SEC Charges South Florida Businessman with Facilitating Brother-In-Law's Misappropriation of Millions from Investors
Litigation Release No. 24707 / January 6, 2020
Securities and Exchange Commission v. Steven A. Schwartz, No. 9:20-cv-80008-DMM (S.D. Fla., filed January 6, 2020)
The Securities and Exchange Commission today charged a South Florida businessman with aiding and abetting the misappropriation of millions of dollars of investor funds from 1 Global Capital, LLC, a now-bankrupt Florida-based merchant cash advance company. The Commission previously charged 1 Global and its former founder, chairman, and CEO, Carl Ruderman, with misappropriating the funds as part of a $322 million fraud perpetrated on 3,600 retail investors in 42 states.
According to the SEC's complaint, Steven A. Schwartz, Ruderman's brother-in-law, served as 1 Global's director and, according to 1 Global's marketing materials, as its chief operating officer. The complaint further alleges that Schwartz became trustee of a Ruderman family trust in June 2014, and that shortly afterwards, Ruderman had Schwartz execute an agreement conveying ownership of 1 Global to the trust. As alleged, until 1 Global declared bankruptcy in July 2018, Schwartz allowed Ruderman to use the trust to misappropriate several million dollars in investor funds to pay for Ruderman's luxury lifestyle.
In a parallel action, the U.S. Attorney's Office for the Southern District of Florida today announced criminal charges against Schwartz.
The SEC's complaint, filed in federal district court in Miami, charges Schwartz with aiding and abetting 1 Global and Ruderman's violations of the antifraud provisions of Sections 17(a)(1) and (3) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rules 10b-5(a) and (c) thereunder. The SEC seeks a court-ordered injunction, a civil penalty, and an officer-and-director bar.
The SEC's continuing investigation is being conducted by Gary Miller in the Miami Regional Office and supervised by Elisha L. Frank and Glenn S. Gordon. The SEC's litigation is being led by Robert K. Levenson. The SEC appreciates the assistance of the U.S. Attorney's Office for the Southern District of Florida, the Federal Bureau of Investigation, and the Florida Office of Financial Regulation.