On December 3, 2021, attorneys for David Gentile, the former principal of GPB Capital, requested a mediation to resolve the government’s case against him. Gentile made the request through his attorneys to the Judge overseeing the case involving the Securities and Exchange Commission. Gentile made a similar request in September.
Both the Securities and Exchange Commission and the monitor representing the interests of the investors are opposed to David Gentile’s motion to mediate the case. The request comes approximately one year after he and his former partners were arrested in a dramatic FBI raid. The judge has yet to rule on the motion, but attorneys familiar with the case expect Gentile’s request to be denied.
David Gentile’s request to settle the government’s case may not be a good sign for investors, explained attorney Marc Fitapelli. Mr. Fitapelli is a securities attorney who has represented victims of the alleged ponzi scheme “It remains to be seen how much, if anything, investors will ultimately collect from David Gentile and the other individual defendants.” Marc Fitapelli said.
In February 2021, David Gentile along with two of his partners were arrested by the FBI based on allegations that they were operating GPB Capital as a ponzi scheme. Since the arrests, the Securities and Exchange Commission as well as numerous individual states have filed charges against Gentile and his former partners. The government’s cases alleges that Gentile used a network of broker-dealers to market GPB Capital a private investment, which would pay 8% annual dividends. In reality, GPB was nothing more than a complex ponzi scheme with its 8% dividend being paid with investor money.
More than 1,400 New York residents invested more than $150 million in GPB funds, which raised nearly $2 billion nationwide. New York Attorney General Letisha James said this about GPB Capital at the time, “GPB and its operators fleeced New Yorkers and investors around the country while subsidizing their own lavish lifestyles, which is why we are filing this lawsuit and fighting to hold these bad actors accountable. We won’t let Wall Street fat cats get away with breaking the rules, as they pilfer New Yorker’s wallets in the meantime.” Like the Securities and Exchange Commission’s case against GPB, New York State’s case is also pending. Attorney Marc Fitapelli described the litigation against David Gentile and GPB capital as a “complex web” that may take many years. “The wheels of justice move slowly,” joked Attorney Fitapelli. GPB Capital issued numerous investment funds, which it claimed it invested in diverse businesses, such as car dealerships. GPB Capital’s two main funds were GPB Auto and GPB Waste, which was later renamed to Armada Waste management. The funds were marketed to retail investors as a way to gain exposure to risky private equity investments. It is estimated that GPB Auto, GPB Waste and GPB’s other funds raised nearly $2 billion from investors throughout the United States. Almost immediately after Gentile and his partners were arrested, a federal monitor was appointed to oversee GPB Capital and its funds, including Armada and GPB Waste.