The law firm of Oakes & Fosher is currently interested in hearing from investors that believe they may have lost money investing in any of the GPB Capital Holding funds. These funds are alternative types of investments known as private placements. These are privately traded securities that are not registered with the Securities and Exchange Commission, or sold on any public securities exchanges. Because of this, it creates the potential for significant oversight when dealing with these products.
What Are Private Placements?
These securities, by nature, are incredibly risky and speculative. This all boils down to how poorly they are regulated, which allows those managing these investment pools to essentially do whatever they please with invested funds. Since private placements are not registered with the SEC, they are not required to provide investors with a prospectus. This is a financial document that serves as the security’s initial offering and details the plans for the invested funds. One way the SEC tries to protect investors from these products is by only allowing them to be recommended to what are known as “accredited investors.” These are investors with either a minimum net worth of $1 million, or an annual income of at least $200,000. This number goes up to $300,000 if the investor is married. Any securities broker that recommended a GPB private placement to an investor who did not qualify as accredited has directly violated this SEC rule.
Another reason private placements like the GPB Capital funds are highly unsuitable is due to their illiquidity. Many investors require the ability to liquidate invested assets should they find themselves in a situation where they need the money. Securities brokers need to be aware of this fact when recommending securities to their customers. However, private placements operate differently. Often times, investors are only offered scheduled buy outs, and these buy out offers are almost always significantly less than what the customer is told their shares are currently valued at.
Private placements are so detrimental to investors that they are not sold at the major wire house securities firms like Morgan Stanley, Merrill Lynch, or Wells Fargo. The main reason that private placements like GPB Capital funds are pushed so much at lower tier firms is due to the exorbitantly high commissions securities brokers and firms receive when selling these products. The percentage they receive depends on the private placement; however, brokers selling shares of GPB funds received up to twelve percent commissions. This was compounded with additional upfront fees that drained principal investments even further. It is distinctly possible that investor’s in GPB Capital Holding funds lost up to 17 percent of their principal investment righ off the bat. When an investor loses that much of their principal investment up front, it makes it almost impossible for them to actually see a profit on their investment under anything besides booming market conditions.
GPB Capital Holding Funds Acted as a Ponzi Scheme
Not only were the GPB Capital funds pitched to unsuited investors, but they also operated as a massive Ponzi scheme. A former GPB Capital Holdings operating partner, named Patrick Dibre came forward and said that “losses occasioned by GPB were in fact caused by a very complicated and manipulative Ponzi scheme.” Dibre also stated that investors were provided with falsified financial information regarding the success of the funds. Dibre stated that this was done so the company could hide its fraud.
A Ponzi scheme is a fraudulent investment scheme where a company, or individual, claims they are investing the funds received from investors. However, instead of being invested, the money is being misappropriated for purposes that had not been disclosed to the investors. In order to keep up appearance, the company, or individual, usually falsifies financial documents in order to misrepresent to the investors that financial growth is actually occurring. When investors want to liquidate their holdings, or if a company needs to pay its investors dividends, they use money solicited from other investors, all the while claiming that it is money achieved from investing.
Some of the GPB Capital Holding Funds
- GPB Automotive Portfolio, LP
- GPB Cold Storage, LP
- GPB Eurobond Finance PLC
- GPB Holdings II, LP
- GPB Holdings III, LP
- GPB Holdings Qaulified, LP
- GPB Holdings, LP
- GPB NYC Development, LP
- GPB Scientific, LLC
- GPB Waste Management, LP
- GPB Waste Management Fund, LP
Oakes & Fosher Can Help
Many investors are unaware of the legal recourse available to them after losing money due to securities broker fraud and/or negligence. The truth is that investors who have lost money in this fashion may actually be entitled to damages.
Securities firms that allowed their brokers to sell the unsuitable GPB Capital funds may be liable for investor loss. This is the case if the firms gave the brokers permission, or if they just failed to adequately supervise them and prevent them from doing so. Oakes & Fosher dedicates its entire legal practice to helping investors across the nation. If you, or someone you know, have lost money investing in any GPB Capital Holding fund, please contact Oakes & Fosher for a free and private consultation. We work on a contingency basis, which means there are no fees charged unless we collect for you.