GPB attracted investors by offering lucrative returns and offered the dealers to sell GPB funds to gain more profit. Now investors are crying investment fraud and there are a number of GPB Capital lawsuits pending. It appears that the 8% commission for trading GPB funds motivated brokers. It now seems as agents received over $100 million in the form of commissions.
GPB Capital is an alternative asset management company based in New York that focuses on getting profit-generating private businesses. The “automotive retail” sector has been a strong point of focus for GPB. Since 2013, GPB earned $1.3 billion from financiers in its GPB Holdings II funds and GPB Automotive Portfolio.
GPB Capital Lawsuit & Fraud Investigation
In July 2017, GPB filed a lawsuit against its earlier business associate who supposedly retracted on a sale of numerous car dealerships. As the case proceeded, several other problems have begun to surface for GPB:
- April 2018: It failed to generate reviewed monetary reports;
- August 2018: It declared no new investor funding would be approved;
- September 2018: An inspection was launched by Massachusetts Division of Securities;
- November 2018: It’s auditor left, quoting seeming risks;
- December 2018: SEC and FINRA launched Investigation on agents that marketed GPB.
The investigations are done as GPB has been shrouded in three or more lawsuits. Patrick Dibre and Jeffrey Lash, its former co-directors of retail are engaged in different lawsuits with the business over the previous year and a half, claiming a violation of the contract.
Lash, last year filed a case in the federal court of New York for a minimum of $30 million but a month later, and withdrew from it voluntarily. Lash along with his lawyer are unavailable at the moment and cannot be reached for further comment.
GPB CAPITAL LAWSUITS INCREASE
In July 2017, a case was filed against Dibre in the federal court of New York by GPB claiming that Dibre has failed to go through the automobile dealership transaction priced at $40 million. GPB appealed to the court to make Dibre to register all stores and pay all profits to them. On the other hand, in March 2018, Dibre claimed that a manipulative and complicated Ponzi scheme caused GPB Capital’s loss. A Ponzi scheme refers to a hoax in which funds are collected from new investors and this money is paid to the existing investors. He also sought more than $32 million in reimbursement.
Dibre’s attorney, Russell Shanks said that they have consistently maintained that the fund could not cover the monies at the price that it was paying out.
In October, a judge dismissed most of the claims made by GPB against Dibre, but GPB has not given up yet. GPB is convinced it will “reach a positive resolution,” the firm’s representative claimed in the email.
Merkin: GPB stopped paying.
Merkin is one of the investors and she shared her experience by saying that GPB was paying a $330 per month and she expected an 8% yield. She said that the yield was not guaranteed but was appealing to her. However, her payments were stopped in December and GPB informed her that the stop was transitory.
In the Dec. 20 letter to financiers, GPB stated the distribution price would alter from consistent numbers to payments that would vary as per the company performance. (Back in April 2018, GPB Holdings I, a different fund that involves debt tactics investments, managed IT solutions and automotive retail, reduced the distribution price from 4% to 8% a year. In November, GPB shortly halted any supply, as per the court records in a Delaware lawsuit filed by a GPB financier against the company.)
The files recently dated to SEC on May 2018 show that the automotive fund of GPB raised over $622 million since 2013 from over 6,300 financiers. Another GPB fund earned approximately $646 million from 6,100 financiers and rewarded $48 million as commissions.
Investment Loss Recovery Group is currently investigating complaints from investors against GPB Capital Holdings Group. Investors can click here or call toll free 1-888-628-5590.
As per the Investment News, “Approximately 60 agents have marketed GPB funds. The SEC filings list included numerous small IBDs as well as some major names such as Woodbury Financial Services Inc, FSC Securities Corp, Sagepoint Financial Inc and Royal Alliance Associates Inc”.
Dealers certified by FINRA are obligated to follow the laws, rules, and regulations when suggesting the acquisition or sale of a security. In addition, it is necessary for the dealers to supervise broker activities and abide by the rules.
Tom Barron has Bachelors Degree from Michigan State, MBA from University of Miami and worked as equities trader for Bank of America. When he is covering investment news, he is spending time with his family. Hobbies include golf and travel.