GPB Capital Lawsuits Update May 4, 2020

The White Law Group is investigating potential securities fraud claims involving GPB Capital Holdings, Inc.

Are you worried about your investment losses in GPB Capital Holdings? If so, the securities attorneys at The White Law Group may be able to help you to recover your investment losses through FINRA Arbitration.

The White Law Group continues to investigate potential securities fraud claims involving broker dealers who may have improperly recommended high risk GPB Capital offerings to investors.

GPB Capital Holdings, Inc., a New York-based alternative asset management firm, has reportedly raised $1.5 billion in investor equity through various private placement offerings in the automotive retail and waste management sectors.

The company has been struggling with bad press since 2018 when William Galvin and the Massachusetts Securities Division launched an investigation into the “sale practices” of 63 Broker Dealers who were selling the GPB capital private placements.

August 2018 – Company Suspends Distributions and Halts Sales

 the company announced the decision to stop raising new money, and suspended redemptions so that they could reportedly focus on straightening up their financial reporting on two of their funds, GPB Holdings II and GPB Automotive Portfolio.

May 2, 2019 – Update-  Company Delays Filing Financials

GPB Capital Holdings has shown no signs of filing financials a year after stating its intention to take a break in raising money while it straightens out the accounting and financial statements of two of its existing funds.

Dealing with proper accounting standards was allegedly the reason for the delay last year. What’s the hold up now? According to Investment News, “The company won’t say, but keep in mind that GPB’s CEO and lead partner, David Gentile, is a CPA. That means even the accountant isn’t doing the accounting at GPB.”

June 21, 2019 – Update – Company reports losses

The company today reported significant losses in the value of the same two investment funds, GPB Holdings II and GPB Automotive Portfolio, which have seen declines in value, respectively, of 25.4% and 39%.

July 31, 2019 – Update – GPB’s Partner files Suit Claiming “Ponzi Scheme”

Prime Automotive Group CEO David Rosenberg reportedly filed a lawsuit in Massachusetts alleging his business partner, GPB Capital, is running a Ponzi scheme by using new investment money to pay returns to existing investors, according to an article in the Portland Press Herald.

Rosenberg reportedly filed the lawsuit in Norfolk Superior Court, after GPB Capital allegedly failed to pay Rosenberg $5.9 million on July 1 as part of a partnership buyout reportedly involving dozens of auto dealerships.

According to the lawsuit, GPB Capital purportedly withheld the payment in retaliation for Rosenberg’s allegations of misconduct in the company’s financial operations that he reportedly passed along to the Securities and Exchange Commission and the FBI.

GPB reportedly invests in auto dealerships through its subsidiary, GPB Prime, which is the 11th-largest dealership group in the country, according to Automotive News’ rankings.

In 2017, David Rosenberg sold a majority stake in Prime Motors to GPB Capital for $235 million and took the position to run the group, but claims GPB execs tried to push him out earlier this year after he made the allegations of “serious financial misconduct.”

Rosenberg claims that GPB was creating fake contracts and adopting deals that benefited the executives rather than investors. He also alleges that when the accounting firm that was hired to audit the books last year withdrew, it was due to “numerous undisclosed and inappropriate” transactions to benefit top GPB Capital executives.

In reply, GPB reportedly told the Boston Globe that the company is involved in a contract dispute with Rosenberg over payments for his remaining holdings and said the other complaints in the GPB lawsuit are without merit.

February 22, 2020 – Update – GPB Delays K1s

The company reportedly notified investors of its GPB Automotive Portfolio fund that it won’t be delivering key tax documents, such as the Schedule K-1, to them in time for this year’s April 15th tax deadline.

Investigating Potential Lawsuits

According to one report, while investors are suffering great losses, financial advisors and brokerage firms have earned more than $160M in commissions, including $52.5M from the GPB Automotive Portfolio.

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, including the following:

Armada Waste Management LP (f/k/a GPB Waste Management LP)

GPB Holdings II

GPB Holdings I

GPB Automotive Portfolio

GPB Cold Storage

GPB NYC Development

GPB Holdings Qualified LP

GPB Holdings Automotive LLC

GPB Portfolio Automotive LLC

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

Unfortunately brokers may not always adequately explain the risks and liquidity problems involved with purchasing units in a limited partnership or limited liability company.These investments are often considerably more risky than traditional investments such as stocks, bonds, or mutual funds just because of lessor oversight by regulators. They also typically come  with high fees and commissions.

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.

Free Consultation

If you have suffered losses investing in a GPB Capital Holdings offering at the advice of your financial advisor, the securities attorneys at The White Law Group may be able to help you. Please call the offices for a free consultation at 1-888-637-5510.

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 and Franklin, Tennessee.  For more information on the firm and its representation of investors, visit https://www.whitesecuritieslaw.com.

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