MIAMI (AP) — A Florida executive whose family business once owned Playgirl magazine has pleaded guilty to conspiracy to commit securities fraud for misleading investors in another of his companies — one that made high-interest loans to small businesses.
Carl R. Ruderman, 82, was chairman and chief executive officer of 1 Global Capital LLC, a commercial lending company that filed for bankruptcy in July 2018. Federal authorities said he took part in a $250 million scheme that affected more than 3,400 investors in 42 states.
Ruderman pleaded guilty Thursday in federal court in Miami. Court records show sentencing is set for Jan. 3, and he faces up to five years in prison and forfeiture of more than $250 million.
Ruderman admitted spending 1 Global investors’ money on credit card payments, vacation travel, drivers, nannies, housekeepers, tuition, mortgage payments, luxury car payments and insurance payments for his art collection and jewelry, the Justice Department said in a news release Friday
Ruderman also admitted diverting investors’ money to businesses benefitting him and his family, without investors’ knowledge, the department said.
The company — based in Hallandale Beach, Florida — made loans to small businesses, called merchant cash advance loans. Prosecutors compared those to payday loans.
The Justice Department said Ruderman admitted he and others made false representations to investors and potential investors about the profitability of 1 Global. Investors were falsely told the company had been audited by a public accounting firm, that investors’ money would be spent on the merchant cash advance loans, and that people could expect double-digit returns on investments.
The Securities and Exchange Commission said in a 2018 complaint against Ruderman and 1 Global that the company collected money from investors, many of whom used retirement savings, from February 2014 to July 2018.
The SEC said 1 Global was formed in 2013 and owned by the Ruderman Family Trust. The SEC said the trust also owned other businesses, including Digi South, which “used to own Playgirl and other adult magazines.” Digi South used the same address as 1 Global and “received approximately $805,000 in investor funds from 1 Global for no consideration or legitimate services,” the SEC said.
Four of Ruderman’s co-conspirators previously pleaded guilty for their roles in the 1 Global fraud, the Justice Department said.
Alan G. Heide, 65, of Lake Worth, Florida, the former 1 Global chief financial officer, pleaded guilty in 2019 to one count of conspiracy to commit securities fraud. He was sentenced to five years in prison and ordered to pay more than $57 million in restitution.
Andrew Dale Ledbetter, 81, a lawyer from Fort Lauderdale, Florida, pleaded guilty in 2021 to conspiracy to commit wire fraud and securities fraud. He was sentenced to five years in prison and ordered to pay more than $148 million in restitution.
Steven Allen Schwartz, 78, of Delray Beach, Florida, a director and consultant at 1 Global, pleaded guilty in 2020 to conspiracy to commit wire fraud and securities fraud. He was sentenced to two years in prison and ordered to pay more than $36 million in restitution.
Jan Douglas Atlas, 78, of Fort Lauderdale, Florida, a lawyer, pleaded guilty in 2019 to conspiracy to commit wire fraud and securities fraud. He was sentenced to eight months in prison and ordered to pay more than $29 million in restitution.