Marquardt Law Office LLC previously reported that financial advisors sold investments in 1 Global Capital and 1 West Capital to investors nationwide. These companies are bankrupt and under investigation for fraud.
According to the Kansas City Star, Kansas City area advisors were among the sellers of 1 Global Capital and 1 West Capital investments. The City Star reported that advisors at Overland Park based Pinnacle Plus companies sold them to many Kansas and Missouri residents. Pinnacle companies include Pinnacle Plus Wealth and Pinnacle Plus Financial. Pinnacle Plus Wealth employs investment advisors and Pinnacle Plus Financial employs insurance agents.
If you purchased investments in either 1 Global or 1 West from an advisor or agent working for a Pinnacle or another company, you may be able to recover your losses. Call Marquardt Law Office LLC at (312) 945-6065 or send the firm a message to receive a free consultation about your recovery options.
Investments Offered by 1 Global Capital and 1 West Capital
1 Global Capital and 1 West Capital were lenders providing cash advances to small businesses. They raised money for the advances by selling investors promissory notes documented by a “memorandum of indebtedness” or loan agreement.
The notes made investors unsecured lenders, exposing them to defaults. Typically, the notes matured in nine-months, then repaid the principal plus interest of 10%, a high rate for a short-term investment.
Financial advisors throughout the nation recommended and sold the notes to possibly thousands of investors. The Kansas City Star reported up to 250 investors had Kansas or Missouri addresses, with about 160 in the Kansas City area. Pinnacle advisors reportedly made 2.25% commission on the notes.
Fraud Investigations and Bankruptcy
On July 27, 2018, the companies filed Chapter 11 Bankruptcy, then stopped repaying investors for the promissory notes. According to bankruptcy records, 1 Global has unsecured creditor claims of $283 million, mostly from investors or their IRAs.
Court records state the companies filed bankruptcy after investigations prevented them from raising additional investor funds, causing a liquidity crisis. The Securities and Exchange Commission (SEC) and U.S. Attorney’s Office in southern Florida are investigating whether they operated a $283 million fraud.
The SEC is investigating whether the companies committed fraud in the offer and sale of the notes or violated laws by failing to either register them as securities or apply for registration exemptions. The SEC is also investigating allegations unregistered brokers sold the notes.
Investors Options to Recover Losses
Financial professionals, like Pinnacle advisors and insurance agents, must perform due diligence before selling investments. Moreover, under Kansas law, advisors generally must be registered as securities brokers to collect commission for selling securities. The Kansas City Star reported Pinnacle advisors were not registered brokers, yet, collected commission for selling the notes.
Additionally, financial advisors are strictly forbidden from selling securities that are not appropriately registered or exempted with the SEC or state securities regulators. Unregistered, non-exempt securities carry huge red flags, escape detection from securities regulators, and frequenly involve fraud.
Investors can pursue private court litigation or arbitration claims to recover losses realized when their financial advisors violate their duties. This gives investors the ability to pursue recoveries independent of bankruptcy or government actions, which can provide recoveries above and beyond any distributions they might receive from bankruptcy claims or the SEC.
If you or someone you know lost money to 1 Global Capital, 1 West Capital, or other risky investments, call Marquardt Law Office LLC at (312) 945-6065 or send the firm a message to schedule a free consultation with an attorney about options to recover the losses.
Marquardt Law Office LLC is a securities law firm in Chicago, Illinois that represents clients nationwide. Investors are represented on a contingency fee basis, which means the firm does not receive a fee unless and until it recovers money for an investor.
UPDATE: The Securities and Exchange Commission has filed charges against 1 Global Capital, its CEO Carl Ruderman, 1 West Capital, and others. Click here to read more.
