An indictment was unsealed in federal court on February 4, 2021, charging GPB Capital Holdings, LLC (“GPB”) with securities fraud, wire fraud, and conspiracy. Those charged include David Gentile, the founder, owner, and CEO of GPB; Jeffrey Lash, former managing partner of GPB; and Jeffry Schneider, the owner and CEO of Ascendant Capital LLC (“Ascendant”).
According to the U.S. Attorney General for the Eastern District of New York and the Assistant Director of the FBI, Gentile, Lash, and Schneider engaged in a scheme to defraud investors by misrepresenting the source of funds used to make monthly distribution payments to investors. They allegedly misled investors about the health and performance of their investments and made payments from undisclosed and improper sources.
The alleged misleading of investors took place for over three years between August 2015 and December 2018. During that time, the CEOs of GPB and Ascendant worked together to convince investors in Holdings I, Holdings II, and Automotive Portfolio that GPB funds would make monthly distribution payments and that those payments would be fully covered by operation funds. Instead, a significant portion of the funds came from investor capital.
If found guilty, Gentile, Lash, and Schneider face 20 years’ imprisonment for knowingly authorizing the use of investor funds to cover income shortfalls and deliberately harming their investors in the process.
The Frankowski Firm has been investigating claims related to the GPB Capital Holdings family of investment funds. In March 2019, Investment News Reported GPB Capital Holdings was under Investigation by the FBI, the SEC, and the Financial Industry Regulatory Authority (“FINRA”).
In June 2019, GPB Capital reported “significant losses” in its funds with its two largest funds seeing declines of 25.4% and 39%. Investment News reported in March that GPB Capital Holdings is under investigation by the FBI, the SEC, and FINRA.
The firm reportedly raised over $1.8 billion from wealthy investors through private placement funds, which invest in auto dealerships and the waste management industry. The firm reportedly paid over $100 million in commission incentives to over sixty brokers to sell GPB’s Regulation D offerings to their clients.
In a lawsuit pending in Nassau County, New York, former GPB partner Patrick Dibre filed a counterclaim in which he alleges that GPB was operating a “very complicated and manipulative Ponzi scheme.” SEC investigators have reportedly been reviewing the accuracy of GPB’s disclosures to investors, fund performance, and investor distributions.
The Frankowski Firm is investigating potential investor complaints into the following GPB Funds:
- GPB Holdings
- GPB Holdings II
- GPB Holdings III
- GPB Holdings Qualified
- GPB Automotive Portfolio
- GPB Automotive Income
- GPB Cold Storage
- GPB Holdings Qualified
- GPB Waste Management
- GPB NYC Development
In addition, the Frankowski Firm is reviewing potential claims against brokerage firms which sold GPB for potential violations of their obligations to investors including fraud, omissions of material facts, failure to do due diligence, conflicts of interest, and violations of federal and/or state securities laws, among others. Such firms may include, but are not limited to: Woodbury Financial Services, Inc.; Royal Alliance Associates, Inc.; Sagepoint Financial, Inc.; Newbridge Securities; Ladenburg Thalmann; and Hightower Securities.