Is GBP Capital A Ponzi Scheme? – FBI Now Investigating Firm

shutterstock_103681238-300x300The law offices of Gana Weinstein LLP continue to report and update investors on their investigation into GPB Capital Holdings (GPB Capital).  The firm currently represents multiple clients who have been recommended GPB Capital by brokers who were paid large commissions to sell the investment.

GPB Capital has been plagued with issues since last year when the firm stopped raising new money, lost an auditor, and engaged in a lawsuit with a former business partner Patrick Dibre (Dibre).  GPB Capital complained that Dibre reneged on the sale to GPB Capital of certain auto dealerships causing the fund to lose $40 million according to GPB’s complaint.  Dibre counterclaimed that GPB Capital is nothing more than “a very complicated and manipulative Ponzi scheme.”  Then it was reported that the Financial Industry Regulatory Authority Inc. (FINRA) and the Securities and Exchange Commission (SEC) launched investigations in to GPB Capital.

Now, according to newsources, GBP Capital is being investigated by the FBI who made an unannounced visit to GPB Capital’s offices in early March 2019.  None of this information is good news for investors who relied upon the due diligence efforts of their brokers in agreeing to invest in GBP Capital offerings.

Brokerage firms are unfortunately all too willing to subject their clients to the risks of investing in GPB due to the hefty fees and commissions these firms earn.  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.  There are as many as 60 brokerage firms that sold these funds and among the largest of those firms are Royal Alliance Associates Inc., Sagepoint Financial Inc., FSC Securities Corp. and Woodbury Financial Services Inc.

GPB Capital has raised $1.8 billion in investor money since 2013.  Subsequent reporting has alerted the public that investors should no longer rely on 2015 and 2016 financial statements and independent accounts’ reports for: GPB Automotive Portfolio, ($622.1 million); GPB Holdings II, ($645.8 million); and GPB Holdings Qualified.  GPB Capital missed an April 30 deadline to file financial statements with the Securities and Exchange Commission (SEC) which crossed industry thresholds for making such information public more than a year ago.

It is highly unusual for an organization of the purported size of GPB Capital to stop raising money, obtain a new auditor, decrease distributions, and be under multiple regulatory investigations without serious underlining issues.  The fact that multiple auditor reports have been disclaimed, suggests potentially multiple years of false information or a size and nature that is currently unknown.

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.