GPB Capital Holdings received a civil fraud complaint from William Galvin, who manages securities regulators in Massachusetts. GPB has received negative news for nearly two years as the FBI has raided them, devalued their funds, had their chief compliance officer arrested, and numerous lawsuits.
GPB strongly rejects the allegations in the administrative complaint and will vigorously defend ourselves against them, a spokesman for GPB Capital said in a statement. We are confident that any resolution of this matter in Massachusetts will be fair and just.
Matt Thibaut (InvestmentFraudLawyers.com), said, “The action by the Secretary of the Commonwealth of Massachusetts William F. Galvin is not surprising. We continue to receive multiple calls about GPB by some very confused, yet trustworthy investors, who know in their heart something isn’t right – just a google search would leave a reasonable person with that feeling – but are often manipulated by the individuals that sold the GPB to them, offering them false hope and promises that a better day will come. We just do not buy into it. It’s nearly impossible to conceive that the amount regulators that are investigating GPB would simply pack up their bags and leave without more enforcement action. What’s more, we are seeing an alarming number of other problematic and similarly structured investments in client portfolios above and beyond GPB. The issues with GPB have certainly provided the catalyst for people to pick up the phone and learn what their rights are, but those that remain with the advisors that sold them the GPB in the first place remain vulnerable.”
Galvin’s securities division is seeking an injunction that would impose administrative penalties on GPB, permanently prohibit it from registering in Massachusetts, require the recovery of all profits, and make a repayment offer to all residents who sold securities in violation of state law.
GPB Capital Holdings, LLC was founded in 2009 by David Gentile as a subsidiary of the New York-based company, also known as GPB Capital. Rosenberg left the company in 2013, accusing GPB Capital of financial misconduct. When Rosenberg sold his stake in the company to Prime Motors for $235 million in 2017, GPC Capital became the majority owner of Prime automakers Group.
Rosenberg is not named in Galvin’s complaint, but he sued GPB Capital Holdings, accusing the company of “serious financial misconduct” in 2014.
According to the lawsuit, the alleged misconduct included falsification of revenue through sham contracts and investor funds embezzlement for personal purposes. In an emailed statement on Wednesday, Rosenberg said: “Having built the Prime Motor Group with my father, it is heartbreaking to see that GPB only serves the narrow self-interest of members of the Prime family.
Galvin’s complaint alleges that GPB failed to disclose transactions with third parties that were indirectly owned by Gentile and Jeffry Schneider, a “strategic advisor” to GPB, who received substantial remuneration for his role as a strategic advisor. According to the complaint, the only difference between GPB Capital and Ascendant was the email address used.
Gentile also benefited from GPB Capital paying commission for alternative strategies, according to Galvin’s complaint. The complaint alleges that the recognition blurred the boundaries between GPB Capital’s investment activities and those of its parent company.