As we discussed in a recent blog post, a $283 million Chapter 11 bankruptcy filing on July 27, 2018, by the Hallandale Beach, FL firm 1 Global Capital (a/k/a 1st Global Capital, or 1GC) has negatively impacted investors nationwide. Unfortunately, many retail investors committed their hard-earned money, in many instances their retirement funds, into so-called 1GC “memorandums of indebtedness” which were also sometimes referred to as First Global Capital Notes (“Notes”). Publicly available records indicate there are more than 4,000 1GC accounts across the country, sold by many advisors in various states.
Formed approximately 5 years ago, 1GC was purportedly in the business of financing small business by providing capital to a range of businesses including restaurants, construction companies, manufacturing operations, and healthcare companies. 1GC issued its Notes to retail investors, often referred to in the contract as “lenders” or in other instances as “creditors.” In exchange, these lenders or creditors invested in supposedly safe, short-term deals that would pay out around 7% in interest at the end of the term (e.g., 9-month term).
Upon information and belief, a number of 1GC investors were steered into these Notes by advisors. Advisors who have recommended Notes reportedly may include Matthew Walker or others working for his Overland Park, Kansas-based group of Pinnacle Plus companies.
THE FOREGOING PARAGRAPH IS BASED ON PUBLICLY REPORTED INFORMATION GATHERED BY OUR FIRM, AND HAS NOT BEEN PROVEN IN ANY LEGAL TRIBUNAL, NOR IS THIS ADVISOR THE SUBJECT OF ANY PENDING LEGAL CLAIMS OR ARBITRATIONS INVOLVING 1ST GLOBAL, TO OUR KNOWLEDGE. WE DO NOT CURRENTLY REPRESENT ANY INVESTORS WITH CLAIMS AGAINST THIS ADVISOR.
Investors who invested in any 1st Global Capital “memorandums of indebtedness” or Notes, or direct merchant cash advances upon the recommendation of a financial advisor, may have viable legal claims if the brokerage firm or Registered Investment Advisor (“RIA”) failed to perform adequate due diligence before recommending the investment. Many agents who offered 1st Global Capital’s memorandums of indebtedness were not registered as brokers, though some were registered as investment adviser representatives (IARs).
Bankruptcy court filings show that there are more than 4,000 1st Global Capital accounts nationwide, spread through various states including Florida, Illinois, Tennessee, Missouri and Kansas, among others. Many investors placed money from individual retirement accounts (IRAs) with First Global, including 11 IRAs each owed between $621,000 and $922,000, according to bankruptcy court papers.
A court filing by 1st Global Capital blamed liquidity problems for its bankruptcy, and stated that investigations by the Securities and Exchange Commission and the U.S. attorney’s office in southern Florida into “alleged possible securities law violations” led to 1st Global’s “acute liquidity crisis.”
Investors who wish to discuss a possible claim concerning 1st Global investments may contact Law Office of Christopher J. Gray, P.C. at (866) 966-9598 or newcases@investorlawyers.net for a no-cost, confidential consultation.