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Investors of GPB Capital Holdings Funds File Class Action Securities Fraud Lawsuit

The first class action securities case against GPB Capital Holdings has been filed. The alternative asset management firm, which invests in waste auto management companies and car dealerships, is accused of operating a $1.8B dollar Ponzi scam that caused thousands of investors to suffer major losses. Now, investors of two of its funds are demanding that GPB fulfill its duty to provide yearly audited statements. GPB has not issued these statements since 2017.

The lead plaintiffs in the case, Victor Wade of Texas and Karen Loch of Georgia, both bought into the GPB funds as limited partnerships. Wade invested $50K in GPB Holdings II through Sagepoint Financial. Loch invested $75K in GPB Automotive via Royal Alliance Associates. Both brokerage firms are Advisor Group, Inc. subsidiaries.

Loch and Wade are suing on behalf of investors of the GPB Holdings II fund and the GPB Automotive Portfolio Fund. They have named the two funds, GPB Capital Holdings, its CEO David Gentile, COO Roger Anscher, CFO William Jacoby, and a number of Doe parties as the defendants.

The class action securities case comes just weeks after GPB acknowledged that its funds have dropped massively in value–as high as up to 73%– and news that brokerage firms and their brokers made over $160M in commissions from selling these investments to clients. The GPB investments were marketed and sold as equity shares through dozens of broker-dealers.

GPB shares are high-commission sales, illiquid, and can come with other high fees. They are not suitable for every investor–certainly not for those that are unable to handle too much risk or volatility or who have conservative investment goals.

Investors Demand Updated Financial Statements
The plaintiffs are contending that GPB’s failure to provide updated financial statements, per their agreement with investors, violates its duty to every class member. The alleged violation prevents the latter from gaining access to information they need about their investments and determining whether anything needs to be done to prevent further investment losses.

The class action securities case points to a number of reasons for suing GPB, its funds, and the other defendants, including allegations of “accounting irregularities and other improprieties” that GPB is accused of committing, as well as the fact that the alternative asset company is under investigation by the US Securities and Exchange Commission (SEC), the Financial Industry Regulatory Authority (FINRA), the Federal Bureau of Investigation (FBI), and the New York City Business Integrity Commission.

The plaintiffs, in their fraud lawsuit, also noted how last year GPB’s auditor, Crowe LLP, stepped down from that role because it believed activities in the alternative asset management firm’s records and books exceeded the auditing firm’s own risk tolerance parameters.

The investors are looking into reports that the defendants:

  • Made up earnings.
  • Created financial statements that were “falsified.”
  • Were involved in accounting practices that were improper.
  • Misappropriated investors’ money.
  • Used newer investors’ money to pay existing investors their distributions.

The plaintiffs are alleging breach of fiduciary duty and breach of contract. They want compensatory damages, pre-judgment and post-judgment interest, and other costs.

GPB Investor Fraud Lawyers
At Shepherd Smith Edwards and Kantas, LLP (SSEK Law Firm), our GPB investment fraud lawyers work with investors to file their own individual claims against the asset management firm and the brokerage firms and brokers that sold them their GPB securities. We are already pursuing fraud claims against a number of broker-dealers for selling GPB investments to our clients. Contact us today.

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