Articles Tagged with GPB Capital

shutterstock_102242143-300x169Advisor Jeffrey Dixson (Dixson), currently employed by Madison Avenue Securities, LLC (Madison Avenue) has been subject to at least seven customer complaints and one regulatory action during the course of his career.  According to a BrokerCheck report the customer complaint concerns alternative investments such private placements and direct participation products (DPPs) like non-traded real estate investment trusts (REITs), oil & gas programs, annuities, and equipment leasing programs.  The attorneys at Gana Weinstein LLP have represented dozens of investors who suffered losses caused by these types of high risk, low reward products.

One private placement that a large number of clients of Madison Avenue were sold is GPB Capital Holdings (GPB Capital) related investments.  GPB Capital is facing multiple accusations of being a Ponzi scheme, an ongoing U.S. Securities and Exchange Commission (SEC) and FBI investigations, and even GPB’s chief compliance officier 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.  While advisors have been telling investors to do absolutely nothing and just hang in there – this is nothing more than just additional poor advice.  In November 2019 GPB Capital’s admitted that no financial audit would occur anytime in the near future.  In sum, investors now know there is nothing to hang onto.  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.

In November 2019 a customer complained that Dixson violated the securities laws by alleging that Dixson engaged in sales practice violations related to investments made between 2016 to the present in various alternative investments and fixed index annuities that were alleged as unsuitable. The allegations include Oregon Securities Law, breach of fiduciary duty, negligence and elder abuse.  The claim alleges $150,000 in damages and is currently pending.

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shutterstock_57938968-200x300According to a compliance officer with Purshe Kaplan Sterling Investments, Inc., (Purshe Kaplan) the firm continued to sell securities offered by GPB Capital Holdings (GPB Capital) after she had reported misgivings as to the entities business model and recommended that the firm not sell the product.  According to court documents, the compliance officers responsibilities included reviewing new product offerings, regulatory disclosures, and conducting monthly and quarterly compliance reviews among other duties.

In January 2016, the compliance officer raised concerns about GPB Capital and did not recommend that the product be added to the Purshe Kaplan platform based upon her finding that members of senior management at the sponsor of the product were using investor funds for personal business interests.  However, Purshe Kaplan dismissed her concerns and re-reviewed GPB Capital without the compliance officer’s input.  Further, Purshe Kaplan instructed the compliance officer not to raise concerns about the product before it was offered to purchasers.  Moreover, it was alleged that less experienced personnel were given the role to evaluate GPB Capital.  If these allegations are true Purshe Kaplan may have intentionally withheld material information from all of its investors concerning GPB Capital.

One private placement that a large number of clients of Purshe Kaplan were sold is GPB Capital related investments.  GPB Capital is facing multiple accusations of being a Ponzi scheme, an 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.  While advisors have been telling investors to do absolutely nothing and just hang in there – this is nothing more than just additional poor advice.  In November 2019 GPB Capital’s admitted that no financial audit would occur anytime in the near future.  In sum, investors now know there is nothing to hang onto.  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.

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shutterstock_186772637-300x199Our 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.

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shutterstock_180412949-300x200Our firm represents multiple clients who have collectively lost millions in GPB Capital Holdings (GPB Capital) related investments.  Recently, class action lawsuits have been filed against GPB Capital with the goal of recovering investor funds.  However, it is our law firm’s belief that remedies against the sales agents who peddled GPB Capital offerings provide investors with potentially quicker and better recovery options.  Further, investors in many cases do not lose out from the ability to still collect from a class action resolution if such an event occurs.

Our firm has analyzed the GPB Capital offerings and believe that brokerage firms did not review these offerings in any significant detail.  Our firm’s investigation has found that brokerage firms failed to conduct due diligence and investigate multiple aspects of GPB Capital’s business including its 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.”).

Any investigation would have revealed that GPB Capital is merely the private equity investment arm of a plain vanilla accounting practice.  There is no evidence that GPB Capital’s senior management had the knowledge, industry experience, or investment experience to run the operations of a $1.8 billion dollar mult-asset strategy private equity fund and should not have been entrusted with investor funds.  Our investigation has also identified a number of business claims that any review would have revealed could not have possibly be substantiated.

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shutterstock_168326705-199x300Our firm represents multiple clients who have been recommended GPB Capital Holdings (GPB Capital) related investments. GPB invests in a variety of businesses but primarily in auto dealerships and waste management businesses.  However, over the past year controversy has embroiled GPB Capital in a saga including multiple regulatory investigations and even an FBI referral which has left investors clueless to the fate of their investments.

According to our investigation Royal Alliance Associates, Inc. (Royal Alliance) and its brokers including Matthew Crafa (Crafa) have recommended GPB Capital private placements to investors.

As a background, financial advisers sold $1.5 billion of these high-risk private placements offered by GPB Capital Holdings.  However, GPB Capital told investors in 2018 that virtually none of the firm’s financial reports could be trusted and that in fact the offering had no accurate financial information.  Recently, GPB Capital released its own internal analysis and valuation of its funds without providing any evidence to support its findings.  As reported by InvestmentNews, the two largest funds offered GPB Holdings II and GPB Automotive Portfolio have declines of 25.4% and 39%.  However, some of the other funds, like Armada Waste, faired much worse declining to only 32% of their original value.  Again these valuations are provided by GPB Capital and only after a year of accounting mishaps.

Our firm’s investigation has found that brokerage firms failed to conduct due diligence and investigate multiple aspects of GPB Capital’s business including its 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.   See 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.”).  Any investigation would have revealed that GPB Capital is merely the private equity investment arm of a plain vanilla accounting practice.  There is no evidence that GPB Capital’s senior management had the knowledge, industry experience, or investment experience to run the operations of a $1.8 billion dollar mult-asset strategy private equity fund and should not have been entrusted with investor funds.

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shutterstock_156562427-300x200Our firm represents multiple clients who have been recommended GPB Capital Holdings (GPB Capital) related investments. GPB invests in a variety of businesses but primarily in auto dealerships and waste management businesses.  However, over the past year controversy has embroiled GPB Capital in a saga including multiple regulatory investigations and even an FBI referral which has left investors clueless to the fate of their investments.

Recently, GPB Capital released its own internal analysis and valuation of its funds without providing any evidence to support its findings.  The results were not good for investors.  As reported by InvestmentNews, the two largest funds offered GPB Holdings II and GPB Automotive Portfolio have declines of 25.4% and 39%.  However, some of the other funds, like Armada Waste, fared much worse declining to only 32% of their original value.  Again these valuations are provided by GPB Capital and only after a year of accounting mishaps.

As a background, financial advisers sold $1.5 billion of these high-risk private placements offered by GPB Capital Holdings. More than a year ago GPB Capital was supposed to file registration forms with the SEC for two of its largest funds to make certain accounting and financial disclosures required under the securities laws.  However the company did not meet its deadline back in April 2018 and now over a year later has no firm date when annual reports for the two funds will be filed and the public has no clue what those values will look like.

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shutterstock_54642700-300x200According to our investigation Kalos Capital, Inc. (Kalos Capital) and its brokers possibly including Eric Weschke (Weschke) have recommended GPB Capital Holdings (GPB Capital) private placements to investors.  Weschke has been subject to at least 13 customer complaints and two regulatory action during the course of his career.  According to records kept by The Financial Industry Regulatory Authority (FINRA), Weschke’s customer complaints allege that Weschke recommended unsuitable securities recommendations in a variety of products including alternative investments, real estate securities, and private debt among other allegations of misconduct in the handling of customer accounts.

In February 2019 a customer filed a complaint alleging that Weschke violated the securities laws by, among other things, that Weschke made unsuitable investment recommendations, breach of fiduciary duty, and failure to supervise during the time period October 2015 through 2017.  The claim is currently pending.

In February 2019 a customer filed a complaint alleging that Weschke violated the securities laws by, among other things, that Weschke made unsuitable investment recommendations, breach of fiduciary duty from October 2015 through 2017.  The claim is currently pending and alleged $200,000 in damages.

Investors who have invested in GPB Capital are encouraged to contact us for a free consultation.  Our firm represents multiple clients who have been recommended GPB Capital Holdings (GPB Capital) related investments. GPB invests in a variety of businesses but primarily in auto dealerships and waste management businesses.  However, over the past year controversy has embroiled GPB Capital in a saga including multiple regulatory investigations and even an FBI referral which has left investors clueless to the fate of their investments.  Investors should prepare themselves that the worst possible outcome, including significant losses on their investments, may be unavoidable.

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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.

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shutterstock_189135755-300x300The law offices of Gana Weinstein LLP have previously reported on their investigation into 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.  That litigation is still playing out in court.

GPB Capital has raised an astonishing $1.8 billion in investor money since 2013.  However as reported, GPB will stop raising new money for now to focus on accounting issues and financial statements of its two large funds.  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.  Apparently, these accounting revisions are only being made because 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.

Investors should be concerned at this point as it is highly unusual for funds’ of this size to cease raising funds unless there are serious concerns.  Moreover, delays in reporting financials and the need to release new reports concerning financial statements made three years ago are highly troubling.  This suggests potentially multiple years of false information or a size and nature that is currently unknown.

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shutterstock_145368937-300x225The 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: