South Florida Lawyer Charged with Fraud Related to 1 Global Capital Investment Scheme

A Florida attorney and former outside counsel for 1 Global Capital LLC (1 Global), has been charged today with conspiring to commit wire fraud and securities fraud in connection with an investment fraud scheme that as alleged impacted more than 3,600 investors in 42 different states, and involved him personally and fraudulently raising more than $100 million from investors. 

Andrew Dale Ledbetter, 78, of Fort Lauderdale, Florida, is charged in an information with conspiracy to commit wire fraud and securities fraud.  The case is assigned to U.S. District Judge Darrin P. Gayles of the Southern District of Florida. 

According to the allegations in the information, 1 Global was a commercial lending business based in Hallandale Beach, Florida, that made the equivalent of “pay day” loans with high interest rates to small businesses, termed merchant cash advance loans (MCAs).  To fund these loans, 1 Global obtained funds from investors nationwide, offering short-term investment contracts that promised to “place” the investors’ money onto MCAs.  The investors would supposedly receive a proportionate share of the principal and interest payments as the loans were repaid.  1 Global raised money using investment advisors and other intermediaries, with promises to these advisors of significant commissions.  In many cases, according to court documents, the commissions were not fully disclosed to investors.  Ledbetter was an attorney licensed in the State of Florida who worked at Law Firm #1 and acted in a fundraising capacity at 1 Global beginning in or around 2015.

Substantial questions arose during the operation of the business as to whether 1 Global was offering or selling a security and whether the investment offering was required to be registered with the U.S. Securities and Exchange Commission.  These questions were raised by investors, investment advisors, and regulators.  Ledbetter and Jan Douglas Atlas, a partner at Law Firm #1 who also acted as outside counsel for 1 Global, knew that if 1 Global’s investment offering were determined to be a security, it would undermine the ability of 1 Global to raise funds from retail investors and to continue to operate without substantial additional expenses and reporting requirements.  Such a classification would undermine the profits and fees that Ledbetter and other principals at 1 Global would be able to obtain from 1 Global’s operations.

The information alleges that at the request of 1 Global’s principals, Atlas authored two opinion letters in 2016 containing false information that Atlas knew would be used by 1 Global to operate the business unlawfully.  The opinion letters falsely described the duration of the investment, among other things, omitting the automatic renewal aspect and that the investment was being targeted toward retail, non-sophisticated investors (such as IRA account holders).   According to the information, Ledbetter used and relied on Atlas’s opinion letters to continue to raise money illegally, knowing that the opinion letters falsely described the investment opportunity and were thus misleading.  Ledbetter cited and used the false letters in numerous pitches and communications to investment advisors and investors.

According to the information, Ledbetter was personally involved in raising more than $100 million in investor funds that went to 1 Global, through his own pitches as well as through investment advisors he attracted to 1 Global.  Over the years, Ledbetter received approximately $3 million from 1 Global, the majority of which was for commissions.  Ledbetter routinely held himself out to investors and investment advisers as outside counsel to 1 Global, and also personally vouched for 1 Global in pitches and marketing materials.  However, Ledbetter did not disclose the commissions that he received from 1 Global to investors, according to the information.  Ledbetter also made misrepresentations to investors regarding the involvement of an outside auditing firm. 

A number of individuals have entered guilty pleas in connection with the 1 Global fraud scheme.  Alan G. Heide, the former 1 Global chief financial officer, was charged via information and sentenced to 60 months, in Case No. 19-60231-CR-RKA.  Atlas, former outside counsel for 1 Global, was charged via information, pleaded guilty, and is awaiting sentencing in Case No. 19-60258-RKA, currently scheduled for Nov. 17, 2020.  Steven Schwartz, a former director of 1 Global, was charged via information, pleaded guilty, and is awaiting sentencing in Case No. 20-60003-RKA, currently scheduled for Nov. 13, 2020.  Information about the related cases can be found here:  https://www.justice.gov/criminal-vns/case/1Global-Capital.

In connection with a parallel civil enforcement action, the SEC today announced the filing of civil fraud charges against Ledbetter.  In related cases, the SEC previously has filed civil fraud actions, SEC v. 1 Global Capital LLC and Carl C. Ruderman, Case No. 18-61991-CV-BB (Sothern District of Florida) SEC v. Alan G. Heide, Case No. 19-62047-CV-FAM (Southern District of Florida), and SEC v. Jan Atlas, Case No. 19-62303-WPD (Southern District of Florida).  The bankruptcy case, In re: 1 Global Capital LLC, et al., No. 18-19121-RBR (Southern District of Florida), remains pending.

A criminal information is merely an accusation.  A defendant is presumed innocent until proven guilty beyond a reasonable doubt in a court of law.

This case was investigated by the FBI’s Miami Field Office, IRS-CI, and FDIC-OIG.  Deputy Chief Jerrob Duffy, Principal Assistant Deputy Chief Lisa H. Miller, and Assistant Chief L. Rush Atkinson of the Criminal Division’s Fraud Section, and Special Assistant U.S. Attorney Elizabeth Young are prosecuting the case.  Assistant U.S. Attorney Nicole Grosnoff is handling asset forfeiture related to the matter.  The SEC’s Miami Regional Office is also thanked for their contributions. 

The year 2020 marks the 150th anniversary of the Department of Justice.  Learn more about the history of our agency at www.Justice.gov/Celebrating150Years.

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    The Internal Revenue Service's (IRS) mission and strategic plan state expectations for IRS to improve the taxpayer experience and services it provides. However, IRS and its divisions that manage programs serving the largest taxpayer groups—the Wage and Investment (W&I) and the Small Business/Self-Employed (SB/SE) divisions—did not have performance goals to specify the desired improvements. For example, W&I aligned its service programs to IRS's strategic objectives for taxpayer services that state broad types of management activities such as monitoring the taxpayer experience and addressing issues. However, it did not have performance goals that specify outcomes to improve the taxpayer experience, such as reducing taxpayer wait times for telephone assistance. Because IRS and these two divisions do not have performance goals for improving the taxpayer experience, IRS does not have related performance measures. IRS has many performance measures—including more than 80 for W&I and SB/SE—for assessing the services it provides, such as related to timeliness and accuracy of information provided to taxpayers. However, these existing measures do not assess improvements to the taxpayer experience, such as whether tax processes were simpler or specific services met taxpayers' needs. The division-level measures also lack targets for improving the taxpayer experience. Further, the existing measures do not capture all of the key factors identified in Office of Management and Budget guidance for how customers experience federal services, including customer satisfaction and how easy it was to receive the services. As a result, IRS does not have complete information about how well it is satisfying taxpayers and improving their experiences. IRS analyzes its taxpayer service measures to compare performance with targets but the analyses provide few insights and no recommendations to improve the taxpayer experience, such as to provide more timely tax filing guidance. Also, IRS does not have a process to use service measures to guide decisions on allocating resources to improve the taxpayer experience. As a result, IRS is challenged to use performance data to balance resource allocation for efforts to improve the taxpayer experience compared with other IRS efforts. Finally, IRS reports limited information to the public about performance related to the taxpayer experience for transparency and accountability. The table below summarizes important management practices that IRS did not fully follow to provide taxpayers a top-quality service experience. According to IRS, providing top-quality service is a critical part of its mission to help taxpayers understand and meet their tax responsibilities. Congress, the National Taxpayer Advocate, and the administration have recognized the importance of improving how taxpayers experience IRS services. Setting goals and objectives with related performance measures and targets are important tools to focus an agency's activities on achieving mission results. GAO was asked to review IRS's customer service performance measures. This report assesses IRS's (1) goals and objectives to improve the taxpayer experience; (2) performance measures to support improved experiences; and (3) use of performance information to improve the experience, allocate resources, and report performance. To assess IRS's goals, measures, targets, and use of them, GAO compared IRS's practices to key practices in results-oriented management. GAO is making 7 recommendations, including that IRS identify performance goals, measures, and targets; as well as analyze performance; develop processes to make decisions on resources needed; and report performance on improving the taxpayer experience. IRS indicated that it generally agreed with the recommendations, but that details around their implementation were under consideration and would be provided at a later date. For more information, contact Jessica Lucas-Judy at (202) 512-9110 or LucasJudyJ@gao.gov.
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  • The Scripps Research Institute To Pay $10 Million To Settle False Claims Act Allegations Related To Mischarging NIH-Sponsored Research Grants
    In Crime News
    The Scripps Research Institute (TSRI) has agreed to pay the U.S. $10 million to settle claims that it improperly charged NIH-funded research grants for time spent by researchers on non-grant related activities such as developing, preparing, and writing new grant applications, teaching, and engaging in other administrative activities, the Department of Justice announced today. 
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  • The United States Leads the Fight Against Foreign Bribery and Transnational Corruption
    In Crime Control and Security News
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  • U.S. Seizes Virtual Currencies Valued at $24 Million Assisting Brazil in Major Internet Fraud Investigation
    In Crime News
    The Department of Justice announced today that it has seized virtual currency worth an estimated $24 million on behalf of the Brazilian government.
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    In Crime News
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    In Travel
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  • Eight Individuals Charged With Conspiring to Act as Illegal Agents of the People’s Republic of China
    In Crime News
    A complaint and arrest warrants were unsealed today in federal court in Brooklyn charging eight defendants with conspiring to act in the United States as illegal agents of the People’s Republic of China (PRC).  Six defendants also face related charges of conspiring to commit interstate and international stalking.  The defendants, allegedly acting at the direction and under the control of PRC government officials, conducted surveillance of and engaged in a campaign to harass, stalk, and coerce certain residents of the United States to return to the PRC as part of a global, concerted, and extralegal repatriation effort known as “Operation Fox Hunt.” 
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  • On the UN Human Rights Council’s Embrace of Authoritarian Regimes
    In Crime Control and Security News
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  • Five Charged in Connection with COVID-Relief Fraud Scheme
    In Crime News
    Five individuals were charged in an indictment unsealed today for their alleged participation in a scheme to file fraudulent loan applications seeking more than $1.1 million in forgivable Paycheck Protection Program (PPP) loans guaranteed by the Small Business Administration (SBA) under the Coronavirus Aid, Relief, and Economic Security (CARES) Act, announced Acting Assistant Attorney General Brian C. Rabbitt of the Justice Department’s Criminal Division and U.S. Attorney Matthew D. Krueger of the Eastern District of Wisconsin.
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  • Two Individuals Charged with Bribery Related to Iraq Contracts
    In Crime News
    Two individuals have been charged with bribery offenses in connection with Department of Defense contracts as part of the Fraud Section’s ongoing efforts to combat corruption and fraud in contracting on U.S. military installations overseas.
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    In Crime Control and Security News
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    In Crime Control and Security News
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  • Federal Prison Industries: Actions Needed to Evaluate Program Effectiveness
    In U.S GAO News
    The First Step Act of 2018 made new, nonfederal markets and potential buyers available to Federal Prison Industries (FPI), a government corporation organized within the Bureau of Prisons (BOP); however, various challenges could limit FPI's ability to sell to customers in these markets. FPI makes apparel, personal protective equipment, and furniture, among other products. FPI may now sell to the District of Columbia government, including, for example, to its firefighters; nonfederal, governmental entities for use in correctional settings or in response to a disaster or emergency, such as local jails and first responders; and nonprofit organizations, such as universities. However, a lack of information makes it difficult to estimate the dollar value of these new markets. The following figure depicts the new markets made available to FPI. New Markets for Federal Prison Industries' Products under the First Step Act Data on the size of most of the new markets are very limited. For example, GAO found no existing national information to help estimate the size and scope of relevant spending by nonfederal entities on disaster relief and emergencies. Also, challenges related to state and local government operations, for example, could limit FPI's ability to sell products in the new markets made available under the First Step Act. Specifically, state-level prison industries and in-state vendors often have preferential access to many of the procurement markets now available to FPI. FPI and the private sector share some similar operating requirements, such as those related to keeping workers safe. They also face different requirements and business practices, such as those related to the legal framework, security, and costs. Available data indicate that buyers are generally satisfied with the delivery and quality of FPI products. GAO analyzed 231 performance reports on FPI in the federal government's database for contractor performance, as of August 2019. Customers rated FPI's performance in the delivery schedule and quality categories as exceptional, very good, or satisfactory on about 80 and 90 percent, respectively, of performance reports. There were too few ratings on cost to analyze them. FPI aims to assist inmates in their reentry into society by providing marketable job skills, but BOP has not reviewed FPI's impact on recidivism in over 2 decades. BOP relies on outdated studies that assessed the impact of FPI on inmates released in the 1980s. In January 2020, BOP cited a 1992 study as the basis for the Attorney General's designation of FPI as an Evidence-Based Recidivism Reduction Program under the First Step Act 0f 2018 . BOP made a plan to evaluate FPI but the plan's timeline passed and the BOP has not set a new one. Without an updated plan for evaluating FPI, BOP continues to rely on outdated evaluations of FPI and has limited information about FPI's effectiveness amidst changes to its inmate population Additionally, while BOP has reported some descriptive statistics on recidivism rates, it has not developed a goal. Without a timeline for evaluation and a goal for reducing recidivism, BOP's ability to assess the effectiveness of FPI will be limited. FPI is a government owned corporation that, as a national reentry program, manages, trains, and rehabilitates inmates through employment. FPI sells inmate-produced goods and services primarily to federal government agencies. The First Step Act of 2018 authorized FPI to sell its products to new markets. A provision in the First Step Act of 2018 required GAO to review various aspects of FPI. This report addresses (1) the potential size and scope of the additional markets made available to FPI under the First Step Act; (2) the similarities and differences in selected requirements and business practices of FPI and private sector sellers of products and services; (3) customers' satisfaction with FPI regarding quality, price, and timely delivery of its products and services; and (4) the extent to which BOP has evaluated the effectiveness of FPI and other vocational programs in reducing recidivism and the results. GAO examined recidivism studies and data, analyzed performance data, conducted fieldwork at four FPI facilities selected based on security level and type of products produced, met with industry associations, and interviewed agency officials and employed inmates. GAO is making two recommendations: (1) BOP should update its evaluation plan for FPI by setting a new timeline for evaluation and (2) BOP should set a goal to reduce recidivism. DOJ concurred with the recommendations. For more information, contact Gretta L. Goodwin at (202) 512-8777 or goodwing@gao.gov or William T. Woods at (202) 512-4841 or woodsw@gao.gov.
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  • Senior State Department Officials Briefing to Traveling Press
    In Crime Control and Security News
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