A New York Federal Judge Seeks to Protect Nearly $1B of Investor Assets from GPB Capital Founder Accused of $1.8B Ponzi Scam
A US judge has adopted a magistrate judge’s recommendation to appoint a receiver to oversee the liquidation of assets at GPB Capital Holdings, an alternative asset management firm accused by prosecutors and investors of running a massive Ponzi-like $1.8 billion fraud scheme. The Securities and Exchange Commission (SEC) claims that GPB Capital Founder David Gentile and other company executives defrauded 17,000 retail investors, including retirees, by running a fraudulent limited partnership fund system that promised investors a steady 8% annual return on their investments.
Investors were able to purchase shares of the limited partnership funds through a network of GPB Capital affiliated broker-dealers and registered investment advisory firms. According to the complaint filed by the SEC, these broker-dealers and financial advisors were compensated on a commission basis for selling GPB Capital private investment offerings to investors. The complaint alleges that the GPB Capital private equity funds were mismanaged, resulting in losses to investors and misappropriation of investors’ personal funds.
The complaint also alleges that GPB Capital and its affiliated broker-dealers and investment advisers lied to investors regarding the status of their investments, claiming that monthly distributions were being paid from the underlying invested funds. In reality, prosecutors allege that GPB Capital was using investor funds to pay for the company’s own operations and distribute payments to other investors.
Federal prosecutors have alleged that GPB Capital and its executives used phony back-dated documents and other false information to conceal the fraud and maintain the appearance of steady performance. As a result, many of the limited partnership funds failed to achieve their stated financial goals and investors suffered substantial losses.
Prosecutors have also alleged that GPB Capital and its affiliated broker-dealers used investors’ money to buy luxury items, such as private planes and automobiles. The defendants and their affiliates have been charged with multiple crimes, including securities fraud, wire fraud, conspiracy, and running a Ponzi-like scheme.
A court-appointed receiver will now take control of the GPB Capital assets, which were frozen since February 2021. The receiver will seek to recover losses for investors.
GPB Capital investors may be able to file a claim for recovery of their investment losses with the SEC and/or FINRA. If you believe that your brokerage firm or financial advisor has sold you high risk GPB Capital offerings, you should contact the experienced GPB Capital fraud attorneys at Haselkorn & Thibaut, P.A. to learn more about your potential claims. The attorneys at Haselkorn & thibaut are dedicated to pursuing claims on behalf of investors who were defrauded by their brokers and financial advisors. Our attorneys can provide a free consultation to help you determine the best course of action to take to recover your lost investment. Call today to get started.