Securities Lawyers Blog
The law offices of Gana Weinstein LLP are investigating GPB Capital Holdings (GPB Capital) and its dispute with a former business partner Patrick Dibre (Dibre) who allegedly reneged on the sale to GPB Capital of certain auto dealerships causing the fund to lose $40 million according to GPB’s complaint. The complaint alleged that between December 2013 and April 2015 GPB Capital advanced Dibre $42 million for auto dealerships he then failed to deliver. The lawsuit claims that Dibre failed to provide required notices to start the sales process of five dealerships.
Dibre owned auto dealerships in the New York area and purportedly held himself out to the GPB Capital as the person who could build out GPB Capital’s auto dealership business. Instead of that happening, the complaint alleges that Dibre informed automobile manufacturers that they should withhold their approval of GPB Capital owning and operating dealers because of claimed malfeasance. However, GPB Capital alleges that Dibre is negotiating for the sale of the same dealerships to an investment fund.
At this time it unclear the ultimate financial impact this failed transaction will have on GPB Capital Holding’s funds which include:
GPB Cold Storage
GPB Automotive Fund
GPB Automotive Income
GPB Holdings II and III
GPB Waste Management
GPB NY Development
According to news sources GPB Capital raised between $600 million to $800 million from investors mostly through the brokerage industries independent contractor channel. On its website, the GPB Capital claims to have raised $1.5 billion. However, investors in GPB Capital pay hefty fees for their interests. When GPB Capital’s Automotive portfolio raised a total of $369.2 million from more than 3,800 investors it paid out $43.4 million, or 11.75%, in commissions. 7% of that amount goes directly to the recommending broker’s pocket.
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. According to studies, alternative investments like non-traded REITs and BDCs have historically have underperformed even safe benchmarks, like U.S. treasury bonds – meaning that non-traded products provide paltry investment returns considering the risk an investor takes. Appropriate due diligence would identify that an alternative investment’s high costs, illiquidity, and conflicts of interests are simply not suitable for investors without a corresponding promise of increased returns.
Investors who have suffered losses are encouraged to contact us at (800) 810-4262 for consultation.
The investment lawyers at Gana Weinstein LLP represent investors who have suffered investment losses due to allegations of wrongdoing. The majority of these claims may be brought in securities arbitration before FINRA. Our consultations are free of charge and the firm is only compensated if you recover.