Anthony Pellegrino and Michael Pellegrino, the co-founders of Goldstone Financial Group LLC, an SEC-registered investment adviser based in Oakbrook Terrace, Illinois, were sanctioned by the Securities and Exchange Commission in March 2022 for selling approximately $37 million of unregistered 1 Global Capital LLC securities to approximately 445 of their advisory clients and insurance and annuity customers between May 2017 and June 2018, receiving $1.6 million in referral fees they failed to disclose. GFG paid a $70,000 civil penalty, Anthony paid $30,000, and Michael paid $50,000, totaling $150,000, all directed to the 1 GC Collections Creditors’ Liquidating Trust for distribution to harmed 1 Global investors rather than the U.S. Treasury.
Michael Pellegrino was permanently barred from the securities industry. Anthony Pellegrino and GFG received censures. GFG continues to operate as a registered investment adviser under Anthony Pellegrino’s sole leadership. The underlying fraud at 1 Global was orchestrated by its 82-year-old chairman Carl Ruderman, who raised $320 million from more than 3,600 investors across the country before filing for bankruptcy in July 2018. Ruderman pleaded guilty in October 2023 and was sentenced to five years in prison in January 2024. The Pellegrinos were unaware of the fraud when they sold the notes.
1 Global Promised Double-Digit Returns on Merchant Cash Advance Notes That Were Actually a Fraud
1 Global Capital, based in Hallandale Beach, Florida, presented itself to investors and sales agents as a legitimate merchant cash advance lender that provided short-term financing to small businesses and passed the interest income on to investors. It claimed its investor funds were used exclusively to fund MCAs, that monthly account statements accurately reflected portfolio values, and that an independent accounting firm had validated its rate of return formula. All three representations were false.
In reality, Ruderman and 1 Global diverted substantial investor funds to personal and unrelated purposes. Ruderman misappropriated at least $32 million, including payments for a family vacation to Greece, monthly Mercedes payments, American Express credit card bills, household staff, $4 million to his family trust, and $1 million to one of his sons to invest in cryptocurrency. Starting no later than October 2017, monthly account statements overstated the cash available in 1 Global’s bank accounts by $23 million to $50 million. The independent audit firm cited on every investor statement, Daszkal Bolton LLP, had never audited 1 Global’s financials or endorsed its rate of return formula. When 1 Global filed for bankruptcy in July 2018, thousands of investors lost hundreds of millions of dollars. Ruderman was sentenced to five years in prison on January 31, 2024, and ordered to forfeit $285,599,532.
The Pellegrinos Conducted Due Diligence But Were Misled by 1 Global’s Lawyers and Marketing Materials
The Pellegrinos were introduced to 1 Global in early 2017 through a professional acquaintance. Before recommending the notes to clients, they conducted internet research, spoke with 1 Global’s Director of Business Development, reviewed FAQ documents and marketing materials, and consulted 1 Global’s outside securities counsel, who misrepresented that returns were validated by an independent accounting firm and provided legal opinions claiming the notes were not securities because their terms were nine months or less. Michael Pellegrino also obtained approval from his registered broker-dealer, which after its own review concluded the notes were not securities and approved them as an outside business activity.
Despite these steps, the SEC found that the Pellegrinos failed to conduct adequate due diligence and sold the notes in unregistered, non-exempt transactions. They also failed to disclose to their advisory clients that they were receiving a 3% referral fee from 1 Global on each investment. GFG’s Form ADV Brochure stated it did not accept compensation for securities sales other than advisory fees, which was false during the period the referral fees were being collected. In March 2018, GFG revised its disclosures to acknowledge the referral arrangement, but by that point most of the $37 million had already been sold. The SEC found violations of Section 206(2) of the Advisers Act and Sections 5(a) and 5(c) of the Securities Act.
After the Fraud Collapsed, Anthony Pellegrino Paid $1.3M from His Personal Funds to Make Clients Whole
When 1 Global filed for bankruptcy, GFG took significant voluntary remedial steps. Anthony Pellegrino contributed approximately $1.3 million from his own personal funds, and GFG litigated against its insurer, obtaining an additional $1 million payment. Together with the return of all $1.6 million in referral fees, GFG facilitated a settlement with all 1 Global investors that returned the fees plus an additional nearly $700,000 above the fee amount. GFG also hired a new chief compliance officer after Michael Pellegrino resigned from that role in August 2018, created a due diligence committee to review new investment products, and revised its policies to strictly prohibit any GFG adviser from soliciting, receiving compensation for, or providing advice about unregistered securities. The SEC’s order noted these remedial efforts in determining to accept the settlement offer.
Michael Pellegrino Was Permanently Barred While Anthony and GFG Received Censures and Continued Operating
The sanctions diverged significantly between the two brothers. Michael Pellegrino, who served as GFG’s chief compliance and investment officer and was responsible for approving the 1 Global notes for client recommendation, received a permanent bar from association with any broker, dealer, investment adviser, municipal securities dealer, municipal advisor, transfer agent, or nationally recognized statistical rating organization. He also received a prohibition from serving in any role at a registered investment company and a penny stock bar. His $50,000 civil penalty was the largest of the three respondents. Anthony Pellegrino and GFG received censures — a formal rebuke without a bar — and paid $30,000 and $70,000 respectively. GFG was required to retain an independent compliance consultant for one year and adopt recommended improvements to its due diligence and disclosure practices.
GFG continues to operate under Anthony Pellegrino’s sole leadership from its Oakbrook Terrace headquarters. The firm was acquired by CAA in 2024 and Anthony Pellegrino, who hosts a “Securing Your Financial Future” television show on CBS Sunday mornings, remains its CEO. FINRA sanctioned Michael Pellegrino separately in January 2021 for violating marketing rules in connection with the 1 Global offering, resulting in a two-month suspension and a $10,000 fine before the SEC order permanently barred him.
Conclusion
The Goldstone Financial Group case sits at the uncomfortable intersection between victimized and culpable. The Pellegrinos were misled by 1 Global’s lawyers, marketing materials, and falsified audit claims, and did not profit from Ruderman’s underlying fraud. But they sold $37 million of unregistered notes to their own clients, collected $1.6 million in undisclosed referral fees, and failed to act when red flags emerged. The SEC’s response reflects that nuance: Anthony is censured, not barred; GFG continues to operate; Michael, who had specific compliance responsibility and greater control over the approval process, is permanently barred. Anthony’s personal $1.3 million contribution to settle client claims is the most concrete evidence that the Pellegrinos understood the human cost of what they had distributed. Ruderman is in federal prison. His investors are still waiting on restitution.
Editor’s Note: This article is based on an SEC administrative order dated March 28, 2022 (Release No. 34-94535). The underlying conduct occurred between May 2017 and June 2018. It is published here for its relevance to the broader 1 Global Capital fraud case, in which founder Carl Ruderman was sentenced to five years in federal prison on January 31, 2024.
