Ex-Prime Automotive Group CEO Accused Alternative Asset Firm of Running Massive Ponzi Scam
A Massachusetts Superior Court judge says the majority of the lawsuit filed by former Prime Automotive Group CEO, David Rosenberg, can move forward. Rosenberg, in his complaint, claims that he was fired and retaliated against after he accused the parent company, GPB Capital Holdings, of financial misconduct.
The alternative asset firm is under investigation over allegations that it ran an over $1.5B Ponzi scam that defrauded thousands of investors. Its many GPB funds have dropped significantly in value and investor redemptions were suspended more than two years ago.
GPB Capital Holdings remains the subject of ongoing investigations by numerous regulatory bodies including the FBI, SEC and FINRA.
It is also the defendant in a number of fraud lawsuits, including class action securities fraud litigation alleging that multiple participants and enablers enriched themselves in what has been described by some as a complex Ponzi scam.
Meanwhile, dozens of brokerage firms and their registered representatives have collectively earned tens of millions of dollars in commissions. While investors in GPB private placements remain unable to redeem their funds or obtain information as to whether their investments have any value left at all.
Our investment fraud attorneys at Shepherd Smith Edwards and Kantas (SSEK Law Firm at investorlawyers.com) have been hard at work building FINRA arbitration claims against broker-dealers whose brokers sold GPB fund investments to their customers.
Contact us today at (800) 259-9010 so that we can help you explore your legal options.
Rosenberg Contends Firing & Nonpayment Were Retaliation
Rosenberg sold the majority of his stake in Prime Motors to GPB Capital Holdings in 2017 for $235M. He was appointed chief executive of the renamed Prime Automotive Group. David Rosenberg says that afterwards he saw evidence of financial misconduct and sought to have these issues addressed. He would go on to sell his remaining stock in Prime Automotive.
Rosenberg was then fired in 2019. He contends that he did not receive the $5.9M owed for the sale of his shares to GPB Capital.
He filed his lawsuit that same year in Norfolk County Superior Court. He alleges that the failed payment was “retaliation” for confronting the alternative asset firm’s fraudulent activities and working with authorities.
The defendants sought to get the case dismissed. They have described the disagreement with Rosenberg as a contract dispute. Although Justice William Sullivan has dismissed a few counts in the complaint, including certain separate charges against individual defendants, he is letting the rest of the lawsuit against GPB Capital proceed.
Among Rosenberg’s contentions is that despite promising investors that they would be paid out of profits made, GPB Capital Holdings used money from newer investors to pay earlier investors and operated similar to a Ponzi scam.
He also claims that GPB executives and its lawyers engaged in a coverup so that investors were led to believe that their investments were safe and any investment losses were not because of misconduct.
Experienced GPB Private Placement Fraud Attorneys
Unfortunately, there are broker-dealers and their registered representatives who enriched themselves, making up to 7% in commissions while unsuitably recommending GPB funds to customers. They also failed to do the proper due diligence into these private placements to ensure they were legitimate, made misrepresentations and omissions about the risks, and overconcentrated investors’ portfolio in these fraudulent investments.
SSEK Law Firm is zealously pursuing financial recovery on behalf of many of the GPB investors that were harmed. Contact us today for your free, no-obligation case consultation.