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SEC Charges Unregistered Brokers Who Sold $24M in 1 Global Securities

The charges are the latest in a string involving 1 Global Capital, which was charged in 2018 with defrauding thousands of retail clients.

A father and son were among four individuals charged by the Securities and Exchange Commission this week for acting as unregistered brokers and illegally selling at least $24 million in securities of 1 Global Capital, a cash advance company, to investors. 

The charges are the latest in the multi-year saga involving 1 Global, a South Florida-based company. In August 2018, the company and its former CEO were charged with allegedly defrauding at least 3,600 retail investors, many of whom were retirees, raising more than $320 million in illegal, unregistered securities between 2014 and July 2018.

1 Global told investors it provided short-term loans for small and medium-sized businesses as an alternative to conventional bank loans, funding their operations primarily with investors’ funds. 1 Global sought out unregistered sales agents to attract investors, with the first being Chris D. Dantin, who subsequently attracted 15 other agents to the company, including Chris A. Dantin, his father. The two are named in the SEC’s latest charge, along with David P. Ortiz and Andrew L. White, also unregistered brokers.

The Dantins co-signed a sales agreement in 2015, in which the younger Dantin received a 4% commission on direct sales, as well as additional percentages for renewals and on sales from agents he brought into the fold. 1 Global provided him with marketing materials, and during his time with the company, Chris D. Dantin sold more than $8 million in 1 Global securities, making more than $2 million in transaction-based sales commission. Neither he nor his father were ever registered as brokers.

1 Global sent investors statements each month that supposedly showed their accounts buoyed by interest payments. But investors didn’t immediately receive those payments, and 1 Global would only pay the interest when investors cashed out. According to the SEC, this created a situation where investors never received interest payments and would lose the principal investment, giving the firm and CEO Carl Ruderman the opportunity to misappropriate funds. Ruderman and the company spent investors’ funds on operations and other business transactions, as well as misappropriating at least $32 million for his own use or for companies in which he or his family had interests.

“This included money to help fund a family vacation to Greece, monthly payments for a Mercedes Benz, monthly American Express credit card payments, payments for Ruderman’s household staff, $4 million to his family trust, and $1 million to one of his sons to invest in cryptocurrency,” the complaint against the Dantins read.

1 Global allegedly told investors they’d use their funds for the short-term loans to businesses, that the monthly statements accurately captured an investment’s value, and that an independent audit firm concurred with how 1 Global calculated returns. But according to the complaint, the monthly account statements falsely illustrated the value of investors’ portfolios, and because Ruderman had taken funds for his own use, the statements overstated how much cash was available in 1 Global’s accounts by as much as $23 million to $50 million.

By the time 1 Global filed for bankruptcy in July 2018, many clients had lost the entirety of their investments, totaling hundreds of millions. In addition to charging 1 Global and Ruderman for defrauding investors, the Commission later charged a Tennessee-based unregistered broker and his firm for taking home more than $3.5 million in commissions for selling allegedly illegal securities from both Woodbridge Group and 1 Global to more than 630 investors over a two-year period.

Both the Dantins and White agreed to settlements with the SEC, including injunctions; Christopher D. Dantin agreed to a disgorgement of almost $1.3 million, prejudgment interest of $123,157, and a $100,000 civil penalty, while his father agreed to disgorgement of $22,818, a prejudgment interest of $2,403, and a $30,000 penalty. White agreed to a disgorgement of $129,672, prejudgment interest of $7,279, and a penalty of $30,000. The Commission is pursuing a jury trial for Ortiz, seeking an injunction, as well as disgorgement with interest and a civil penalty.

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