Securities Lawyers Blog
The attorneys at Gana Weinstein LLP are looking into potential actions to help investors ensnared in the 1st Global Capital LLC (1st Global Capital) investment fraud scheme. According to the Kansas City Star 160 victims of the 1st Global Capital resided in the Kansas City area. It appears that many of the victims I the Kansas City area were brought to 1st Global by Matthew Walker – CEO of Overland Park-based Pinnacle Plus Financial (Pinnacle Plus) and other affiliated businesses. Investors who invested through Walker and Pinnacle Plus have stated that they were told 1st Global Capital was essentially a sure thing and a secure investment.
Emails and other documents released by the SEC show Pinnacle Plus soliciting numerous investors and the involvement of other Pinnacle Plus staff and advisors including Kenny Riewerts.
As revealed in court documents and the complaint filed by The Securities and Exchange Commission’s (SEC) – 1st Global Capital engaged in a four year unregistered securities offering overseen by Carl Ruderman (Ruderman) – also charged. The SEC has alleged that more than 3,400 investors nationwide have been caught in the company’s $287 million fraud.
As in many frauds, the SEC alleged that 1st Global Capital used substantial investor funds for purposes other than the cash advances including misappropriated at least $35 million of investor money from which at least $28 million went directly to Ruderman and other entities he owned or controlled. Other alleged illegitimate uses include paying operating expenses and purchasing already-distressed, longterm credit card debt. As a result, by October 2017 1st Global Capital experienced a shortage of investor funds of $23 million which increased to about $50 million by June 30, 2018.
After the writing was on the wall Ruderman resigned from 1st Global Capital in July after the company declared bankruptcy.
Our firm is investigating advisors who recommended 1st Global Capital to their clients. Under the securities laws financial advisors must conduct due diligence and have a reasonable basis for their investment recommendations. Common due diligence looks into the investment’s properties including its benefits, risks, tax consequences, the issuer, the likelihood of success or failure of the investment, and other relevant factors. When dealing with alternative investments and private equity deals due diligence can be more challenging but firms are responsible to meet those heightened challenges prior to recommending the investment to its clients.
Investors who have suffered losses are encouraged to contact us at (800) 810-4262 for consultation. The attorneys at Gana LLP are experienced in representing investors in cases of financial advisors failing to conduct proper due diligence on investments. Our consultations are free of charge and the firm is only compensated if you recover.