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Despite $1.8B Ponzi Scam Allegations, GPB Capital Received Up to $7M in PPP Loans

Alternative Asset Firm Gets Federal Aid While Its Investors Fight To Recover Their Losses

Even as the US Securities Exchange Commission (SEC), the Financial Industry Regulatory Authority (FINRA), the FBI, state regulators and others have continued to investigate GPB Capital Holdings over allegations that it ran an up to $1.8B Ponzi scam, the alternative asset firm and its affiliated companies were able to secure between $3M and $7M in Paycheck Protection Program (PPP) loans following the outbreak of COVID-19. 

News of the loans was disclosed by the Small Business Administration.  GPB is one of over 660,000 small businesses that received loans under the PPP program, which is part of the $2 trillion Coronavirus Aid, Relief, and Economic Security (CARES) Act.

GPB Capital Holdings has several private placement funds that invest in auto dealers and waste management. 

For over a year, our broker fraud attorneys at SSEK Law Firm have been hard at work filing individual FINRA arbitration claims on behalf of investors who lost money from what many are now saying was a complex scheme that defrauded thousands, including retirees and other retail investors. 

The fact that the alternative asset firm was able to secure loans even while under investigation and as its thousands of investors remain unable to access their funds or obtain any information about the value of their investments is outrageous and unacceptable. 

GPB Affiliates Also Received Substantial PPP Loans 

According to the US Treasury Department, GPB Capital Holdings was issued $1 to $2M in PPP loans while two other businesses, referred to as GPB 5 and GPB 8 were lent the same amounts. Another business, GPB Cars 12, received a $350K to $1M loan.

GPB investors’ redemptions were suspended in 2018. Audited financial statements have not been provided to investors nor have the SEC received mandatory filings that were due. 

Earlier this month, GPB Capital Holdings sent a letter notifying investors of its GPB Holdings II, LP, which is its largest fund, that it was not going to be able to hand over their 2019 Schedule K-1 Tax forms in time for July 15, 2020, which is when taxes are due this year. In January, more than 6,500 GPB Automotive Portfolio fund investors were told that they wouldn’t be getting this tax form in time for the original April 15 tax deadline.  

Receipt of the Schedule K-1 Tax forms would have notified investors of the value of their private placements, which many suspect are now worthless.  

GPB Capital Holdings Embroiled in Investor Lawsuits, Other Legal Troubles

In addition to the ongoing probes, the alternative asset firm is facing class action securities litigation and fraud lawsuits by two former business partners. Its former chief compliance officer, Michael S. Cohn, is charged with obstruction of justice, disclosing confidential information in order to procure employment, and unauthorized computer access. 

Broker-Dealers Made Millions From GPB Private Placement Sales 

Dozens of brokerage firms and their registered representatives that sold GPB private placements made over $160M in commissions from selling them to customers even when the investments were unsuitable for their portfolios. Many of these broker-dealers neglected to conduct the proper due diligence into the alternative asset firm and its funds and failed to properly supervise its brokers.

At SSEK Law Firm, our GPB investor fraud attorneys are pursuing claims against many of these firms including Ameriprise, Triad Advisors, Kalos Capital, Arkadios Capital, International Assets Advisory, Pruco Securities and others. Contact us today.

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