Private equity firm GPB Capital Holdings says it is “deeply disappointed” with the myriad of criminal and civil charges against the firm, its CEO and two of its employees, one of whom describes his client as “a good man with a clean record.” “- Boston to Birmingham, Ala. The firm promises to come up with” significant evidence in its favor, “and boy, boy, is it going to need it because there sure was enough going in the opposite direction to get the Department of Justice, SEC’s attention, on to pull FINRA, a slew of clients and powers in New York, New Jersey, Massachusetts, Illinois, Georgia, Missouri, South Carolina and Alabama.
According to the authorities, Messrs Gentile and Schneider were aware that GPB’s funds were not generating sufficient returns to pay the promised distributions and approved the repeated use of investor funds to cover the dividends. [New York State Attorney General Letitia] James said GPB and Ascendant, an affiliate marketing firm, as well as Messrs Gentile, Schneider and Lash “fled” more than 1,400 New Yorkers who invested more than $ 150 million in the company’s private equity funds. She said the funds never delivered promised profits and that the defendants instead used the investments to subsidize “their own lavish lifestyles.”
Ooh tell us more!
Among other things, GPB reportedly used funds to cover costs for private jets, including a $ 90,000 per year flight attendant, ATV rental, and more than $ 29,000 in expenses, according to an auditor, according to data from David David’s 50th birthday was included on the state’s appeal. It is also alleged that GPB spent $ 355,000 on a 2015 Ferrari FF that was used by Mr. Gentile.
GPB is also facing several federal class action lawsuits in which plaintiffs have accused the company of running a Ponzi scheme that used fresh investor capital to pay dividends to previous investors.
Last month, an arbitration tribunal for the Detroit Financial Industry Regulatory Authority ruled in favor of an investor who alleged a $ 225,000 investment in a GPB automotive fund had been misused, documents show.
All the standard stuff like supposed ponzi schemes go, but these also have a fun, contemporary twist.
In addition, GPB is charged with retaliation against a whistleblower who alerted the SEC to what was going on at the company. In its complaint, the SEC also said that GPB fired a senior auto dealer who was involved in running some of its dealerships after raising a number of concerns, including GPB’s use of investor funds to cover dividend payments.
There should be better evidence indeed.
GPB Capital is charged over $ 1.7 billion in a Ponzi-like program for fraud [WSJ]