The Ponzi scheme is named after Charles Ponzi, who took millions of dollars from investors and claimed that he could double their money in three months. The first Ponzi scheme was recorded in the early 1900s. Since then, many Ponzi schemes have been developed, luring in unsuspecting victims.
GPB Ponzi Scheme Explained
GPB Capital Holdings is a New York-based asset management company. In February 2021, the company was charged by the SEC (Securities Exchange Commission) for running a Ponzi scheme. It had taken investments from around 17,000 investors, and failed to offer returns as promised to these investors.
Initially, GPB Capital Holdings told investors that they would receive 8 per cent returns every month. It said that the returns would come from the income made through private partnerships. The company paid some of the investors the promised returns. However, when it failed to offer the 8% return on the investments as agreed, it then said that the returns would be distributed among investors based on the private partnership’s performance. This was the first warning sign.
The company tried to cover its inability to offer returns. It started paying the previous investors by using the money of the newest investors. It also generated fake documents to indicate that investments were making progress. The company did it to lure new investors and settle down the arising issues with older investors. It kept doing it until the new investors kept investing. However, the scheme failed when GPB Capital Holdings ran out of money (more info).
In 2016, GPB provided a financial statement. According to this statement, the returns were not being entirely covered by investment profits. However, GPB salespeople still claimed that their distributions were 100% covered, so that they could attract new investors.
In 2018, GPB said that it would not generate audited financial statements anymore. In August 2018, GPB did not accept new investments in any GPB Funds. Seeing the inability of GPB to provide returns, the FINRA started investigating it in 2019.
Attorney General Letitia James and some investors filed suits against GPB Capital Holdings and 5 other persons. The plaintiffs claimed that the defendants ran a Ponzi scheme and lured new investors to use their money for personal enrichment.
Several suits were filed against David Gentile (founder of GPB Capital Holdings), Jeffrey Lash, Jeffry Schneider, Ascendant Alternative Strategies, and Ascendant Capital.
Jeffry Schneider and David Gentile were considered the leaders of this scheme. Schneider has worked with three firms that were expelled by FINRA. His reputation in the securities industry was also not good.
The defenders were alleged to have received money from shell companies, and it was found that Gentile and Schneider received $2 million from these companies. Several payments were also made to Gentile’s wife.
What Action Should Investors Take?
If you have lost your money in this ponzi scheme, you still have a chance of getting it back, but you don’t have long. If you take the right action during this narrow window, you can still recover your investment. MDF Law has a team of qualified attorneys who have helped many investors recover their lost money. We would highly recommend that you get in touch with them today…