The news continues to get worse for the thousands of retail investors with money locked-up in various GPB Capital Funds. Those funds include the GPB Automotive Fund, GPB Waste Management Fund, and GPB Fund II, amongst others. Stoltmann Law Offices has been investigating these funds for several months. We have filed roughly two dozen FINRA Arbitration claims on behalf of our clients to recover their losses in these funds from the brokerage firms responsible for soliciting them to invest in these ill-fated private placements.
On November 22, 2019, GPB sent a letter to their “partners” informing them of some really bad news. The recent indictment of GPB Capital’s Chief Compliance Officer by the United States Attorney for the Eastern District of New York for obstruction of justice, amongst other claims, has caused the auditing process to fall off the rails. All of those promises by GPB to investors, all of those promises repeated by financial advisors to their clients, that GPB was well on its way to finally providing restated, audited financial statements, have officially been broken. The letter states that GPB’s auditor has “decided to suspend work on outstanding financial statement audits. In addition, the Audit Committee has elected to resign effective ups the earlier of the completion of the Rosenberg Investigation or by November 27, 2019.” The “Rosenberg investigation” is the self-implemented third party investigation into how the company’s CCO obstructed justice, and what GPB knew and when it knew it. Well, according to the indictment, detailed on this blog last month, GPB hired the CCO with knowledge that he had confidential information obtained from his participation in the SEC’s investigation of GPB. They knew he had obtained information from the SEC in the course of its investigation, it would seem, and GPB made him their chief compliance officer.
The November 22, 2019 notice also eviscerates another false narrative promoted by GPB and passed along to clients by financial advisors, who are scrambling at this point to come up with excuses. Despite operating in a red-hot economy where car sales are through the roof, the GPB Automotive Fund has managed to lose over $200 million and GPB Holdings II has lost roughly $125 million. To add insult to injury to the investors stuck holding this rapidly depreciating asset, GPB is not allowing investors to unload their units on secondary markets. Unfortunately for investors, this is what a Ponzi scheme looks like when it is no longer able to attract new investor money.