The Securities and Exchange Commission, regulators from seven (7) states and the United States Attorneys’ Office for the Eastern District of New York today simultaneously filed regulatory, civil and criminal actions against GPB Capital Holdings, LLC (“GPB”), two related entities, Ascendant Capital, LLC (“Ascendant Capital”) and Ascendant Alternative Strategies, LLC (“AAS”) and various principals associated with those entities, David Gentile, Jeffry Schneider and Jeffrey Lash.
The SEC charged GPB, Ascendant Capital, AAS and Messrs. Gentile, Schneider and Lash with running a “long-running and multi-faceted fraudulent scheme.” The SEC Complaint alleges that Mr. Gentile, the owner and CEO of GPB, and Jeffry Schneider, the owner of GPB’s placement agent Ascendant Capital, defrauded investors by, among other things, misrepresenting the source of the funds used to pay distributions to investors. The GPB interests were marketed by representing to investors that distribution payments were exclusively funded with money generated by operation of GPB’s portfolio companies (“funds from operations” or FFO), but according to the SEC Complaint, distributions were funded from other investor dollars. The SEC Complaint also alleges that the principals misappropriated investor funds for their own use to the detriment of the funds’ financial condition. The SEC Complaint seeks disgorgement, monetary penalties and permanent injunctive relief. The SEC Complaint can be found here:
Additionally, civil complaints and administrative proceedings were filed by state regulators in: Alabama, New Jersey New York, Georgia, Illinois, Missouri and South Carolina against GPB and the other defendants identified above, alleging violations of state securities laws and defrauding investors. These complaints are seeking court-ordered monetary penalties, investor restitution, disgorgement, and permanent injunctive relief barring the defendants from violating securities laws or participating in the future sale of securities.
Lastly, the United States Attorneys’ Office for the Eastern District of New York unsealed indictments charging Messrs. Gentile, Schneider and Lash with securities fraud, wire fraud and conspiracy.
WSS has a large team in place that is actively engaged and closely monitoring these unfolding developments. Should you or your firm have any questions regarding GPB or these developments, please contact any of the following attorneys who can assist: Michael Schwartzberg, Benjamin Biard and Jessica Levine.