Articles Tagged with GPB Capital Holdings

GPB Capital Sales: SSEK Files Investor Fraud Lawsuit Against Money Concepts Capital

Two investors in Alabama are pursuing a Financial Industry Regulatory Authority (FINRA) claim against Money Concepts Capital Corp. These investors sustained losses after one of the independent brokerage firm’s longtime registered representatives recommended that they purchase GPB Capital private placements. 

Shepherd Smith Edwards and Kantas, LLP (SSEK Law Firm) is representing both claimants in their investor fraud claim. 

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

Two broker-dealers, Sagepoint Financial and Royal Alliance, recently made headlines after investors who bought GPB Capital Holdings private placements from them sued the alternative asset firm in a class action securities fraud case. GPB Capital Holdings, which invests in waste management and car dealerships, is accused of operating a $1.8B Ponzi scam.

The lead plaintiffs of the first class action securities lawsuit are Karen Loch of Georgia and Victor Wade of Texas. They invested in two GPB funds–$50K in GPB Holdings II for Wade that he purchased through Sagepoint Financial and $75K in GPB Automotive Portfolio for Lock through Royal Alliance Associates.

GPB Holdings II and GPB Automotive are GPB’s two largest funds, with both having  raised over $600M from over 6000 investors. The two funds are not listed or traded on any exchange. In May, InvestmentNews reported that their assets were over $10M and they had at least 750 shareholders, thus requiring them to be registered with the US Securities and Exchange Commission (SEC). Still, GPB failed to register both funds by their April 30, 2018 deadline and no annual reports have been filed since. This failure has kept Lock, Wade, and thousands of other investors from receiving even the most basic information about both funds and their money.

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.

National Financial Services, which is Fidelity Investments’ clearing and custody unit, has given its brokerage firm clients 90 days to get rid of all GPB Capital Holdings private placements from its platform. The announcement means that investors and their financial advisers will have to move their GPB fund assets to a different custodial firm. Considering that there are a lot of broker-dealers who use National Financial as their primary custodial firm and to clear the investments of clients, the decision is likely to impact a lot of parties.

A main reason for the edict is that, reportedly, neither Fidelity nor National Financial are clear about the actual value of the GPB private placements. Third-party vendors typically provide this information. According to InvestmentNews, Fidelity spokesperson Nicole Abbott said that at the moment GPB is not meeting her company’s policy regarding alternative investments.

In Trouble with Investors and Regulators

Investment News is reporting that broker-dealers and their brokers that sold GPB Capital Holdings private placements to investors have collectively been paid $167 million in commissions. That large number represents 9.3% of the $1.8 billion that supposedly accredited, wealthy investors paid for these risky private placements. Recent reports had estimated that the commissions paid were lower, at around $100 million (about 7% per transaction), but GPB Capital has apparently confirmed the much larger number.

While brokers and broker-dealers are allowed to make up to a 10% commissions for selling financial products to clients, very few investments pay such a high rate. However, private placements, such as GPB Capital, entice brokers and their firms to sell such risky investments by offering much higher commissions and fees.

For private placements, it is not uncommon for financial representatives to earn around 7% in commissions, with another 2% going to the brokerage firm. In comparison, mutual funds and other similar investments typically pay less than half as much in commissions.

Patrick Dibre, a former business partner of GPB Capital Holdings, is accusing the asset management firm of operating a Ponzi Scam. Dibre made his claims in his counter-suit filed against GPB after the company sued him.

GPB Capital is at the center of a growing controversy surrounding brokerage firms that sold its private placements, raising $1.8B in the process. The asset management company, which invests primarily in auto dealerships and waste management companies, has been under fire since late last year when it suspended its sale of the private placements, as well as redemptions to investors. It also is under investigation by the US Securities and Exchange Commission (SEC), the Financial Industry Regulatory Authority (FINRA), state regulators, and the Federal Bureau of Investigation (FBI).

The following GPB funds are under investigation:

An investor in GPB Capital has filed a Financial Industry Regulatory Authority (FINRA) Claim against Arkadios Capital and one of its brokers over losses she sustained to her IRA after she followed the financial adviser’s recommendation to invest in GPB Capital Holdings.

Now she is claiming retirement fund losses in the hundreds of thousands of dollars. Our investor fraud law firm, Shepherd Smith Edwards and Kantas, LLP (SSEK Law Firm) is representing the investor, who hails from the greater Atlanta area, and we have filed a FINRA arbitration claim on her behalf.

GPB Capital Holdings is an alternative asset management firm whose private placement funds are primarily invested in auto dealerships and waste management. The firm is under scrutiny by FINRA, the US Securities and Exchange Commission (SEC), Massachusetts Secretary of the Commonwealth William Galvin, and the FBI over its private placements that were sold by dozens of brokerage firms and their brokers.

Just days after InvestmentNews reported that the Federal Bureau of Investigation (FBI) is now investigating alternative investment management firm GPB Capital Holdings, ProPublica is reporting that the FBI and regulators from New York City’s Business Integrity Commission (BIC) have raided the corporate offices of GPB Waste NY, which is the private trash hauling company once known as Five Star Carting that GPB Capital Holdings acquired in 2017. The raid reportedly involved a search warrant from the US Attorney’s Office to gather materials.

Aside from the FBI, GPB Capital Holdings is already under investigation by the US Securities and Exchange Commission (SEC), the Financial Industry Regulatory Authority (FINRA), the New Jersey Bureau of Securities, and Massachusetts Secretary of the Commonwealth William Galvin, who is investigating more than 60 brokerage firms that sold GPB Capital Holdings-related private placements to investors. However, public filings submitted to the SEC note that there were about 80 brokerage firms in the US at least authorized to sell investments to clients on behalf of GPB.

GPB Capital Holdings primarily invests in auto dealerships. However, it also purchases private trash hauling companies. NYC’s BIC is responsible for looking into possible misconduct or corruption involving the private trash industry in the city. Five Star, according to ProPublica, had previously dealt with a “troubled labor and safety record,” including government inspections that found that the company used unsafe trucks.

According to public filings submitted to the Securities and Exchange Commission, there were approximately eighty broker-dealers across the country who sold, or were at least authorized to sell, these investments for GPB, including Aegis Capital Corp., D.H. Hill Securities, Purshe Kaplan Sterling Investments, Sagepoint Financial, Inc., Woodbury Financial Services, Inc., and many others.

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