GPB Capital Holdings: Special Alert for Your Clients Who Invested
GPB Capital Holdings, LLC (“GPB Capital”) has come under intense scrutiny and regulatory accusations that it perpetrated a $1.8 billion Ponzi scheme in selling numerous GPB “Funds”.
What Happened?
Sold as a vehicle that guaranteed substantial monthly income distributions, not from return of capital but instead from operating profits, approximately 2,000 investors bought GPB Funds (including GPB Automotive Portfolio LP and GPB Holdings II).
However, beginning in 2018, GPB Capital began to unravel with its April, 2018 failure to produce audited financial statements, its August, 2018 warning to investors not to rely on 2015 and 2016 financial statements, and the November, 2018 resignation of its auditor.
The situation worsened in 2019 with a February, 2019 FBI raid on GPB’s New York offices, and the October, 2019 indictment of GPB’s compliance officer.
Most recently, last May the Massachusetts Securities Enforcement Section filed a detailed Administrative Complaint alleging:
The firm continued to make its monthly distributions in order to maintain appearances and stay attractive to investors. In order to keep up with distributions, GPB Capital began dipping into other sources of incomes …eventually turn[ing] to investor contributions to meet the demands of the 8% monthly distributions, and the fund financials tell as much.
The complaint alleges that, in connection with the offerings to investors, GPB Capital made false and misleading statements and omitted material facts in connection with the offer and sale of GPB Funds.
What Recourse Is Available to Your Clients?
Currently, only one regulator (Massachusetts) has filed a complaint seeking rescission of the investment for Massachusetts investors. No other states, FINRA or the SEC has brought an action.
To fill that void, class actions and arbitration actions are being solicited and have been filed.
Nonetheless, investors must weigh their options carefully. A class action likely will not be a prudent approach. And many attorneys who solicit investors to file arbitration claims may not have sufficient qualifications, experience, support, legal staff and financial resources to adequately represent your clients in FINRA arbitration.
Accordingly, and given the dire and extreme circumstances involved in what appears to be a Ponzi scheme, Eccleston Law LLC is accepting your referrals to help your investor clients recover their losses. Please contact us (or have your clients contact us) for a no-charge, initial consultation.
