The statements gave the false impression that the finances had been independently verified by an outside audit firm. These misrepresentations were made in monthly statements mailed to investors that falsely showed profitable investments. 1 Global also paid substantial commissions and other expenses with investor funds without disclosing the extent of these payments.Īccording to the court record, co-conspirators at 1 Global made false statements to investors that gave the impression that 1 Global had an independent auditor. Furthermore, the conspirators misappropriated large amounts of cash for themselves, including, primarily, to support the lavish lifestyle of Individual #1. In reality, 1 Global business lost money and ultimately used new investor funds to pay back earlier investors who sought to cash out in a manner consistent with a Ponzi scheme. 1 Global promised investors that all or nearly all of that money would be applied to various MCA agreements with the investor supposedly receiving a portion of the proceeds paid back by the merchants. Heide, and others made false and misleading representations to investors and potential investors as to the profitability of 1 Global’s business in marketing materials and periodic account statements. In order to attract investments, Individual #1, Schwartz, Attorney #1, co-conspirator Alan G. On or about June 5, 2014, 100% of the issued and outstanding shares of 1 Global were transferred under the umbrella of Individual #1’s purported family trust, and designated as the trust property. Schwartz also served as the designated trustee for a purported family trust and an art trust for which Individual #1, the de facto owner of 1 Global, served as the grantor. Schwartz was a director and consultant at 1 Global, and also held out as a Chief Operating Officer in the company’s marketing materials. In many cases, the commissions were not fully disclosed to investors. 1 Global raised money using investment advisors and other intermediaries, with promises to these advisors of significant commissions. The investors would supposedly receive a proportionate share of the principal and interest payments as the loans were repaid. To fund these loans, 1 Global obtained funds from investors nationwide, offering short-term investment contracts that promised to “place” the investors’ money in MCAs. He faces a maximum statutory sentence of up to five years in prison and a fine up to $250,000 or double the gross proceeds of the offense.Īccording to the court record, 1 Global Capital LLC (1 Global) was a commercial lending business based in Hallandale Beach, Florida, that made the equivalent of “pay day” loans to small businesses at high interest rates, termed merchant cash advance loans (“MCAs”). Schwartz is scheduled to be sentenced on Maat 3:00 p.m. Hunt to the single count information, charging him with one count of conspiracy to commit wire fraud and securities fraud, in violation of Title 18, United States Code, Section 371 (Case No. Steven Allen Schwartz, 75, of Delray Beach, Florida, pled guilty before U.S. De Palma, Special Agent in Charge, Internal Revenue Service, Criminal Investigation (IRS-CI), Miami Field Office made the announcement. Piro, Special Agent in Charge, FBI Miami Field Office, and Michael J. The scheme, which authorities describe as “Ponzi-like” in court filings, came tumbling down in 2017 when 1 Global Capital LLC filed for bankruptcy.Today, a former consultant who also served as the Chief Operating Officer of 1 Global Capital, LLC pled guilty for his role in connection with a $287 million securities fraud scheme involving a commercial payday loan business that operated from early 2014 through July 2018 and impacted more than 3,400 investors in 42 different states.Īriana Fajardo Orshan, United States Attorney, Southern District of Florida, George L. But the investments were technically securities, unregistered - and illegal, according to the Securities and Exchange Commission. It was mainly senior citizens who invested in the company, which purported to offer short-term loans at high interest rates to small- and medium-sized businesses. Schwartz, the chief operating officer for the company, was charged Monday with conspiracy to commit wire fraud and securities fraud. Steven Schwartz, 76, of Delray Beach, was a director and consultant for 1 Global Capital LLC, helping run the $287 million operation that helped support the lavish lifestyle of his boss, according to the U.S. A Hallandale Beach-based company ran a multimillion-dollar Ponzi-like scheme that preyed on over 3,400 investors across the country, and it has led to criminal charges against several employees, authorities say.
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