Securities Lawyers Blog
Our firm has been contacted by hundreds of clients that have been defrauded in GPB Capital Holdings (GPB Capital) related investments. One common element in our firm’s contact with GPB Capital investors is the advisor’s recommendation to victims – do absolutely nothing. The advisors recommendation is expressed in phrases like “the audits will come out”, “GPB Capital is a completely transparent company and not a scam”, and sometimes “just hang in there.”
However, in November GPB Capital’s patience game crumbled and the firm admitted that no financial audit would occur anytime in the near future. In sum, investors now know there is nothing to hang onto. Advisors have no counter talking points to weigh against multiple accusations of being a Ponzi scheme, the ongoing U.S. Securities and Exchange Commission (SEC) and FBI investigations, and even GPB’s chief compliance officer being indicted for illegally obtaining information on the SEC’s investigation. Now even Volkswagen and Toyota are threatening to pull the plug on GPB Capital auto dealerships. By the day, advisor recommendations to do nothing appear to be completely self-serving, out of the loop, and not in the interest of the investor.
Our firm has analyzed the GPB Capital offerings and believe that brokerage firms did not review GPB Capital offerings in any significant detail. Any serious due diligence would have revealed that GPB Capital was a dubious offering destined to fail. In complaints filed with The Financial Industry Regulatory Authority (FINRA) our clients have alleged that GPB Capital’s scam was highly predictable and easy to spot. Nearly every aspect of the offering raised unanswerable questions from GPB Capital’s senior management, fantastical business claims, and intra-fund lending practices.
For instance, with respect to GPB Capital’s senior management the company was founded by David Gentile (Gentile). Had brokerage firms investigated GPB Capital’s senior manager it would have found that prior to founding GPB Capital, Gentile’s experience was as a CPA and company advisor with the accounting practice his family ran at Gentile Pismeny & Brengel, LLP (GP&B) in New York. Nonetheless, GPB’s PPMs claimed expertise in these areas. GPB Holdings II, LP, PPM, pg. 9 (Apr. 13, 2015) (“GPB’s senior management have a great deal of experience investing in the Automotive Retail, Managed IT Services and Life Sciences sectors.”). In sum, it appears that no one running a private equity multi-asset strategy fund with $2 billion in assets had any investment experience, licenses, track record, or qualifications. The poor quality of GPB Capital’s management is just one of many areas that should have served as a “red flag” for brokerage firms to stay away from unqualified outfits like GPB Capital.
GPB Capital Holding’s funds include:
GPB Cold Storage
GPB Automotive Fund
GPB Automotive Income
GPB Holdings II and III
GPB Waste Management
GPB NY Development
Brokers have a responsibility treat investors fairly which includes obligations such as making only suitable investments for the client after conducting due diligence. Due diligence includes an investigation into the investment’s properties including its benefits, risks, tax consequences, issuer, history, and other relevant factors. Appropriate due diligence would identify that an alternative investment’s high costs, illiquidity, and conflicts of interests that would make the investment not suitable for investors.
Investors who have suffered losses are encouraged to contact us at (800) 810-4262 for consultation. At Gana Weinstein LLP, our attorneys are experienced representing investors who have suffered securities losses due to the mishandling of their accounts. Claims may be brought in securities arbitration before FINRA. Our consultations are free of charge and the firm is only compensated if you recover.