Unregistered Broker Pleads Guilty to Securities
Fraud and Embezzlement in Payday Loan Scheme
MD ( June 26, 2009) - Attorney General
Douglas F. Gansler announced today that Alvin Allister Ambrose,
37, formerly of 5617 Broadwater Road in Clarksville, pled guilty
before Howard County Circuit Court Judge Timothy J. McCrone to
charges of securities fraud and fraudulent misappropriation by
a fiduciary. Securities fraud is a misdemeanor punishable by up
to three years in prison, a $50,000 fine, or both. Fraudulent misappropriation
by a fiduciary is a misdemeanor punishable by up to five years
in prison, a $25,000 fine, or both.
The charges arise from
Ambrose’s misuse of over $5,000,000
solicited from investors to provide “payday” loans
to borrowers with high rates of return to the investors. “Payday” loans
are defined as small, short-term loans that a borrower uses to
cover expenses until the next payday. As the owner and operator
of First Cash Express, Inc., Ambrose advertised the company as
an entity that pools investment funds to provide payday loans to
clients of the “cash advance” business. Ambrose offered
new investors a return of 15 percent a month on a minimum investment
of $20,000 and assured prospective investors that the investment
opportunity was legal and safe.
The State identified
over 180 investors that invested approximately $5,040,990 in
the payday program. However, Ambrose’s investment
offering was not a registered securities in Maryland or elsewhere,
and neither Ambrose or his business is a registered securities
broker-dealer or licensed to offer consumer loans. Ambrose did
not establish an escrow account for the funds he received, but
instead comingled the funds with his own business and personal
At the time the Securities Division was alerted to the scheme,
over $3,279,000 in investment funds were found in Ambrose’s business account. Ambrose’s
counsel assisted the Securities Division in taking possession of those funds
and returning it to investors. The State determined that out of $5,040,990
solicited by Ambrose, he invested only $261,932 in payday loans. He returned
only $769,150 to investors and those funds were not the promised interest payments,
but were paid from the funds of subsequent investors.
By the State’s most conservative findings, the defendant
used $609,792 of investors’ money for his personal benefit,
spending the money on his house, his real estate speculation business,
a Carribean cruise, diamond rings, furniture and his wife’s
law school tuition.
The criminal investigation and prosecution of Ambrose followed
a referral from the Attorney General’s Securities Division.
This guilty plea followed a multiple-agency investigation performed
by the Criminal Division and Securities Division of the Attorney
General’s Office, with support from the Maryland State
Sentencing for Ambrose is scheduled for Friday, August 28, 2009.