The smoke has been steadily rising from GPB Capital Holdings for about a year at this point. Over the last few months, however, it has been all quite on the GPB Capital front. The main talking points being communicated by GPB Capital to brokers and financial advisors to then deliver to their investor-clients, have been that everything at GPB Capital is fine and that the audited financial statements will be delivered in no time. Well, as the Wizard of Oz said, “Pay no attention to that man behind the curtain.” Just today, InvestmentNews published a story reporting that an executive at GPB Capital has been indicted for obstruction of justice. Nothing happening indeed.
According to a press release issued by the United States District Court for the Eastern District of New York, on Wednesday, October 23, 2019, a superseding indictment was unsealed charging Michael S. Cohn, Managing Director and Chief Compliance Officer with obstruction of justice, unauthorized computer access, and unauthorized disclosure of confidential information. According to the indictment, Mr. Cohn was an employee of the United States Securities and Exchange Commission (SEC) when he left the commission for a position with GPB Capital Holdings. In the course of that transition, Mr. Cohn is alleged to have stolen investigatory files and materials relevant to the ongoing SEC investigation into GPB Capital and then delivered those materials to his brethren at GPB Capital. FBI Assistant director-in-charge William Sweeney was quoted in the press release stating, “When Cohn left the SEC to join GPB, he left with more than his own career ambitions.” What’s worse, when Cohn was interviewing for his job with GPB, he let them know he had this information and shared it. The grand jury indictment contains allegations, which if proven beyond a reasonable doubt, could land Mr. Cohn in prison for decades.
The fact that GPB Capital hired Mr. Cohn after he told them that he had inside information about the SEC’s ongoing investigation into GPB, is as clear an indication yet that GPB Capital is running an unreliable and highly questionable business, where at a minimum, ethics are of no concern. Investors should be concerned about this latest development because it indicates a few important points. First, it’s an indication that the SEC’s investigation into GPB is still ongoing. Second, the indictment reflects the acts of an allegedly corruptible person who was entrusted at GPB with being the company’s chief compliance officer – a position for the incorruptible. It is staggering that GPB would hire Mr. Cohn after he approached the firm with clearly illegally obtained information and highly confidential documents.
Stoltmann Law Offices, P.C. has been investigating GPB Capital and the brokers and financial advisors that sold these investments to their clients. We have been retained by several investors and filed at least a dozen cases through FINRA arbitration seeking rescission of these GPB investments. Rescission is a remedy offered under every state securities act which essentially means that our clients are requesting that the brokerage firm buy their GPB Fund investment back from them at cost. If GPB Capital is fine and everything is rosy despite the dumpster fire in the alley behind GPB Capital, then the brokerage firm should buy it back from you! The smoke continues to billow from this company and it is simply impractical for an investor to sit and wait and see if this house of cards comes crashing down. Dozens of brokerage firms, including National Securities Corp., Madison Avenue Securities, David A. Noyes, Westpark Capital, and FSC Securities, to name just a few, sold over $1 billion worth of GPB Capital Funds to retail clients, earning over one hundred million dollars in commissions for doing so.
If you invested in GPB Capital Funds as a result of a solicitation by your financial advisor, please contact Stoltmann Law Offices in Chicago at 312-332-4200. We represent investors nationwide in securities arbitration and litigation. Call now for a free consultation with an experienced investor-rights securities lawyer.