Approximately 60 broker-dealers across the U.S. sold $1.7 to $1.8 billion of GPB investments marketed as private placements to investors. These GPB investments appear to be part of a large ponzi scheme. It is believed the broker-dealers failed to conduct adequate due diligence prior to recommending these securities to their retail clients. GPB issued several individual limited partnerships that may be the cause of significant investment losses. Some of these funds include:
- GPB Holdings, LP
- GPB Holdings II, LP
- GPB Holdings III, LP
- GPB Scientific, LLC
- GPB Cold Storage, LP
- GPB Automotive Portfolio, LP
- GPB NYC Development
- GPB Holdings Qualified, LP
- GPB Eurobond Finance PLC
- GPB Waste Management, LP f/k/a GPB Waste Management Fund, LP
SEC Charges Individuals and Affiliated GPB Entities with Ponzi Scheme
On February 4, 2021, the U.S. Securities and Exchange Commission (“SEC”) charged three people and their affiliated companies with operating a Ponzi-like scheme. The fraudulent acts, which raised more than $1.7 billion, are alleged to have been run by a New York-based asset management firm, GPB Capital. GPB Capital was also charged by the SEC with violating whistleblower protection laws.
Who was arrested in connection with this fraud?
Three individuals were arrested in connection with this incident of investment fraud. Defendants include, David Gentile, owner and CEO of GPB Capital, Jeffry Schneider, owner and CEO of Ascendant Capital LLC, and Jeffrey Lash, former GPB managing partner. According to the Wall Street Journal, the individuals involved with fraudulent GPB investments had fallen under suspicion after investors stopped receiving payments in 2018. Since that time, investors have been unable to retrieve any monies from GPB. It is alleged the trio of Defendants defrauded over 17,000 investors, with 4,000 of the victims being seniors. In addition to federal charges, several civil lawsuits have been filed.
What charges have been filed?
An SEC press release states charges were filed in federal court for the Eastern District of New York. The official Complaint alleges Gentile, Schneider, GPB Capital, Ascendant Capital, and Ascendant Alternative Strategies violated antifraud provisions of the Securities Act of 1933, Securities Exchange Act of 1934, and the Investment Advisers Act of 1940. Over a period of four years, officials say Defendants allegedly falsified documents, made misrepresentations to investors about millions of dollars in fees, misused investor funds, failed to register two funds with the SEC, and also evaded delivering audited financial statements to the SEC. Accusations of violating whistleblower laws also have been made.
Mislead investors and misuse of investor funds
SEC officials and victims say, in this scheme designed to lure investors, the accused made promises of steady 8% returns. Once investors were on board, they subsequently misled them about the health and performance of their investments. Rather than building wealth from legitimate investments and distributing dividends, evidence supports a significant amount of GPB’s distributions were instead paid directly from investor funds. In many instances, payments came from the investors’ own funds because the investment funds did not generate sufficient income to cover their distribution payments.
William F. Sweeney, Jr., Assistant Director-in-Charge of New York’s FBI Office, said in a press release.
“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.”
Victims have the right to reclaim their money
Broker-Dealer and Registered Investment Advisor are required to conduct due diligence on the investments they make available to their clients. If they fail to complete sufficient due diligence on the securities they offer, they can be held liable for losses sustained by their clients. If you have invested in GPB, and believe you have been misled, defrauded, or exploited, you can, and should, seek legal counsel to recover your losses.
Schwartz’s Investor Advocates can help
Investment fraud claims and FINRA arbitration is complicated, and it’s important to hire an attorney who understands the intricacies associated with this area of law. Schwartz’s Investment Advocates is committed to helping victims recover investment-related losses. Our knowledgeable and experienced attorneys will aggressively fight for you to ensure you receive any money you are entitled to and that wrongdoers are held accountable for investment fraud they have committed.
Our litigation law firm is nationwide. We take cases on a contingency fee basis, which means our firm does not collect a fee unless it recovers money for you. Contact us today to receive a free consultation.