The chief financial officer of lending business 1 Global Capital has been charged for fraudulently raising funds from retail investors by the Securities and Exchange Commission (SEC).
The regulator alleges that Alan Heide and the firm managed to get $322m (£265.7m, €290.1m) from 3,600 investors between 2014 and 2018.
The funds were supposed to be used as short-term cash advances to businesses but were instead redirected towards paying for operating expenses and to fund the chief executive officer’s, Carl Ruderman, lifestyle.
Ruderman had already been charged with fraud last year.
Fiddling with investors’ returns
According to the SEC, Heide overstated the value of investors’ accounts and falsely represented that the firm had an independent auditor which endorsed 1 Global’s way of calculating returns.
“Heide’s misrepresentations gave false comfort to investors, allowing them to be duped to invest in 1 Global’s securities,” said Eric Bustillo, director of the SEC’s Miami regional office.
“We allege that as 1 Global’s CFO, Heide played a significant role in 1 Global’s fraud by overstating the value of investors’ accounts and their rates of return and falsely representing the role of an auditor.”
He now faces charges of violation of the anti-fraud provisions of the federal securities laws.
Heide agreed to settle the charges without neither admitting or denying the regulator’s allegations.
He has also agreed to be subject to an injunction where the penalty’s sum will be decided by a court at a later date.
But the US Attorney’s office for the southern district of Florida has, separately, filed criminal charges against Heide.
