Two investors have filed a class action lawsuit over GPB Capital Holdings funds, alleging that the company has failed to provide audited financial statements for the last two years, amid growing signs of trouble and accusations of fraud that has resulted in substantial financial losses.
Victor Wade and Karen Loch filed the complaint (PDF) last month in the U.S. District Court for the Southern District of New York, naming GPB Capital Holdings, LLC, GPB Holdings II, LP, GPB Automotive Portfolio, LP, David Gentile, Roger Anscher, William Jacoby and 100 unidentified individuals as defendants.
The lawsuit seeks class action status for all GPB investors, indicating the firm was obligated to provide investors with audited financial statements, regarding the funds they have invested into on an annual basis. The company has failed to do so since 2017.
“In 2018, and thus far in 2019, Defendants have not provided these audited financial statements,” the lawsuit notes. “Defendants’ failure to provide timely and accurate financial statements violates Defendants’ obligations to Plaintiffs and each member of the Class, and has prevented and continues to prevent Plaintiffs from obtaining necessary information about the status of their investments and taking such action as may be appropriate to avoid or mitigate any potential investment losses.”
Wade, of Texas, indicates he invested $50,000 in GPB Holdings II, and made his investment through a securities broker-dealer at SagePoint Financial, Inc. Loch, of Georgia, invested $75,000 in GBP Automotive, through Royal Alliance Associates, Inc.
Troubles first began to appear when it missed a filing with the Securities Exchange Commission (SEC) in April 2018. It stopped paying distributions in December 2018, and in March of this year the FBI raided its offices.
Last month, amid allegations of a so-called Ponzi scheme and that it had been falsifying its records, GBC Capital announced that its two biggest investment funds values had sharply declined, with some investors saying they have lost between 25% and 75%. GPB focused on private placement investments, which are generally considered suitable only for accredited investors.
Some investors say they were not informed of the actual risks of private placement investors. However, some are going further and saying the entire company was a scam.
This claim joints a growing number of GPB Capital class action lawsuits and investor claims being presented against the firm and investment brokers who sold its funds to investors, accusing them of financial fraud and misconduct.
Investigations are underway by the SEC, the FBI, the Financial Industry Regulatory Authority (FINRA), New Jersey, and Massachusetts. Of the 80 brokerage firms authorized to sell GPB investments, 60 are under investigation by Massachusetts officials.