Money Concepts’ Ray Reese Allegedly Recommends GPB Capital Holdings Amid “Ponzi Scheme” Allegations

The law firm of Oakes & Fosher is currently interested in hearing from investors who believe they were financially harmed by an alternative asset management firm called GPB Capital Holdings, allegedly recommended by Money Concepts' Ray Reese.

According to his publicly available FINRA BrokerCheck report, Ray Reese is a Missouri-based securities broker that has worked in the securities industry for thirty-one years and has been registered with five different firms.

GPB Capital Holdings, launched in 2013, has faced numerous complaints in the past, facing specific allegations of securities fraud as recently as 2019. Recently, GPB Capital Holdings announced that it would not be providing Schedule Cs and required tax documents for investors. This comes after the change of the CEO, an additional lawsuit by the former CEO, and the arrest of GPB’s Compliance Officer for Obstruction of Justice. Additionally, in late June, a class action lawsuit against GPB was registered in a Texas U.S. District Court, alleging that GPB Capital Holdings was operating a Ponzi Scheme.

What is a Ponzi Scheme?

A Ponzi Scheme occurs when an investor doesn’t receive returns from generated income, but rather from the investment money of other investors.  Investors continue to receive their distributions, but since no growth is actually taking place the broker(s) or firm(s) need funds to satisfy this; these funds usually come in the form of money solicited from later rounds of investors. This process continues until such point that the entire scheme collapses. Indeed, in the class action lawsuit against GPB Capital Holdings, investors were alleging that GPB was paying investors with new investor funds. Rather than generating an 8 percent return to investors, as promised when the investors purchased private partnerships, GPB would instead issue returns that were equal to or less than the investor’s capital, usually with their own investment or that of the other, new investors.

In addition to the class-action lawsuit, on May 27, 2020, William Galvin, the Commissioner of the State of Massachusetts Securities Division, filed an enforcement action against GPB Capital Holdings. The complaint is a scathing commentary on the business practices of GPB-- according to the complaint, GPB allegedly made material misrepresentations to investors by promising them 8% investment returns paid solely from operational capital and revenue. These representations were reinforced in private placement memoranda and marketing materials. However, as GPB continued to acquire new investors, it failed to deploy the capital into new business ventures. Instead of suspending investor dividends until the capital could be deployed in order to generate revenue for the various GPB funds, GPB continued to pay dividends to investors. Because the revenue of the GPB funds was less than their distribution requirements, the dividends were paid with investor capital. Consequently, without a consistent appreciation of profits and revenue, GPB was completely reliant on new investor capital to meet its dividend requirements.

Approximately 60 brokers across the U.S. sold GPB funds totaling nearly $1.8 billion in investments marketed as private equity opportunities to more than 2,000 different investors.  GPB allegedly paid out more than $165 million in commissions to brokers and financial advisors such as Ray Reese. These high commissions raise serious concerns regarding the brokers that recommended them, as excessive commissions can often point to a nefarious reason to recommend an investment in the first place.

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.

Oakes & Fosher dedicates its entire legal practice to helping investors across the nation. If you, or someone you know, have lost money due to being invested in GPB Capital Holdings, please contact Oakes & Fosher for a free and private consultation. Oakes & Fosher handles cases on a contingency basis, which means there are no fees charged unless we collect for you.