Aventura CEO’s sentence in ripoff of 3,400 investors: 1 year per each $50 million stolen

Miami Herald (FL)

Over five years after the 1 Global Capital bankruptcy ended a scam that fraudulently raised $285.5 million from more than 3,400 investors, the Aventura-based kingpin of the scheme learned his probable prison sentence:

Five years or one year for every $57,119,906 that the 1 Global gang ripped off under Carl Ruderman’s direction.

Ruderman, indicted on July on wire fraud, conspiracy to commit wire and mail fraud and conspiracy to commit securities fraud, pleaded guilty Thursday to that last charge. The plea agreement between the 82-year-old Ruderman, represented by Marcus Neiman & Rashbaum’s Daniel Rashbaum, and the U.S. Department of Justice says they’ve agreed to a five-year sentence. The Justice Department says Ruderman’s also agreed to a $250 million cash forfeiture.

If approved by the court, Ruderman would get no more prison time than 1 Global’s CFO, Alan Heide, and Fort Lauderdale attorney Alan Ledbetter, each of whom got five years for their parts in the fraud. Delray Beach’s Steve Schwartz, the company chief operating officer, got a two-year sentence. Fort Lauderdale attorney Jan Atlas got eight months for authoring a legal opinion he knew was a lie, stating that what 1 Global offered investors didn’t count as a security.

A spokesperson for the U.S. Attorney’s office said it can’t comment on plea negotiations.

Ruderman’s cash forfeiture does exceed the restitution and forfeiture required of each of the other individuals. On the civil side, in 2019, the Securities and Exchange Commission hit Ruderman with a $15 million civil penalty and demanded he drop 50% of the equity he had in the five-bedroom, 7 1/2-bathroom Bella Vista North condominium he owned.

According to realtor.com, Ruderman listed the condo for $7.85 million. County property records say he sold it in February 2022 for $5.5 million.

One database says Ruderman currently rents a three-bedroom, four-bathroom, 3,256-square foot condominium in Aventura.

READ MORE: Two people sentenced in MJ Capital Funding fraud

Carl Ruderman and the 1 Global Capital fraud

Similar to the MJ Capital Funding fraud, the 1 Global Capital fraud involved a Broward-based business taking investor money under the guise of using it for short term, high-interest loans to businesses. Getting paid the principal and interest from these “merchant cash advances” would keep 1 Global rolling. 1 Global Capital was registered with the state on June 7, 2013.

Ruderman’s guilty plea admits he and his fellow con men lied to investors “as to the performance and profitability of 1 Global’s business, including claims that 1 Global’s past profits had been between 18% and 20%,” Ruderman’s admission states. “[Ruderman] and others working at his instruction also created portfolio statements provided to investors which falsely inflated 1 Global’s past returns on investments.”

Investors got a falsely deflated number of businesses who were defaulting on the loan payments. Also, past, present and potential investors were told that 1 Global’s financial statements had withstood auditing by “at least two” certified public accounting firms. This, too, was a lie, by the margin of “at least two.” Nobody audited 1 Global’s numbers.

Meanwhile, Ruderman began raiding the 1 Global piggy bank. Investor money that hadn’t been used for loans were called “cash not yet deployed” or “cash not deployed” funds.

“Over time, the difference between the amount of money 1 Global raised form investors and the amount of money 1 Global actually loaned out via MCAs grew to tens of millions of dollars,” Ruderman’s guilty plea says. “[Ruderman] misappropriated millions of dollars of existing 1 Global funds frequently from the “cash not yet deployed” for his benefit and the benefit of his family without investors knowledge or consent.”

Ruderman used the money for “credit card payments, vacation travel, insurance payments for an art collection and valuable jewelry, drivers, nannies, housekeepers, mortgage payments for his house, tuition, and payments for a luxury car driven by his wife, often funneling the money through a bank account in the name of Pay Now Direct or describing the payments as “an annuity” from 1 Global.”

Ruderman’s guilty plea says he also moved $5.3 million of 1 Global investor money to a payday lending business, $ 1 million to a cryptocurrency company; about $19.6 million to a cosmetic dentist financing company; sent $4 million to a trust in his family’s name; sent $200,000 to accounts in his name and $5.6 million to Pay Now Direct.

State records say Pay Now Direct was registered by 1 Global’s director of operations on April 1, 2015 with offices a few doors down from 1 Global in the commercial building at 1250 E. Hallandale Beach Blvd.

Pay Now Direct is now in the hands of receiver Jon Sale of Nelson Mullins Riley & Scarborough. 1 Global is “1 GC Collections” and under the control of James Cassel of Cassel Salpeter, the liquidating trustee.

“During the course of the scheme, [Ruderman] and others raised a total of$285,599,532 from investors as a result of the false and fraudulent statements and the sales of unregistered securities,” Ruderman’s guilty plea ends.