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More Litigation Hits Brokers Who Sold GPB Private Placements

GPB | | Diana Britton | June 30, 2020

“A flurry of claims were filed this week against brokerages and advisors who invested client money in GPB Capital, a New York-based private placement shop currently under investigation by the FBI and securities regulators. One law firm, Peiffer Wolf Carr Kane & Conway, filed three dozen FINRA arbitration claims this week across 12 brokerage firms.

The law firm also filed an updated class action lawsuit, which adds another investor and highlights the involvement of Austin-based brokerage firm, Ascendant Capital, which, the case claims, peddled the investments. The suit claims that Ascendant brokers made over $800,000 in commissions in a single month from GPB Capital.

“This is a week of reckoning for an investment scheme that was rotten to the core from day one,” said Joseph Peiffer, managing partner, Peiffer Wolf Carr Kane & Conway. “The GPB/Ascendant machine was engineered to generate illicit profits for its organizers and their broker henchmen.”

Peiffer estimates that GPB was sold to over 2,000 investors, with losses of up to $1.8 billion, and that some 60 brokerage firms participated nationwide.

“After a few years of GPB/Ascendant keeping the fat commissions to themselves, roughly 60 brokerage firms around the country decided that they couldn’t stand on the sidelines any longer,” said Jason Kane, partner, Peiffer Wolf Carr Kane & Conway. “These brokers and brokerage firms were flown to Austin for parties and pep rallies touting the excessive commissions that brokers would be able to extract from investors. Disguised as diligence meetings, the GPB/Ascendant team was training a bigger salesforce to act as ropers to get investors into the GPB Capital tent.”

The law firm has filed arbitration claims against Madison Avenue Securities, Crystal Bay Securities, Royal Alliance, Crown Capital, SagePoint Financial, Concorde Investment, National Securities Corporation, Kalos Capital, Coastal Equities, Hightower Securities, McDonald Partners and Triad Advisors.

Loretta DeHay, a 62-year-old Austin woman, filed an arbitration claim against SagePoint, where her broker, Dan Dillard, was registered at the time he recommended an investment in GPB. (He’s now registered with Union Capital Company.) She claims she lost $100,000 in GPB. DeHay has also joined the class action lawsuit, which has not yet been certified by the court.

Dillard did not return a call seeking comment, and Advisor Group, SagePoint’s parent, was not immediately available for comment.

“We always trusted that our broker had our best interest in mind,” DeHay said, on a media call. “To think that sky high commissions was the driving force behind our broker’s recommendations just makes me sick. It was so disheartening to learn that the $100,000 I invested in GPB through our broker was such a dead end. I was assured that this was a safe investment that would generate retirement income that I could rely on.”

The lawsuit points to GPB’s automotive portfolio, which includes several auto dealerships, as particularly problematic, claiming that the firm ran Prime Automotive Group “into the ground” and that the dealership is now at risk of losing its association to auto manufacturers. (Prime’s CEO David Rosenberg sued GPB in Massachusetts, alleging the firm is running a Ponzi scheme.)


Last June, GPB estimated the value of its funds to be $1.1 billion, or 61% of initial raised capital of $1.8 billion. But the firm has not released its audited financials, and it keeps pushing back the release date.

Peiffer claims GPB liquidated some underlying companies in one of the funds to pay so-called distributions to investors across other funds.

Late last month, state securities regulators in Massachusetts went to court to accuse GPB of fraud and using new investor cash to pay dividends to other investors, “which is the very definition of a Ponzi scheme,” Peiffer said.”

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