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GPB Class Action Investigation
February 25, 2021 Update
GPB Investor News: GPB Capital Holdings, David Gentile, Jeffrey Schneider, and Jeffrey Lash Sued by SEC and state regulators for Alleged Involvement in a $1.8 Billion Scheme to Defraud
Investor rights attorney at Rosca Scarlato LLC law firm announce that on February 4, 2021, the U.S. Securities Exchange Commission filed a complaint against GPB Capital Holdings, Ascendant Capital, Ascendant Alternative Strategies, David Gentile, Jeffry Schneider, and Jeffrey Lash bringing allegations of fraud and Ponzi scheme. This complaint was filed simultaneously with the Indictment filed by the New York Attorney General against David Gentile, Jeffry Schneider and Jeffrey Lash for their role in the alleged Ponzi scheme.
On the same date, the North American Securities Administrators Association announced that the states of Alabama, New Jersey and New York filed court actions against GPB for defrauding their citizens in the alleged $1,8 B securities scheme. These civil actions were joined by administrative proceedings filed in Georgia, Illinois, Missouri and South Carolina with assistance from Texas. All these civil and administrative actions follow the Massachusetts administrative complaint previously filed against GPB Capital Holdings.
Securities attorneys Alan Rosca, Paul Scarlato and their colleagues at Rosca Scarlato, together with their co-counsels represent investors in the class action filed against GPB and several other alleged participants in the GPB scheme. Investors who are concerned about their GPB investments are encouraged to reach out to attorney Alan Rosca, or his colleague Paul Scarlato at 888-998-0530, send an email to arosca@rscounsel.law or pscarlato@rscounsel.law, or complete the contact form on this webpage.
Potential Compensation Claims
The SEC files Complaint in the GPB Capital Holdings Scheme
The Securities and Exchange Commission filed a Complaint alleging that GPB Capital, Gentile, Ascendant Alternative Strategies, Ascendant Capital, and Lash perpetrated “a long-running and multi-faceted fraudulent scheme” and as a result the entire raised amount of $1.7 billion is allegedly at risk. According to the SEC, the alleged scheme was purportedly ongoing for more than four years. During that time, GPB Capital served as the general partner and/or manager of Portfolio Companies including, Automotive Portfolio, Holdings I, Holdings II, Waste Management, and Cold Storage. GPB Capital reportedly marketed its investments exclusively with Ascendant Capital and Ascendant Alternative Strategies (AAS) which promoted the investments to dozens of broker-dealers nationwide.
The SEC alleges that in order to sustain the aura of success, GPB Capital allegedly resorted to acts such as promising investors monthly payments with an 8% annual rate, claiming the cash flow was funded by the Portfolio Companies, when in fact the GPB Portfolio Companies were allegedly underperforming and distributions were being paid with other investors’ capital instead of funds from operations of the Portfolio Companies.
The SEC complaint also adds that GPB Capital allegedly promoted the investments exclusively through Ascendant Capital and Ascendant Alternative Strategies. Ascendant in turn used dozens of broker dealers nationwide to further market the GPB investments. According to SEC this resulted in substantial fees and expenses paid by the GPB investors.
Allegedly, from August 2013 to March 2019, investor paid approx. $187 million in selling fees to Ascendant Capital and to broker-dealers affiliated with it or used by AAS to further market the GPB investments, the Complaint notes. The selling fees were also allegedly accompanied by close to $600,000 in management fees paid and payable to GPB Capital, and $26 million in acquisition fees.
The SEC complaint goes on to allege that GPB Capital, with assistance from Gentile and Lash, allegedly manipulated financial statements for two limited partnership funds in addition to allegedly giving the false appearance that the income earned by the Funds from the Portfolio Companies was greater than it was.
In addition to the aforementioned acquisition fees, Gentile and Schneider allegedly misappropriated $2.9 million earned by Portfolio Companies owned by Automotive Portfolio and Holdings I in the form of warrant contract proceeds, board stipends, and finance manager compensations, as stated on the Complaint.
In concluding its Complaint, the SEC asked the Court to permanently enjoin GPB Capital and its co-defendants from committing, aiding and abetting or engaging in conduct that would make them liable for the violations of the federal securities laws; the SEC also asked the Court to order the disgorgement of all ill-gotten gains received as a result of the alleged scheme, and pay civil monetary penalties.
David Gentile, Jeffrey Schneider, and Jeffrey Lash Indicted for Fraud
The United States Attorney’s Office for the Eastern District of New York has allegedly arrested Jeffry Schneider and Jeffrey Lash on February 4, 2021. David Gentile has allegedly agreed to surrender on all related charges.
The indictment filed on the same day as the SEC complaint alleges that David Gentile, Jeffry Schneider, and Jeffrey Lash engaged in a scheme to defraud the GPB investors by allegedly engaging in misrepresentations and omissions relating to the source of funds used to pay the dividends, and the revenue generated by the GPB Holdings I and GPB Automotive.
The indictment alleges that by engaging in the aforementioned alleged misconduct, Gentile, Lash, and Schneider purportedly engaged in conspiracy to commit securities fraud, conspiracy to commit wire fraud, securities fraud and wire fraud.
In the press release announcing the unsealing of the indictment, FBI Assistant Director-in-Charge William Sweeney declared that:
“As alleged, the defendants misrepresented the holdings of GPB Capital through deceptive marketing practices, luring investors with promises of monthly distributions that would be covered by funds from the investments and not drawn from underlying invested capital. As we allege today, however, this was all a lie. In truth, a significant portion of GPB’s distributions were paid directly from investor funds. Investment fraud schemes are not only problematic for the victims they claim, but for the overall investing public who loses faith in a free-market system every time they hear of crimes like this. Along with our partners, we’re committed to exposing these frauds whenever and wherever we find them and holding the fraudsters accountable.”
Potential Compensation Claims
NASAA Announces State Complaints and Administrative Actions
On February 4, 2021, the North American Securities Administrators Association (NASAA) also issued a press release announcing that seven state securities agencies have filed regulatory actions against GPB Capital Holdings and co-defendants for involvement in a $1.8 billion securities fraud scheme.
GPB Capital Named Defendant in Complaints filed in the State Courts of Alabama, New Jersey and New York
In a press release, the Alabama Securities Commission director Joseph Borg announced that the ASC filed a securities enforcement action against GPB for allegations of fraud and Ponzi-like financing, similar to the allegations brought by the SEC. According to the press release, approximately 226 Alabama investors purchased limited partnership interests in various GPB Funds, with more than $28.8 million in investments, according to Alabama’s Complaint.
Separately, the New Jersey Bureau of Securities announced that the Division of Consumer Affairs has filed a securities enforcement action against GPB reiterating the allegation of fraud. Allegedly, approximately 700 New Jersey investors purchased limited partnership interest in various GPB Funds, with a total investment of more than $70.4 million, according to New Jersey Division of Consumer Affairs’ press release.
In a press release announcing the filing of the New York state court action against GPB Capital, Ascendent, Gentile, Lash, and Schneider, the New York Attorney General Leticia James stated that:
“GPB and its operators fleeced New Yorkers and investors around the country while subsidizing their own lavish lifestyles, which is why we are filing this lawsuit and fighting to hold these bad actors accountable. We won’t let Wall Street fat cats get away with breaking the rules, as they pilfer New Yorker’s wallets in the meantime.”
Reportedly, more than 1,400 individuals from New York invested over $150 million in GPB Capital based on promises of profits on private equity investments in portfolio companies that included automotive dealerships and waste management companies.
Administrative Proceedings Filed Against GPB in Georgia, Illinois, Missouri and South Carolina
Reiterating the allegations made by the SEC and the state complaints, several states initiated administrative proceedings against GPB Capital.
Georgia Secretary of State Brad Raffensperger, announced in a press release that more than 900 individuals in Georgia invested over $78 million in the alleged scheme. Georgiaâ’s Secretary of State has reportedly issued a $520,000 penalty against GPB Capital and its associated entities
Missouri Secretary of State Jay Ashcroft also announced that the MO Securities Division ordered David Gentile, Jeffry Schneider, Jeffrey Lash and their companies to show cause why restitution of more than $24 million should not be paid after allegedly defrauding 255 Missouri investors.
The South Carolina Attorney General Alan Wilson announced in a press release also dated February 4, 2021 that more than 320 South Carolina investors purchased limited partnership interests in various GPB funds, with a total investment of more than $28 million according to a Cease and Desist Order by the Securities Commissioner of South Carolina.
The states are seeking court-ordered monetary penalties, investor restitution, disgorgement, and permanent injunctive relief in barring the defendants from violating securities laws or participating in the sale or issuance of securities in the future.
Finally, it is important to note that, as of the date of this article, there has not been a finding of liability as to the complaints or allegations mentioned in this article, unless otherwise indicated. Any reader should also read the original sources hyperlinked in this blog for accuracy, including any BrokerCheck report and/or record of any disciplinary or regulatory action. Those sources are incorporated by reference into the text of this blog, and are the governing materials in case of any inconsistencies or typos in this blog.
Securities Lawyers Are Pursuing Claims on Behalf of GPB Investors
The Rosca Scarlato LLC law firm attorneys often represent victims of Ponzi schemes and broker misconduct and are currently pursuing claims on behalf of a putative class of GPB investors interest in a class action filed against GPB and several of its affiliated companies and control persons, including Gentile, Lash, and Schneider.
Investor rights attorney Alan Rosca, a securities lawyer and adjunct professor of securities regulation, has experience representing thousands of investors in cases ranging from class actions to arbitration. Attorney Rosca is encouraging GPB investors who are concerned about their investments to contact an experienced securities lawyer for a free case evaluation or discussion of options by calling 888-998-0530, via email at arosca@rscounsel.law, or through the contact form on this webpage.
Potential Compensation Claims
Securities Lawyers file Class Action Lawsuit on Behalf of Investors in GPB Capital Funds
On August 6, 2019, investor rights attorneys at Rosca Scarlato LLC, together with co-counsels Jeffrey Kaplan of Dimond Kaplan & Rothstein, PA and Brian Levin of Levin Law, PA., filed a class actions lawsuit on behalf of investors in GPB Capital Holding Funds.
To view a copy of the GPB class action complaint please click here. To learn more information about the lawsuit, investors are encouraged to contact out investor rights attorneys at 888-998-0530, via email at arosca@rscounsel.law or pscarlato@rscounsel.law, or through the contact form on this webpage.
GPB Capital Alleged High Risk Private Placements
GPB Capital Holdings is a New York based alternative asset management firm that raised over $1.5 billion dollars in capital from thousands of investors across the country, through 10 separate offerings:
- GPB Automotive Portfolio, LP
- GPB Cold Storage, LP
- GPB Eurobond Finance PLC
- GPB Holdings II, LP
- GPB Holdings, III, LP
- GPB Holdings Qualified, LP
- GPB Holdings, LP
- GPB NYC Development
- GPB Scientific, LLC
- GPB Waste Management, LP formerly: GPB Waste Management Fund, LP.
Numerous broker-dealers and their registered representatives across the country sold private placements for GPB Capital. Those broker-dealers and registered representatives allegedly received $167 million in fees and commissions for their sales of GPB products to investors, according to an industry publication.
GPB investors, however, are now looking at striking drops in the value of their investments, and GPB Capital has been investigated by state and federal regulators including the Securities and Exchange Commission (“SEC”), Financial Industry Regulatory Authority (“FINRA”), and the State of Massachusetts.
GPB Armada Waste Has Dropped 67.4% in Value
GPB’s Armada Waste Management has particularly struggled, and, according to GPB, the present estimated value of the fund is $53.4 million, after investors purchased $163.4 million of the securities, the media reports note. Overall, Armada Waste Management has declined in value 67.4%, the reports state, which would mean that an investment of $100,000 would plummeted to $32,660.
GPB Investors Represented by Rosca Scarlato LLC Preparing to Seek Compensation for Losses
GPB investors represented by the Rosca Scarlato LLC investor right lawyers are preparing to take action and seek compensation for their losses arising out of their GPB investment.
GPB recently reported estimations that the value of its seven funds have plummeted to $1.1 billion, or only 61% of the initially raised capital. GPB has recently focused its business on buying auto dealerships and waste management businesses with the reported goal of producing high, single digit returns for clients, according to media reports.
GPB has attempted to console investors by making statements that it has returned a total of $272 million to investors through distributions, which act like dividends. That would account for approximately 15% of investors capital. However, the Rosca Scarlato securities lawyers are investigating whether said payments were a return of investor capital and not a return on investment.
GPB started registering the funds with the SEC in 2013, according to its document filings.
Investors who believe they lost money in the GPB investment programs are encouraged to contact Rosca Scarlato LLC attorneys Alan Rosca or Paul Scarlato for a free, no-obligation discussion about their loss recovery options, at 888-998-0530 or via email at arosca@rscounsel.law.
Potential Compensation Claims
GPB Capital Holdings Was the Focus of an SEC and FINRA Inquiry and Has Been under FBI Investigation Since March of 2019
GPB Capital Holdings fell under the scope of SEC and FINRA investigations regarding the aforementioned private placements, the media reports note. The SEC’s inquiry reportedly focused on the accuracy of disclosures made by GPB to investors, the performance of various funds and the distribution of capital to investors, according to an industry sources.
The heat was then turned up as GPB Capital Holdings reported in March that the FBI made an unannounced visit to the firm’s office in New York, regarding one of their investment programs, the aforementioned reports state.
GPB has made the following statement via a GPB spokesman:
Recently, we have been cooperating with inquiries from various authorities and the visit on February 28, 2019 from the FBI and the New York City Business Integrity Commission, while unscheduled, was a part of that process. We will continue to cooperate with inquiries and are confident that as we move forward our portfolio companies are stable and well-positioned for the future.
Securities Lawyer Investigating GPB Capital's alleged high-risk private placements sales
The Rosca Scarlato LLC law firm represents investors who lose money as a result of investment-related fraud or misconduct and are currently investigating GPB Capital‘s alleged high-risk private placements sales.
The firm takes most cases of this type on a contingency fee basis and advance the case costs, and only gets paid for their fees and costs out of money recovered for clients. Attorney Alan Rosca, a securities lawyer and adjunct professor of securities regulation, and has represented thousands of victimized investors across the country and around the world in cases ranging from arbitrations to class actions.
What GPB Investors Should Do
Investors who are concerned they may have lost money invested in GPB programs may contact a securities attorney to discuss about their legal options. Investor rights attorney Alan Rosca, of the Rosca Scarlato law firm, is working with GPB investors and investigating activity related to GPB Capital‘s alleged high-risk private placements sales.
Investors who believe they lost money as a result of GPB Capital‘s alleged high-risk private placements sales and related approval of high commissions for reps and brokers may contact attorney Alan Rosca for a free no-obligation evaluation of their recovery options, at 888-998-0530, via email at arosca@rscounsel.law, or through the contact form on this webpage. The GPB Capital Holdings Investor Center is not affiliated with GPB Capital Holdings or any of its affiliated companies.
Recent Investigations
DISCLAIMER
In our legal system, every person is innocent until and unless found guilty by a court of law or a tribunal. Whenever we reference “allegations” or charges that are “alleged,” such allegations or charges have not been proven, and are merely accusations, not findings of fault, as of the date of the blog. We do not have, nor do we undertake, a duty to continue to monitor or follow matters about which we report, and/or to publish subsequent updates regarding various developments that may occur in such matters. Readers are encouraged to conduct their own research regarding any such matters and any developments that may or may not have occurred in such matters. Also, the Brokercheck report linked to some of our blogs is the up-to-date version as of the date of accessing by the reader. The information in our blogs is current as of the date of the drafting of the blog, and given that sometimes certain past complaints may no longer be listed in newer Brokercheck reports, some of the events referenced in some of our blogs may later on be removed from newer Brokercheck reports. Visitors may check the most recent version of each brokercheck report at www.finra.org, and may contact FINRA for the earlier version of the Brokercheck report upon which various blogs may be based.
