If you invested in GPB Capital, you may have been victimized by a massive securities fraud scheme. According to the SEC and numerous state securities regulators, GPB Capital Holdings, a New York-based investment adviser, is at the center of an alleged multi-billion dollar Ponzi scheme that has left investors with enormous losses. The firm’s founder, David Gentile, and two of its principals have been arrested on related criminal charges.
GPB Capital Holdings sold unregistered, high-commission limited partnership interests in a series of alternative investment funds to investors across the country through more than five dozen brokerage firms. The funds were marketed to so-called “accredited investors,” individuals with a minimum net worth or income who qualified to participate in private placement transactions exempt from registration requirements under federal and state securities laws.
The SEC’s complaint alleges that Legal implications of investing in GPB Capital and its principals, David Gentile, Jeffry Schneider, and Jeffrey Lash, used deceptive marketing to misrepresent the nature of the investments and their returns. Gentile, Schneider, and Lash are charged with luring investors into the investment funds with promises that distribution payments would be paid exclusively from revenue generated by the portfolio companies and not from investor funds. The complaint alleges that the defendants misrepresented the funds’ actual financial results by back-dating performance guarantees and manipulating financial statements to give the appearance of inflated revenue.
As the GPB Capital funds lost value, the firm’s annualized distribution payments were paid in part from investor funds. This is a classic feature of a Ponzi scheme. A Ponzi scheme is unsustainable and typically collapses when the scheme fails to find enough new money to pay old investors.
According to the complaint, the defendants’ fraudulent scheme was made possible by their control of several broker-dealers that were the primary underwriters for the GPB Capital funds. In fact, FINRA recently sanctioned several brokerage firms, including Cetera Advisors, NewBridge Investments, Royal Alliance, and FSC, for selling the private placements without performing required due diligence on the GPB Funds.
It is believed that the underlying investments in the GPB Funds were a mixture of mortgage-backed securities, credit default swaps, and other complex derivative instruments. Many of these investments are illiquid and subject to a variety of regulatory restrictions. Investors have suffered significant losses because they are unable to sell their illiquid investments.
If you have been affected by the alleged GPB Capital scheme, the securities lawyers at Haselkorn & Thibaut are prepared to review your claim. We have extensive experience representing investors in FINRA arbitration claims against stockbrokers who recommended the investments and failed to perform their statutory duties of due diligence. We can also assist you in filing a complaint with FINRA if you have been the victim of another securities fraud. Contact us today for a free consultation. Our attorneys will review your case and inform you of your options for recovery. We represent clients throughout the United States in a wide range of investment loss cases, including securities arbitration claims against FINRA-registered brokerage firms and Registered Investment Advisory (“RIA”) firms.