Arizona Revokes Advisor's License for Misrepresenting High-Risk GPB Capital Investments

Posted on November 26th, 2024 at 10:21 AM
Arizona Revokes Advisor's License for Misrepresenting High-Risk GPB Capital Investments

From the desk of Jim Eccleston at Eccleston Law

The Arizona Corporation Commission has revoked the license of Scottsdale-based investment advisor representative Luke M. Johnson, who sold over $10 million in high-risk private placements by GPB Capital Holdings. According to the commission, Johnson fraudulently sold these securities through his business, Legend Capital, between September 2014 and July 2018, misleading at least 95 investors, primarily Arizona residents, about the nature of the investments.

According to InvestmentNews, the commission found that Johnson provided false assurances to clients, claiming the investments were "solid, safe, and/or low risk" while the GPB Capital materials labeled them as "highly speculative" with a significant risk of total loss. He also misrepresented his own investment in GPB products and failed to inform clients about GPB’s ongoing legal troubles, including accusations of running a Ponzi scheme. In addition, Johnson allegedly falsified some clients’ net worth to meet the accredited investor requirement, which is essential for purchasing high-risk alternative investments.

GPB Capital, founded in 2013, gained popularity for its high-yield private placements and raised $1.8 billion. However, its operations came under scrutiny due to regulatory lapses, eventually leading to an FBI raid in 2019. In a federal court case this summer, GPB executives David Gentile and Jeff Schneider were convicted of securities fraud.

In Arizona’s recent order, Johnson was directed to pay $229,241 in restitution and a $20,000 administrative penalty.

 

Eccleston Law LLC represents investors and financial advisors nationwide in securities, employment, transition, regulatory, and disciplinary matters.

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