GPB Capital Principals Indicted

Jeffry Schneider, David Gentile, and Jeffrey Lash, GPB Capital Principals Indicted

Our firm has written extensively about GPB Capital and allegations that the “investments” were a massive Ponzi scheme. The U.S. District Attorney for the Eastern District of New York has indicted several of the principals of GPB Capital, and the indictment was unsealed today, February 4, 2021.

Specifically, the district attorney incited Jeffry Schneider, David Gentile, and Jeffrey Lash. These individuals were also all arrested today and will appear before local courts for initial appearances in Austin, Texas, Fort Myers, Florida, and Boston, Massachusetts. According to the indictment, Jeffry Schneider, David Gentile, and Jeffrey Lash misrepresented the GPB Capital investments to investors about “the source of funds used to pay monthly distribution payments to investors in several of the GPB Funds, including Holdings I, Automotive Portfolio and Holdings II, and (b) the revenue generated by Holdings I in 2014 and Automotive Portfolio in 2015.” These allegations are also non-exclusive, meaning the prosecuting attorneys are leaving open-ended the totality of misrepresentations that are at issue.

The reality, according to the prosecutor’s office, was far different. These GPB Capital funds between August 2015 and December 2018 “frequently underperformed expectations” and that the monthly distributions that investors actually received were “substantially derived” from other investors, rather than being generated by the underlying investments, as investors had been led to believe.

Ponzi Scheme Reality

The indictment further details how these GPB Capital funds devolved into a Ponzi scheme while continually making representations to new investors about the claimed positive attributes of the funds.

For instance, employees of Ascendant were emailing new investors as late as November 2017 claiming that one of these funds paid “8% target annual distribution, paid monthly, which has been fully covered with funds from operations since inception.” However, the reality was that this same fund, the Automotive Portfolio, had been running at a deficit since approximately October 2015, two years beforehand, and had been using funds from new investors to cover the shortfall for distributions.

By late 2015 to mid-2016, the GPB funds were purportedly paying out hundreds of thousands of dollars (averaging approximately $500,000 per month) more than they were generating in revenue, meaning that millions of dollars of new funds being contributed by new investors were going directly to pay the dividend payments for old investors in classic Ponzi style.

Ultimately, as a result of these issues, these three individuals face charges where, if convicted, they could face up to 20 years’ imprisonment, as estimated by the attorney’s office.

GPB Private Placement Fraud Attorneys

SSEK Law Firm continues to offer free case consultations to GPB investors looking to recover their losses. Unfortunately, GPB private placements were unsuitable for many of the customers to whom they were sold. Not only that, but broker-dealers neglected to do their proper due diligence to make sure that these were viable investments before recommending the GPB funds, and they should be held liable for customers’ losses.

If you have been affected by the latest GPB Capital news or have suffered investment losses as a result of investing in this firm’s private placements, do not wait to contact an attorney. Please contact our GPB private placement fraud law firm today at 800-259-9010 for a free, no consultation case evaluation.