SEC Charges GPB Capital Holdings and 3 Executives in $1.7 Billion Ponzi Scheme

The United States Securities and Exchange Commission (SEC) charged New York based-investment adviser company GPB Capital Holdings and three executives on Feb. 4 for allegedly defrauding thousands of investors in a Ponzi-like scheme.

According to SEC, the company and its three executives defrauded over 17,000 retail investors nationwide, raising over $1.7 billion.

In a complaint, SEC alleges that Chief Executive Officer David Gentile, GPB Capital’s placement agent Ascendant Capital owner Jeffrey Schneider, and GPB Capital’s former managing partner Jeffrey Lash used investors’ own funds to pay out monthly distributions to investors to enrich themselves, instead of placing them into customers’ investments.

“As alleged in our complaint, the defendants told investors that they would be paid distributions from profits of the portfolio companies when, in reality, many of the payments were being made from the investors’ own funds,” SEC’s New York Regional Office Richard Best said.

SEC also alleged that the defendants “manipulated the financial statements of certain limited partnership funds” to show an income that did not exist.

Unsealed in federal court in Brooklyn, New York on Feb. 4, the indictment also charged the company and the executives with securities fraud, wire fraud, and conspiracy.

SEC also charged GPB Capital with violating the whistleblower protection laws.

However, GPB Capital denies the allegations, claiming that it managed investors’ funds in good faith.

“GPB denies these allegations and intends to vigorously defend itself in court where, for the first time, the firm will be able to present significant evidence in its favor,” the company said in a statement to CNN Business.

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