The criminal trial of two senior executives at GPB Capital began this morning in federal court. The allegations are that the company, and a number of brokers-dealers who sold its private placements, defrauded investors out of more than $1.8 billion in high-risk investments in a series of alternative asset investment funds. The case has drawn interest from the press, investors and financial advisors.
Investors in the funds were lured by promises of high yields in a time of low interest rates. The scheme allegedly involved raising money from “accredited investors” by selling limited partnership interests in a series of GPB Capital-controlled investment funds. The funds were sold to investors who qualified for investment in the private placements by having a net worth or income exceeding certain thresholds. The defendants allegedly sold the securities in violation of federal and state registration requirements.
It is alleged that the defendants made a variety of material misrepresentations and omissions in the course of selling their investments. For example, they allegedly represented that distributions paid to investors would come from operating funds rather than from the invested capital. In fact, according to the SEC, the defendants used new investor money to pay out old investors and failed to disclose that their portfolio was not generating enough revenue to meet the distribution payments.
The Defendants allegedly also violated anti-fraud Learn more about GPB Capital fraud cases here laws by using fund assets to benefit themselves and their family members, and by engaging in a pattern of undisclosed conflicts of interest and self-dealing. The Defendants also failed to make required filings with the SEC, including audited financial statements for the two largest GPB Capital funds.
GPB Capital Holdings and its two senior executives, David Gentile and Jeffry Schneider, face charges of securities fraud, wire fraud, conspiracy, mail fraud and other related offenses. The charges relate to the firm and two affiliated investment funds, Ascendant Capital and GPB Automotive Portfolio.
Gentile and Schneider are charged with running a Ponzi-like scheme in which they collected money from new investors to pay off older ones. The alleged scheme was exposed in 2018 when it became clear that the firm’s investment funds, which focused on auto dealerships and waste management companies, were not performing as promised. In the course of the investigation, the FBI raided the firm’s offices in February 2021.
Investors in the GPB Capital funds may be able to recover losses they sustained as a result of the alleged misconduct. The Wolper Law Firm, P.A. is representing investors nationwide in securities litigation and arbitration on a contingency fee basis. Contact us today to learn more about your options for recovering investment losses. We can also help you file a claim with your broker-dealer to receive a refund of your initial investment. We are committed to fighting for justice on behalf of investors and preserving our nation’s capital markets. We will do everything possible to get you the compensation you deserve.