New Details Into Alleged GPB Capital Ponzi Scam

New Class Action Offers Details Into Alleged GPB Ponzi Scam

This week in Austin, Texas, another proposed class securities case was filed on behalf of investors of GPB Capital Holdings and its many funds. This latest investor lawsuit directly accuses the alternative asset firm and its executives of running an alleged $1.8B Ponzi scam and provides new details into the fraud.

Filed in the US District Court for the Western District of Texas by the lead plaintiff and GPB investor Millicent Barasch, the class action securities fraud case was announced at a press conference. Toni Caiazzo Neff, an ex-Financial Industry Regulatory Authority (FINRA) examiner, spoke about how she’d previously tried to blow the whistle on GPB Capital Holdings.

This happened when she was working as a Purshe Kaplan Sterling Investments broker. Purshe Kaplan is one of dozens of broker-dealers who sold GPB private placement to customers.

Caiazzo Neff said that she became suspicious of GPB Capital Holdings in 2016 when her firm tasked her with doing due diligence. She contends that despite what she found, Purshe Kaplan decided to sell GPB private placements to investors. It then fired her when she refused to stay quiet about her concerns.

Caiazzo Neff said that last year, she reported her suspicions to the US Securities and Exchange Commission (SEC). This was months before one of the regulator’s former examiners, Michael Cohn, left to go work for GPB as its Chief Compliance Officer (CCO).

Last month, Cohn was indicted for obstruction and accused of stealing confidential information from the SEC about its GPB probe and sharing this confidential information with other company executives.

Lawsuit Alleges Complex Web Of Co-Conspirators

This latest class action securities case, names Cohn and other GPB executives, including CEO David Gentile as defendants, along with a number of other individuals and entities. Different GPB funds have also been noted including:

GPB Holdings
GPB Holdings II
GPB Holdings III
GPB Automotive Portfolio
GPB Cold Storage
GPB Waste Management Fund
GPB Holdings Qualified
GPB NYC Development

The complaint contends that while GPB seemed to be operating your “garden variety Ponzi Scam” – investors promised 8% returns but then paid with money that came from other investors – there was actually an allegedly “complex web” of participants that profited from the GPB Capital Ponzi scheme.

Barasch claims that the numerous GPB limited partnerships, which supposedly controlled auto dealerships and waste management companies, were purportedly also hiding unknown funding sources and the self-dealing taking place by GPB Capital executives via different shell companies.

Other codefendants in the case include underwrites from Ascendant Capital, Ascendant Alternative Strategies, and Axiom Capital Management. The plaintiff contends that unbeknownst to investors, the underwriters and GPB Capital were “functionally the same entity,” with both the heads of Ascendant and Axiom, Jeffrey Schneider and Mark Martino, respectively, possessing a track record of disciplinary and legal proceedings in the securities industry that should have precluded them from serving in an underwriter capacity.

Other defendants include those whom the complaint categorizers as “GPB owners,” and a number of auditors that are accused of issuing “false and consistently misleading” documents that enabled to scam to go for as long as it did. The class-action believes the GPB Ponzi scam began in 2013.

Meantime, brokerage firms went for the high commissions – some were paid up to 11% on sales – despite the various red flags involving GPB’s many private placement funds. According to the lawsuit, such payments to financial firms meant that investors lost 20% of their money the moment they signed the paperwork to invest.

To date, broker-dealers and their brokers have reportedly made over $160M in commissions while investors are the ones that have suffered the losses, what with the various GPB funds plunging in value and the suspension of the investor redemptions almost a year ago.

GPB Investor Fraud Lawyers

Shepherd Smith Edwards and Kantas, LLP (SSEK Law Firm) works with investors who sustained losses because they were sold GPB private placements by a brokerage firm and/or broker. Our GPB investor lawyers have already filed a number of investor claims on behalf of our clients.

This is not the type of securities case that you want to pursue without experienced legal help. Also, filling your own investor fraud claim rather than going with a class action case increases the chances of maximizing your recovery. Contact SSEK Law Firm today.