many cases, according to court documents, the commissions were not
fully disclosed to investors. Ledbetter
was an attorney licensed in the State of Florida who worked at Law Firm #1 and
acted in a fundraising capacity at 1 Global beginning in or around 2015.
Substantial questions arose during the operation of the
business as to whether 1 Global was offering or selling a security and whether
the investment offering was required to be registered with the U.S. Securities
and Exchange Commission. These questions
were raised by investors, investment advisors, and regulators. Ledbetter and Jan Douglas Atlas, a partner at
Law Firm #1 who also acted as outside counsel for 1 Global, knew that if 1
Global’s investment offering were determined to be a security, it would
undermine the ability of 1 Global to raise funds from retail investors and to
continue to operate without substantial additional expenses and reporting
requirements. Such a classification
would undermine the profits and fees that Ledbetter and other principals at 1
Global would be able to obtain from 1 Global’s operations.
The information alleges that at the request of 1 Global’s
principals, Atlas authored two opinion letters in 2016 containing false
information that Atlas knew would be used by 1 Global to operate the business
unlawfully. The opinion letters falsely
described the duration of the investment, among other things, omitting the
automatic renewal aspect and that the investment was being targeted toward
retail, non-sophisticated investors (such as IRA account holders). According to the information, Ledbetter used
and relied on Atlas’s opinion letters to continue to raise money illegally,
knowing that the opinion letters falsely described the investment opportunity
and were thus misleading. Ledbetter
cited and used the false letters in numerous pitches and communications to
investment advisors and investors.
According to the information, Ledbetter was personally
involved in raising more than $100 million in investor funds that went to 1 Global,
through his own pitches as well as through investment advisors he attracted to
1 Global. Over the years, Ledbetter
received approximately $3 million from 1 Global, the majority of which was for
commissions. Ledbetter routinely held
himself out to investors and investment advisers as outside counsel to 1
Global, and also personally vouched for 1 Global in pitches and marketing
materials. However, Ledbetter did not
disclose the commissions that he received from 1 Global to investors, according
to the information. Ledbetter also made
misrepresentations to investors regarding the involvement of an outside
auditing firm.
A number of individuals have entered guilty pleas in
connection with the 1 Global fraud scheme.
Alan G. Heide, the former 1 Global chief financial officer, was charged
via information and sentenced to 60 months, in Case No. 19-60231-CR-RKA. Atlas, former outside counsel for 1 Global,
was charged via information, pleaded guilty, and is awaiting sentencing in Case
No. 19-60258-RKA, currently scheduled for Nov. 17, 2020. Steven Schwartz, a former director of 1
Global, was charged via information, pleaded guilty, and is awaiting sentencing
in Case No. 20-60003-RKA, currently scheduled for Nov. 13, 2020. Information about the related cases can be
found here:
https://www.justice.gov/criminal-vns/case/1Global-Capital.
In connection with a parallel civil enforcement action, the
SEC today announced the filing of civil fraud charges against Ledbetter. In related cases, the SEC previously has
filed civil fraud actions, SEC v. 1 Global Capital LLC and Carl C. Ruderman,
Case No. 18-61991-CV-BB (Sothern District of Florida) SEC v. Alan G. Heide,
Case No. 19-62047-CV-FAM (Southern District of Florida), and SEC v. Jan Atlas,
Case No. 19-62303-WPD (Southern District of Florida). The bankruptcy case, In re: 1 Global Capital
LLC, et al., No. 18-19121-RBR (Southern District of Florida), remains pending.
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