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Articles Tagged with GPB Capital Holdings

Regulator Wants to Prevent Alternative Asset Firm From Causing Investors More Financial Harm

In U.S. District Court for the Eastern District of New York in Brooklyn, the Securities and Exchange Commission (SEC) has submitted a court filing asking that a monitor be appointed to prevent GPB Capital Holdings, LLC from committing more alleged misconduct and disposing of any assets that could be used to recover investors’ money. The regulator is suing the alternative asset firm for allegedly defrauding more than 17,000 investors in an over $1.7B Ponzi scam.

The SEC contends that having a monitor is warranted and needed. The Commission wants to give this person broad powers over “non-privileged books, records, and account statements for the entities and assets” related to GPB Capital Holdings’ portfolio companies and funds. 

State Lawsuits Come After SEC Complaint and FBI Arrests

New York Attorney General Letitia James is suing GPB Capital Holdings along with five co-defendants for running a mass Ponzi scam.

The NY AG contends that the alternative asset firm and private equity fund manager, which is based in the state, defrauded investors throughout the US of over $700M. The complaint said that more than 1,400 of those victims were New Yorkers who invested over $150M.

Claimants Had Alleged Negligence, Poor Supervision, and Other Charges 

A Financial Industry Regulatory Authority (FINRA) arbitration panel has awarded one customer and his trust $515K in their GPB private placement fraud claim against Arete Wealth Management. The Chicago-based brokerage firm also has been ordered to pay all of the claimant’s legal fees. The award is more than twice what was sought by the claimants, who had requested $225K in damages. 

This is just one of the thousands of broker-dealer negligence claims brought against the financial firms and their registered representatives that marketed and sold GPB investments to their customers. GPB Capital Holdings, which invests primarily in waste management and auto dealerships, has allegedly been running an over $1.5B Ponzi scam. 

Justice Department Files Parallel Criminal Charges Against GPB Capital’s David Gentile and Others

The Securities and Exchange Commission (SEC) has filed civil charges against GPB Capital Holdings CEO and owner David Gentile, ex-GPB managing partner Jeffrey Lash, Ascendant Capital owner Jeffry Schneider, and affiliated entities, including Ascendant Alternative Strategies, of defrauding 17,000 retail investors in a more than $1.7B in a Ponzi-like scam.

GPB Capital Holdings, an alternative asset firm that invests in auto dealerships and waste management, has been under investigation over Ponzi fraud allegations by the SEC, the Federal Bureau of Investigation (FBI), the Financial Industry Regulatory Authority (FINRA), and others for more than two years. Now, in a parallel case, the U.S. Attorney’s Office for the Eastern District of New York has filed criminal charges indicting Gentile, Lash, and Schneider. If convicted, they could each spend up to two decades in prison.

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.

Triad Advisors and its Ex-Florida-Based Broker Placed Claimants Funds In Too Risky GPB Capital & REIT Investments  

Two Utah retirees have filed a Financial Industry Regulatory Authority (FINRA) arbitration claim against Triad Advisors, Inc. over losses they suffered from investing in GPB private placements and privately traded real estate investment trusts (REITs), including American Realty Capital Trust. Now they are seeking up to $500K in damages. 

The couple worked with former Triad Advisors broker Michael Payne, who is now a broker with Proequities, Inc. in Longwood, Florida. He also is a financial representative with Payne Financial Group in Winter Springs, Florida. 

Senior Investor Seeks up to $500K in Damages For Loss of Savings

A retiree from Texas has filed a Financial Industry Regulatory Authority (FINRA) arbitration claim against brokerage firm Calton & Associates over losses he suffered in GPB Capital Holdings private placements and other non-publicly traded products. This investor is seeking up to $500K in damages. Arbitrators in Dallas, Texas will hear his case.

At Shepherd Smith Edwards and Kantas (SSEK Law Firm at investorlawyers.com), our Dallas securities fraud attorneys are representing this claimant in his fight to recover his losses.

Delayed Filing with the SEC Shows 45.2% Drop in AUM Over 18 Months 

Last month, GPB Capital Holdings finally filed its Form ADV with the US Securities Exchange Commission (SEC) after requesting an extension from the regulator in 2019.  

In the form, the alternative asset firm, which is already under siege in the wake of numerous federal and state regulator investigations, an FBI probe, and lawsuits accusing it of operating a massive Ponzi scam, reported a $196.3M decline in assets under management (AUM) over 18 months from the end of 2017 to the end of June 2019. That’s a 45.2% drop from $434.3M in AUM to $238.6M. 

Alternative Asset Firm Gets Federal Aid While Its Investors Fight To Recover Their Losses

Even as the US Securities Exchange Commission (SEC), the Financial Industry Regulatory Authority (FINRA), the FBI, state regulators and others have continued to investigate GPB Capital Holdings over allegations that it ran an up to $1.8B Ponzi scam, the alternative asset firm and its affiliated companies were able to secure between $3M and $7M in Paycheck Protection Program (PPP) loans following the outbreak of COVID-19. 

News of the loans was disclosed by the Small Business Administration.  GPB is one of over 660,000 small businesses that received loans under the PPP program, which is part of the $2 trillion Coronavirus Aid, Relief, and Economic Security (CARES) Act.

K-1 Tax Documents Delayed Past Tax Deadline

In the latest GPB Capital news, the firm has notified investors of its GP Holdings II, LP fund that they won’t be getting their 2019 Schedule K-1 tax documents ahead of or by July 15, 2020, which is when US tax filings are due this year. The filing deadline was extended by the Internal Revenue Service (IRS) from its usual April 15 date as part of the US government’s COVID-19 relief. 

This is the latest delay by the alternative asset firm, which has yet to provide key financial statements to investors and regulators for the past few years and is accused of operating a more than $1.5 B Ponzi scam. 

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