First Bankers Trust Services Settlement Agreement

First Bankers Trust Services Settlement Agreement: Understanding the Key Details

First Bankers Trust Services, Inc. recently announced that it has reached a settlement agreement with the U.S. Department of Justice (DOJ) regarding its involvement in the illegal activities of a former client, 1 Global Capital LLC. The agreement helps to resolve the allegations of First Bankers Trust Services` role in facilitating the fraudulent activities of 1 Global Capital, which led to the defrauding of investors of approximately $287 million.

Here are some important details to understand about the First Bankers Trust Services Settlement Agreement:

The Background

1 Global Capital was a Florida-based merchant cash advance company that offered short-term financing to small businesses. In July 2018, the Securities and Exchange Commission (SEC) filed a complaint against 1 Global Capital alleging that the company was operating as a Ponzi scheme. In August 2018, the DOJ indicted 1 Global Capital`s founder, Carl Ruderman, and former CFO, Alan Heide for conspiracy to commit securities fraud, wire fraud, and mail fraud. The DOJ alleged that the defendants had defrauded investors by making false and misleading statements about the profitability of 1 Global Capital`s business.

The Allegations Against First Bankers Trust Services

First Bankers Trust Services was 1 Global Capital`s banking partner, providing custodial and escrow services for the company. The DOJ alleged that First Bankers Trust Services knew or should have known about the fraudulent activities of 1 Global Capital and that it failed to take appropriate action to prevent them. The DOJ further alleged that First Bankers Trust Services continued to provide services to 1 Global Capital even after becoming aware of the fraud.

The Terms of the Settlement Agreement

Under the terms of the settlement agreement, First Bankers Trust Services has agreed to pay $15 million to resolve the allegations against it. The company has also agreed to implement and maintain enhanced compliance measures, including the appointment of an independent compliance monitor. The settlement agreement does not include an admission of guilt or liability by First Bankers Trust Services.

The Implications of the Settlement Agreement

The First Bankers Trust Services settlement agreement demonstrates the increasing scrutiny that financial institutions face regarding their role in facilitating illegal activities. It also highlights the importance of implementing effective compliance measures to prevent and detect fraudulent activities. The appointment of an independent compliance monitor is one such measure that can help identify potential risks and ensure compliance with regulatory requirements.

Conclusion

The First Bankers Trust Services Settlement Agreement serves as a reminder of the potential consequences of failing to implement effective compliance measures. Financial institutions must stay vigilant in identifying and mitigating risks associated with their clients and operations to avoid involvement in illegal activities. The appointment of an independent compliance monitor can help ensure compliance with regulatory requirements and prevent fraudulent activities that can cause harm to investors and the financial system as a whole.