As we have discussed in several recent blog posts, on July 27, 2018, 1 Global Capital (a/k/a 1^st Global Capital) (hereinafter, “1GC”) filed for Chapter 11 bankruptcy protection in U.S. Bankruptcy Court for the Southern District of Florida. Formed about 5 years ago, 1GC was purportedly in the business of making short term merchant cash advances to a range of small businesses. In exchange for investor money, 1GC issued so-called “memorandums of indebtedness,” sometimes referred to as First Global Capital Notes (“Notes”), to numerous retail investors through a nationwide network of advisors and sales agents. Investors were promised a high-return, low-risk investment in supposedly safe, short-term deals.

Prior to 1GC’s bankruptcy filing, the SEC had “opened an investigation into the company’s activities related to alleged possible securities laws violations, including the alleged offer and sale of unregistered securities, the alleged sale of securities by unregistered brokers, and by the alleged commission of fraud in connection with the offer, purchase and sale of securities.” In the weeks following 1GC’s $283 million Chapter 11 filing, it has become apparent that numerous investors nationwide have been negatively impacted. As alleged by the SEC, 1GC “used a network of barred brokers, registered and unregistered advisers, and other sales agents – to whom they paid millions in commissions – to offer and sell unregistered securities to investors in no fewer than 25 states.”

Publicly available information indicates that numerous investors in the greater Kansas City, KS area have sustained losses in connection with investing in 1GC Notes. In particular, publicly available information suggests that Overland Park-based investment group Pinnacle Plus Wealth Management (a/k/a Pinnacle Financial) (“Pinnacle”), through its principal and Pinnacle employees / agents, may have recommended investments in 1GC Notes to retail investors. In fact, court records indicate that approximately 160 1GC accounts involved Kansas City area addresses, and moreover, it appears many investors committed their retirement funds to 1GC investments through their retirement accounts.

Pinnacle is structured as a Registered Investment Advisor (“RIA”), and according to publicly available information through the SEC, is licensed to sell securities in Kansas, Missouri, Colorado, and Louisiana. Pinnacle’s CEO and founder, Mr. Matthew Lynn Walker, CRD. No. 153896, also serves as Pinnacle’s Chief Compliance Officer. Upon information and belief, a number of Kansas City area investors may have been steered into 1GC Notes upon the recommendation of Mr. Walker and certain of his employees at Pinnacle.

Investors who invested in any 1^st 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.

Investors who wish to discuss a possible claim concerning 1^st 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. Attorneys at the firm are admitted in New York and Wisconsin and various federal courts around the country, and handle cases nationwide (in cooperation with attorneys located in those states if required by applicable rules).

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 1^ST GLOBAL, TO OUR KNOWLEDGE. WE DO NOT CURRENTLY REPRESENT ANY INVESTORS WITH CLAIMS AGAINST THIS ADVISOR.

Investors who invested in any 1^st 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 1^st Global’s “acute liquidity crisis.”

Investors who wish to discuss a possible claim concerning 1^st 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.