After more than two years without disclosing any audited financial statements to investors or regulators, GPB Capital Holdings has once again missed the deadline for providing a required update to shareholders. This time, the lapsed due date was one it had set for itself. This is just the latest bad news headline plaguing the beleaguered alternative asset firm, which is accused of running a $1.5B Ponzi scam. It is also facing a slew of investor claims for losses sustained after its GPB private placements funds saw a huge drop in value, in some cases by more than 73%.
Once boasting $1.8B in assets involving auto dealerships and waste management, the private placement issuer is now under investigation by the Federal Bureau of Investigation (FBI), the US Securities and Exchange Commission (SEC), the Financial Industry Regulatory Authority (FINRA), and multiple state regulators. Two of its former business partners are accusing the company of operating like a Ponzi fraud.
Prime Automotive Group CEO Fired After Suing GPB Capital
One of these former business partners is David Rosenberg, now the former CEO of Prime Automotive Group, whom GPB Capital just fired. He recently filed a lawsuit against the firm in which he accused the company of “massive securities fraud,” “serious financial conduct,” fabricating revenue,” misappropriating investor money, and other wrongdoings.
Last week, GPB Capital issued a release announcing that Rosenberg was “relieved of his duties” and that the asset management firm’s automotive strategy chairman, Kevin Westfall, was replacing him in the interim. Rosenberg’s lawyer, in a statement to Business Journal, accused GPB Capital of wrongful termination and retaliating against his client.
Rosenberg claims that he didn’t know about the fraud until after the private placement issuer appointed him to helm its entire auto portfolio, including dealerships it had previously acquired. GPB Capital owns a major stake of $235M in Prime Automotive Group. According to Rosenberg, as part of the purchase deal, the asset management firm was supposed to buy his remaining 23.7% stake in the company, but that he has yet to receive the first installment that was due in July.
GPB Capital Shunts Blame for Disclosure Delays
News of Rosenberg’s firing comes a week after GPB Capital sent a letter notifying investors of its GPB Holdings II and GPB Automotive Portfolio funds about the latest disclosure delay. The notice blames the delay on numerous “challenges,” including the allegations made by Rosenberg, for which GPB Capital says it hired an independent investigator. The private placement issuer also claimed that it is making substantive progress toward completing and issuing audited financial statements, as is required by federal securities laws.
GPB Investors File Broker Fraud Claims
Unfortunately, investors of GPBs numerous private placement funds have suffered huge losses, what with the funds dropping in value and the suspension of shareholder redemptions. However, none of this has impacted the more than $167M in commissions already earned by brokerage firms and their brokers who sold these illiquid, risky investments to their clients, many of whom reportedly were never fully apprised of the risks and/or should never have purchased GPB private placements to begin with because they were unsuitable investments for them.
SSEK Law Firm
Our GPB investor lawyers are representing clients who sustained losses because brokerage firms and their registered representatives recommended GPB funds to them for purchase. If you invested in any GPB pirate placement fund, including the GPB Automotive Portfolio and the GPB Holdings II, contact Shepherd Smith Edwards and Kantas, LLP (SSEK Law Firm) today. Recent GPB investor claims by our broker-dealer misconduct law firm have included those against Kalos Capital and Arkadios Capital.