A class-action complaint was filed in a Texas federal court on October 25, 2019 against GPB Capital and its principals and affiliates as well as nearly 80 broker-dealers. The basis of the lawsuit is “improper conduct in selling securities . . . at the direction of GPB Capital.” Specifically, the suit alleges that the defendants knowingly made misstatements and omissions in communications with potential investors that they were engaged in a massive Ponzi scheme.
For the most part, the complaint lays out in great detail what we already know: GPB engaged in an asset management strategy that was fraudulent and “destined to fail” and GPB’s scheme was carried out by broker-dealers who blindly recommended the investment in exchange for high commission payments. Per previous articles, the selling broker-dealers ignored the best interests of their clients and pocketed millions of dollars in the process.
The wrinkle in this class action suit is that it seeks to hold GPB Capital, GPB’s various funds, and several GPB insiders liable for the alleged gross mismanagement of the fund and the misrepresentations made to, and subsequently used by, broker-dealers. While the conduct alleged is serious and someone should be held financially responsible, it is likely that the class action plaintiffs will struggle to recover money from these entities and individuals, as GPB is embroiled in allegations that it is in fact a Ponzi scheme.
Ponzi Scheme Allegations
In July 2017, GPB filed a lawsuit against a former business partner alleging he reneged on a $40 million transaction. The former business partner, Patrick Dibre, responded that:
- “GPB has purposefully fabricated the earnings, knowing the falsity thereof, in an attempt to falsify their financial statements to investors and conceal the fact that they have defrauded investors”; and
- The true purpose of GPB’s suit was to “divert attention away from the fact that the losses occasioned by GPB were in fact caused by a very complicated and manipulative Ponzi scheme.”
The class action suit alleges the same—that GPB and the other defendants were engaged in a massive Ponzi scheme. Since the Dibre lawsuit, GPB missed SEC filing deadlines, was raided by the FBI, and had one of its insiders criminally indicted.
Recovery Of GPB Investment Losses
If the allegations that GPB is a Ponzi scheme are true, it means that GPB does not possess the assets and wealth that they once convinced investors and authorities of. Rather, with thousands of investors angling to recover investment losses, questions will arise as to where that money will come from.
Rather than seek recovery from struggling GPB, Silver Law Group is investigating and has already filed claims on behalf of GPB investors against some of the 60+ broker-dealers who improperly marketed and sold GPB to their customers. If you or someone you know invested in any of GBP’s offerings, please contact Silver Law Group toll free at (800)-975-4345 or email@example.com for a confidential consultation.