Over 17,000 investors have suffered substantial losses after their brokerage firms sold them GPB Capital private placement investments. The firm has been accused of investment fraud and has now been liquidated by a court-appointed receiver. The firm had been selling high-fee and risky alternative investments to “accredited investors,” meaning individuals with a certain net worth or income who could participate in private placement securities transactions exempt from SEC and state registration requirements.
The firm allegedly operated as a Ponzi scheme, which involves paying existing investors with funds from new investors. The company hid its financial difficulties by altering records, according to US prosecutors. GPB Capital’s founder and CEO David Gentile and broker-dealer chief Jeff Schneider are now facing criminal charges for their alleged roles in the scheme. Gentile and Schneider allegedly failed to file audited financial statements for the limited partnership funds that GPB sold to investors.
As the investigation into the alleged GPB Capital investment fraud continues, it is critical for investors to seek legal counsel immediately. A securities attorney will be able to review their losses and determine whether they are eligible to recover their losses through FINRA arbitration.
Founded in 2013, GPB Capital raised more than $1.7 billion for several limited partnership funds that the company managed. The funds were sold by GPB Capital and its affiliated entities as well as through a network of brokers and brokerage firms. The funds were considered private placement securities, which are inherently risky and only suitable for sophisticated investors. Broker-dealers are required to conduct adequate due diligence before selling such investments to clients.
According to the SEC complaint filed against the company, GPB Capital and its executives allegedly sold these private placement securities to thousands of investors nationwide. The complaint alleges that the investors were promised returns based on the underlying investment’s profitability and growth, which never happened. Investors were also paid fictitious distributions, or dividends, from the money of other investors instead of the actual business profits from the investment.
Prosecutors say that the GPB Capital Ponzi-like scheme was able to continue for years by keeping investors in the dark about the limited partnership funds’ true financial status. According to the complaint, Gentile and Schneider used phony and back-dated documents to hide the true performance of the funds.
The attorneys at Haselkorn & Thibaut are representing investors who invested in the GPB Capital fund. If you believe you were harmed by this investment scam, please contact our securities law firm immediately. Time to file a claim is limited, and our award-winning lawyers are ready to help you. You may be eligible to recover substantial recovery for your losses. For a free, no-obligation consultation, contact our office today. We represent investors throughout the United States.