A former Fort Lauderdale attorney raised $100 million of a $322 million scam, feds say
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The 1 Global Capital Fraud
What was sold as a boost for small businesses and an opportunity for mom-and-pop investors turned out to be a massive scam involving financial thugs throughout the Miami-Fort Lauderdale metropolitan area.
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Criminal charges filed Tuesday in federal court say former Fort Lauderdale attorney Andrew Ledbetter fraudulently raised $100 million in the $322 million fraud perpetrated by Hallandale Beach company 1 Global Capital.
And Ledbetter’s a “former” attorney because he gave up his law license knowing he’d enter a plea bargain once these charges were filed, according to Florida Bar documents.
Ledbetter, 78, got hit with securities fraud and conspiracy to commit wire fraud charges in criminal court, while the Securities and Exchange Commission filed fraud charges against him in civil court.
The SEC and Justice Department did the same double-team on 1 Global’s Chief Financial Officer, Alan Heide, in August 2019. Prosecutors got Heide time — he’s in federal prison until December 2024 for conspiracy to commit securities fraud — and requested over $70 million in restitution.
Heide is one of three men already convicted in a fraud that burned over 3,600 investors. Awaiting sentencing are former 1 Global director Steven Schwartz, who pleaded guilty to the same charges Ledbetter’s facing; and former outside counsel Jan Atlas, who pleaded guilty to one count of securities fraud.
As for Ledbetter, his defense attorney, Jeffrey Sloman, had no comment on the charges when reached Tuesday by the Miami Herald. But in a June petition to the Florida Supreme Court for Ledbetter’s disciplinary revocation, Sloman wrote “Petitioner participated in activities which were part of a $322 million unregistered securities offering involving commercial lender 1 Global Capital LLC.”
Getting set to take the charges
“Disciplinary revocation” could be described as a five-year (at least) disbarment. If granted, it voids current or coming Bar discipline cases against the attorney. But the attorney’s law license also goes away, for at least five years. Also, the attorney must still deal with any criminal or civil charges from his/her actions.
The Bar started a discipline case against Ledbetter, the petition said, after hearing his “participation in the (1 Global) conspiracy has resulted in impending formal criminal charges to be filed by the U.S. Attorney’s Office for the Southern District of Florida, and as a result, (Ledbetter) will be executing a plea agreement with USAO/SDFL.
“(Ledbetter) will also be executing a consent judgment with the U.S. Securities and Exchange Commission as formal charges are impending by the SEC.”
Ledbetter’s disciplinary revocation was granted and began July 23. Atlas, a lawyer at Kopelowitz Ostrow with Ledbetter, was granted disciplinary revocation in January.
Ledbetter and 1 Global Capital
One Global Capital sold itself to investors as a lender of high-interest, short-term cash advance loans to businesses, akin to payday lender Amscot but for small businesses. Investors would get principal and some of the interest when businesses repaid 1 Global.
But investors didn’t know that 1 Global promised fat commissions to investment advisers and middlemen, such as Ledbetter.
According to Atlas’ admission of guilt, investors, investment advisers and regulators questioned whether 1 Global was giving investors a security, thus violating federal or state securities law. As a corporate attorney, Atlas knew that if 1 Global was selling a security, it couldn’t “raise funds from retail investors and...continue to operate without substantial additional expenses and reporting requirements.”
Also, CEO Carl Ruderman, “wanted legal cover...to continue to operate without adhering to the registration requirements of federal and state securities laws.”
So, Atlas provided that cover in the form of two legal opinion letters in 2016 that Atlas knew contained “false and misleading statements.”
Court documents filed Tuesday say Ledbetter knew this and even discussed with Atlas how to skillfully lie. Then, he took those opinions to investors and advisers, “and failed to disclose material risk factors, knowing that 1 Global’s investors would rely on his false and misleading statements.”
In addition, Ledbetter is accused of telling investors that 1 Global regularly opened its books to auditors. Heide admitted in his guilty plea that 1 Global never was audited.
Ledbetter raised $100 million, the charges say, and he earned $3 million from commissions and legal fees.
This story was originally published September 30, 2020 at 8:02 AM.
