GPB investors and Recovery of their Investment
Older and retired investors are, once again, the targets and victims of a billion dollar Ponzi scheme. The perpetrator? GPB Capital, which raised over $1.8 billion dollars from 17,000 investors, most of whom were older people seeking safe, secure monthly checks. Now, their monthly checks have vanished, as have their initial investments. The very people who did not want risk were targeted by brokers who sold GPB limited partnership interests.
In February 2013, a federal judge unsealed an indictment against GPB and its owners. GPB’s CEO and two directors were arrested. More arrests may occur as the Ponzi scheme’s affairs are wound down.
GPB began in 2013 when a New York CPA, David Gentile, began raising money to buy automotive dealerships. Gentile, a member of the Church of Scientology, opened a GPB office in Clearwater, Florida, and lived a life of luxury near the Church of Scientology’s international headquarters.
By 2015, GPB began using later investors’ money to pay early investors the promised monthly income. Brokers told investors they would receive 8 % a year income, paid monthly.
In 2018, a former GPB employee alleged in litigation that GPB was a Ponzi scheme. Massachusetts investigated. In 2020, after reviewing GPB’s hundreds of bank accounts and its complex financial records, the Massachusetts AG concluded that he was correct: GPB used money from later investors to pay distributions to earlier investors. It concluded that “as time went on, and GPB raised more money, it was unable to deploy its cash efficiently.”
In February 2021, the U.S. Attorney’s office for the Eastern District of New York unsealed an indictment charging David Gentile and his two cohorts with engaging in a scheme to defraud investors by misrepresenting the source of funds used to make monthly distributions to investors. Several allegations were made:
* GPB did not use all the $1.8 billion dollars to make business investments. Instead funds were diverted to pay for personal and Church of Scientology-related items
*Investors were told they would receive monthly checks from business profits, but they were largely made from other investors’ funds
*GPB had no audited financials for some years and had manipulated other financial statements to create a false impression of profitability
The Nygaard Law Firm is representing investors who have lost money in GPB partnership interests including GPB Capital Holdings, GPB Capital Holdings II, GPB Automotive Portfolio, GPB Waste Management, LP, a/k/a Armada Waste Management, LP and GPB Cold Storage, LP.
These GPB limited partnerships were sold to investors through a network of over 50 brokerage firms. They received sales commissions of 8% to the financial advisor and 3-4% to the brokerage firm for marketing and due diligence.
FINRA and the SEC both require brokerage firms to conduct extensive due diligence when selling “alternative, non traded” investments. This includes reviewing financial statements and business documents; researching the issuer, GPB, and principals; and understanding financial relationships with affiliated companies. The brokerage firms failed to conduct this due diligence. They failed to inspect or analyze financial statements, and investigate the promoters.
Consequently, the brokers proceeded to sell GPB to unsuspecting investors. They represented that the investments were safe, and would pay 8% income, via monthly checks.
Because their due diligence was not conducted effectively, the brokers and brokerage firms missed many red flags. This misconduct is actionable. Investors can recover their money through the FINRA arbitration process or a class action.
Possible class actions are being investigated for recovery of investors’ money against the following brokerage firms. Much depends upon the existence of written sales materials and their use. Investors with information they received about any of the GPB investments are asked to complete the form below. Thank you
Advisory Group Equities
Crown Capital Securities
Madison Avenue Securities
National Securities Corporation