Ex-GPB Capital Partner Accusing Firm Of Running A Ponzi Scam
David Rosenburg, a former GPB business partner, is once more accusing GPB Capital Holdings of committing a “massive securities fraud” when it raised over $1.5B from investors. Rosenberg is a former GPB employee and the ex-CEO of its Prime Automotive Group.
Two years ago, before going to work for GPB, he sold $235M of his stake in the Prime Automotive Group to the alternative asset firm. GPB Capital fired him in September just weeks after Rosenberg sued the company in Massachusetts Superior Court and accused it of operating a major Ponzi scam.
Now, Rosenberg has updated his complaint, alleging that not only did he find out that there were alleged improper actions going on at GPB’s auto operation while he was CEO — the alternative asset firm invests in car dealerships and waste management — but also he claims that he tried to stop these behaviours, which is what led to his firing.
Among the accusations, he has made related to GPB were that:
- The company was using investor money to hide shortfalls at some of the auto dealerships
- Insider dealing was happening
- Certain dealerships were being misrepresented in terms of their actual value
- Some dealerships defaulted on loan covenants
The former Prime Automotive CEO alleges that GPB Capital still owes him a $5.9M payment that was due in July and other payments — $23.6M in total — that was supposed to pay for his remaining 23.7% stake in the company. Rosenberg further contends that after he was let go, the company did not replace him with someone who was qualified enough to do the job.
He said that this has caused decision-makers to begin a termination process that could hurt the business’s assets and their value. After Rosenberg’s ousting, GPB replaced him with interim CEO, Kevin Westfall.
GPB Ponzi Scam & Recent News: Other Ex-Partners Who Made Accusations
Rosenberg is not the only former GPB business partner to sue the firm. Patrick Dibre, another ex-partner, also sued GPB Capital Holdings and accused it of operating a Ponzi scam.
Now, news that yet another team of auditors that was supposed to provide audited financials of GPB and its numerous private placement funds has resigned, does nothing to alleviate growing concerns among investors that they have been the victim of massive fraud. The auditing team’s decision to step down comes over a year after an earlier auditor, Crowe Capital, also walked away.
Last month in Texas, one investor filed a proposed class action also accusing GPB of operating a Ponzi Scam and described a complex web of co-conspirators who have enriched themselves while working together to have allowed the fraud to go on several years.
In October, GPB fired its compliance head, Michael Cohn, after he was indicted on criminal charges of obstruction that allegedly involved him stealing information from his former employer, the US Securities and Exchange Commission (SEC), regarding the regulator’s investigation into the alternative asset management firm. Cohn then allegedly shared that information with GPB executives.
GPB Ponzi Fraud Lawyers
Throughout all of this, brokerage firms and their registered representatives have earned more than $160M in commissions from selling GPB private placements to customers. With over sixty broker-dealers known to be involved in the selling of GPB investments.
This is why our GPB investor fraud lawyers at Shepherd Smith Edwards and Kantas, LLP (SSEK Law Firm) have been hard at work filing broker fraud claims in an attempt to help our clients recoup their losses. If you feel that you have been a victim of a ponzi scam related to GPB Capital Holdings, get in touch today and receive a free, no-obligation case consultation.