GPB Capital Holdings Must Pay Investors Who Were Defrauded $400M Payout, Says Judge. Our GPB Private Placement Lawyers Are Here To Explore Your Legal Options
A New York Federal Judge approved a payout plan of up to $400M to investors who were harmed in the more $1.8B GPB Capital Holdings Ponzi scam. The order comes after insiders from the alternative asset company argued that the settlement was unfair since they still could be subject to liability.
However, U.S. District Judge Margot K. Brodie found that such concerns did not supersede the need to compensate the victims. She determined that the proposed plan was” fair and reasonable.”
Over 17,000 retail investors, including thousands of senior citizens, were defrauded in GPB’s Ponzi fraud. In 2024, Its top executives were convicted of securities fraud, wire fraud, and conspiracy to commit both. The jury found that the defendants lied about the health of the GPB funds while using investors’ money to make it seem as if its portfolio companies were successful.
The GPB Funds:
- GPB Holdings, LP
- GPB Holdings II, P
- GPB Holdings III, LP
- GPB Holdings Qualified, LP
- GPB Automotive Portfolio, LP
- GPB Waste Management Fund, LP
- GPB Cold Storage, LP
- GPB NYC Development, LP
Meanwhile, investors, who were promised 8% dividends, were misled into thinking that monthly distribution payments would come completely from fund profits. Instead, in a Ponzi-like fashion, a significant part of these distributions came from investors.
The monthly distributions ceased completely by December 2018, and investors’ money was frozen in the GPB funds.
Per the deal approved by the judge, an initial distribution of no greater than $400M will be issued to investors in several of the GPB funds. This will be determined on a partnership-by-partnership basis depending on the funds’ limited partnership agreements.
The receiver will hold $719M in cash reserves and set up procedures for claims solicitation and resolution for investors and those who already have claims against GPB. To the extent of fund availability, more distributions will be issued.
Broker-Dealers and GPB Profited While Investors Lost Money
Over 60 brokerage firms earned commissions of about 11% (around a collective $160M) when they sold private placement offerings in the various GPB Funds to investors.
GPB Capital Holdings received high management fees yearly, and a significant chunk of investor cash was used to fund the lavish lifestyles of its top executives. Even though GPB Private Placements should have only been sold to accredited investors that had a high-risk tolerance level, this is not what happened.
While prosecutors and the court are holding GPB and its executives accountable for investor losses, they are not the only ones responsible.
The brokerage firms and their registered representatives should have looked out for investors’ best interests, conducted the proper due diligence into the GPB funds, and made sure these alternative investments were suitable for each customer to whom they sold these private placements.
Instead, it appears that financial advisors and their firms chose to prioritize the high commissions they were able to earn over protecting investors.
Shepherd Smith Edwards and Kantas Private Placement Lawyers (investorlawyers.com) are representing investors against the broker-dealers that unsuitably marketed and sold the GPB funds to their customers. We are well-versed in why these investments failed and the role that financial firms played.
We have the skills, resources, and experience to take on even the most complex investment loss recovery claims. Over the decades, we have helped thousands of investors to collectively recoup many millions of dollars.
There is still time to explore your legal options. Call Private Placement Lawyers today at (800) 259-9010 or contact us online.