Two south Florida securities lawyers and the former Chief Operating Officer of 1 Global Capital LLC (“1 Global”) were sentenced for their roles in a sprawling fraud scheme that affected more than 3,600 investors in 42 states.
Andrew Dale Ledbetter, 79, of Fort Lauderdale, Florida, pled guilty to a 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. 20-CR-60103), and was sentenced today to 60 months in prison by U.S. District Judge Roy K. Altman.
Ledbetter was also ordered to pay over $148,976,248 million in restitution to the victims of the scheme.
Steven Allen Schwartz, 76, of Delray Beach, Florida, pled guilty to a 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. 20-CR-60003), and on July 9, 2021, U.S. District Court Judge Roy K. Altman sentenced Schwartz to a term of imprisonment of 24 months.
Schwartz was also ordered to pay over $36 million in restitution to the victims of the scheme.
Jan Douglas Atlas, 76, of Fort Lauderdale, Florida, pled guilty to a 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. 19-CR-60258), and on August 20, 2021, U.S. District Court Judge Roy K. Altman sentenced Atlas to a term of imprisonment of 8 months. Atlas was also ordered to pay over $29 million in restitution to the victims of the scheme.
According to court documents, 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 was a director and consultant at 1 Global, and also held out as a Chief Operating Officer in the company’s marketing materials.
Ledbetter was an attorney licensed in the State of Florida who had an of counsel position at Law Firm #1 and acted in a fundraising capacity at 1 Global beginning in or around 2015. Atlas was a partner at Law Firm #1 and acted as outside counsel for 1 Global.
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 Atlas 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.
At the request of 1 Global’s principals, Atlas authored two opinion letters in 2016 containing false information that Atlas allegedly 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). Ledbetter used and relied on Atlas’s opinion letters to continue to raise money illegally, in numerous pitches and communications to investment advisors and investors.
According to court documents, 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. Atlas received approximately $627,000 from Ledbetter’s commissions.
Neither attorney disclosed these commissions to Law Firm #1. 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, without disclosing his extravagant commissions.
In addition, in order to attract investments, Individual #1 (the de facto owner of 1 Global), Schwartz, Ledbetter, 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.
Juan Antonio Gonzalez, Acting United States Attorney, Southern District of Florida, George L. Piro, Special Agent in Charge, Federal Bureau of Investigation (“FBI”) Miami Field Office, Matthew D. Line, Special Acting 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.
FBI Miami, IRS-CI, Miami Field Office, and FDIC-OIG investigated the case. This case is being prosecuted by Assistant U.S. Attorney Elizabeth Young. Assistant U.S. Attorney Nicole Grosnoff is handling asset forfeiture related to the matter.
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