GPB Capital Reportedly Charged with Defrauding Over 17,000 Retail Investors out of $1.7B

The CEO of a GPB Capital Holdings, a New York-based registered investment adviser, and two others were arrested February 4 in connection with a massive “Ponzi-like scheme” that allegedly defrauded 17,000 investors across the U.S. out of more than $1.7 billion, according to the U.S. Attorney’s Office for the Eastern District of New York.

Three executives including GPB’s founder, owner and CEO of asset management firm and RIA GPB Capital, the owner and CEO of GPB placement agent Ascendant Capital; and a former managing partner of GPB, were charged with fraud, wire fraud and conspiracy.

The Securities and Exchange Commission and seven state regulators reportedly filed similar charges  on February 4. The SEC also reportedly charged GPB Capital with violating the whistleblower protection laws. 

The SEC’s complaint alleges that David Gentile, the owner and CEO of GPB Capital, and Jeffry Schneider, the owner of GPB Capital’s placement agent Ascendant Capital, lied to investors about the source of money used to make an 8% annualized distribution payment to investors.  

The firm and two executives also allegedly falsified financial statements to inflate the limited partnership funds’ income so that it would appear to be generating sufficient income to cover the distribution payments.

While the executives were reportedly aware of the shortfalls, they purportedly told investors that their 8% monthly distributions would be fully covered by profits of the portfolio’s companies.

Instead the investors were at least partially paid with funds from new investors.

The SEC alleges  that the “Ponzi-like scheme” continued for more than four years because GPB was able to hide the funds’ financial condition from investors, neglecting to deliver audited financial statements and register two of its funds with the SEC.

Class Action Lawsuits filed against GPB Capital Holdings

GPB Capital has been in trouble since 2018 when William Galvin and the Massachusetts Securities Division first  launched an investigation into the “sale practices” of 63 Broker Dealers who were selling the GPB capital private placements which led to a halt in sales and suspension of distributions.

There have been numerous lawsuits filed against GPB since then, alleging serious  financial misconduct and accusations of an alleged Ponzi scheme.

The firm has reportedly raised $1.5 billion in investor equity through various private placement offerings in the automotive retail and waste management sectors. Although one of its funds made a special distribution last year, the firm has not paid any other distributions since 2018. 

GPB Shareholders may have Claims

The White Law Group is currently representing numerous investors in claims against their brokerage firms in connections with their investments in risky GPB Capital offerings, such as GPB Holdings II LP, GPB Automotive Portfolio LP and GPB NYC Development LP.

Private placement investments such as GPB offerings are highly complex, high risk investments. They are only suitable for sophisticated, accredited investors and institutions.

Broker dealers are required to perform adequate due diligence on all investment recommendations they make. They must ensure that each investment is suitable for the investor in light of the investor’s age, risk tolerance, net worth, financial needs, and investment experience.

If a broker or brokerage firm makes an unsuitable investment recommendation or fails to adequately disclose the risks associated with an investment they may be liable for investment losses through FINRA arbitration.

Recovery of Investment Losses in GPB Capital Offerings

If you have suffered losses investing in a GPB Capital offerings you may be able to file a complaint against your brokerage firm. Please call the securities attorneys at The White Law Group for a free consultation at 1-888-637-5510.

These claims are distinct from the class action filed directly against GPB Capital and could be pursued concurrently.

The White Law Group, LLC is a national securities fraud, securities arbitration, investor protection, and securities regulation/compliance law firm with offices in Chicago, Illinois.  For more information on the firm and its representation of investors, visit https://www.whitesecuritieslaw.com.