In February 2021, the Securities and Exchange Commission (SEC) filed an enforcement case against GPB Holdings, and the three men running it: David Gentile, of Manhasset, New York, its founder and CEO; Jeffrey Schneider of Naples, Florida, the owner and CEO of Ascendant Capital, LLC; and Jeffrey Lash, of Austin, Texas, a managing partner of GPB Capital. The three men were arrested and charged with running a Ponzi scheme. https://www.justice.gov/usao-edny/pr/gpb-capital-founder-and-ceo-among-three-individuals-indicted-private-equity-investment
They and the brokers who sold the GPB securities listed below, raised almost two billion dollars from over 17,000 investors, mostly unsophisticated and retired people, who were told they were investing in businesses—often car dealerships, real estate, or waste disposal businesses—that generated large and consistent cash. Investors were promised 8% annual returns, paid out every month.
The brokerage firms that received large commissions identified the target investors: retired people who needed supplemental monthly income. They chose not to look too closely into the actual financials and businesses touted by GPB. SEC rules require brokerage firms to conduct extensive “due diligence” of any security before selling it to investors. The brokers failed to do so. In addition, brokers are required to recommend only “suitable investments” to their clients. Again, the brokers violated SEC rules. Instead, keen to receive their 9-11% upfront commissions, they misrepresented these securities as being safe, secure sources of steady monthly income.
The businesses did not generate large returns. The three men running it lived luxurious lives from the large fees taken from investors funds. It has been reported that David Gentile is a Scientologist and resident of Clearwater, Florida, who spent heavily in the Scientology-controlled Clearwater area. The three men misrepresented the securities, paying very large commissions to brokers who sold them to investors without doing the required “due diligence”. It was all a lie, according to the SEC. “In truth, a significant portion of GPB’s distributions were paid directly from investor funds.”
A Ponzi scheme is like a pyramid scheme because early investors receive money from the investments made by later investors, not from the businesses. Eventually, there are simply too many people who are awaiting their monthly checks to be supported. Unless more investors are found quickly enough, the scheme collapses.
As stated in the indictments issued by the U.S. attorneys office in the Eastern District of New York, which also exposed and indicted the “Wolf of Wall Street”, “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, this was all a lie. In truth, a significant portion of GPB’s distributions were paid directly from investors’ 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.”
GPB Capital and the brokers who sold its securities to investors promised them 8% annual returns, in safe investments. Now, investors are finding that not only are they receiving no distributions, but that their invested money will be lost unless they can recover it through a civil action or arbitration.
Possible class actions and other legal remedies are being investigated involving investors who were sold these securities. If you invested in any of these GPB securities, please complete the form below
GPB Holdings, LP
GPB Holdings, II, LP
GPB Automotive Holdings
GPB Waste Management, aka Armada
GPB Cold Storage