The Investor’s Watchdog

The Investor's Watchdog

GPB Investors Want Their Money Back

Wednesday, August 14, 2019

GPB Capital Holdings recently reported that the $1.8 billion it raised from investors is now worth 25-39% less. The attorneys at ChapmanAlbin suspect that loss estimate may be too low. Recent GPB actions and reports suggest much deeper losses. The investor loss recovery law firm has been investigating the GPB situation for about a year and recently filed the first wave of actions on behalf of investors who claim more than $1 million in GPB losses. ChapmanAlbin attorney Jason Albin commented: “GPB’s most recent valuation report offers no comfort to investors. The valuations appear to be based upon nothing at all. There is no accounting attached to support the valuation.” Investors have been receiving letters for months promising audits for 2016, 2017, and 2018 will be filed soon and that GPB is cooperating with “authorities”, which includes, the FBI, FINRA, the SEC, and the Massachusetts Securities Division. “The dust is still settling” commented Mr. Albin, “but we already know investors have taken a massive hit—the only question is: ‘how massive.’”

ChapmanAlbin Attorneys’ Loss Recovery Actions against GPB Brokers and Brokerage Firms

GPB investors allege the brokerage firms who pitched them on GPB were more interested in the fat sales commissions GPB offered than in their customers’ best interests. “GPB investors, many of whom are seniors, relied on the promised income to help cover their day-to-day expenses. Now the distributions have stopped, with no indication as to when they will resume.” Mr. Albin cautions GPB investors: “Don’t be lulled into inaction by GPB’s so-called valuation reports. Talk to an experienced attorney to learn about your legal rights.”

GPB Sends Letters with False Hope to Investors

GPB has made many promises to investors over the last several months, but has failed to deliver:

  • In March 2019, GPB informs investors it is cooperating with “authorities” and is taking steps to strengthen its business and enhance oversight
  • On April 4, 2019, GPB apologizes for concerns that have arisen and says it is working to complete audits and make SEC filings that are more than 2 years past due. GPB blames “internal and external factors” as the cause for delay without explanation and promises “a solid path forward to completion of the audit.”
  • On April 30, 2019, GPB apologizes for not providing fair market value estimates and reports there will be no distributions for the first quarter of 2019. GPB represents the process of completing valuations is taking longer than expected.
  • On June 21, 2019, GPB finally provides fair market valuations for its investments. It reports GPB investments are worth 25%-39% less than their purchase price. The report does not contain any explanation for the valuations. GPB promises it is working diligently with auditors to complete and file the 2016-2018 audits.

The letters attempt to make a bad situation seem rosy, but if investors read between the lines, it is obvious that GPB is just delaying its inevitable demise. None of the letters provide any proof for the promises made. Attorney Jason Albin asks “how can GPB value its securities when it hasn’t finished its 2016-2018 audits?”

GPB Alleged to be a Ponzi Scheme

According to public reports, trouble for GPB started in 2017 when it sued a former business partner, Patrick Dibre, who allegedly reneged on a sale of multiple car dealerships. Among other claims, GPB Capital Holdings sought the return of $42 million it had paid to the former business partner. In one filing, Dibre alleges “losses occasioned by GPB were in fact caused by a very complicated and manipulative Ponzi scheme.”  The claim also alleges “GPB paid its investors significant returns based upon falsified financial information.”  The complaint further alleges GPB had to “implement a different investment methodology than the one disclosed to the investors.”

Broker Duties for GPB Sales

Brokerage firms have a duty to their customers to make sure that securities, including private placements, are recommended only to investors for whom they are suitable. In addition, securities broker-dealers have an obligation to conduct due diligence on private placement securities prior to offering, recommending, or selling them to their customers. If your brokerage firm recommended and sold any GPB Capital fund to you, it is possible that your brokerage firm violated certain duties owed to you. If that is the case, you may be able to sue your brokerage firm in FINRA arbitration to recover damages.

If you are a GPB investor, call ChapmanAlbin today at 1-877-410-8172 for a free, no-obligation, consultation.

Commonly-Asked Questions about ChapmanAlbin’s GPB Lawsuit

How Much Do You Charge?

We represent investors on a contingency fee basis. We do not charge our clients for our time unless we win for our clients and put money back in their pockets. We advance all case expenses. Clients reimburse us for these expenses only if we win. If we recover nothing for you, you owe us nothing.

What if My GPB Shares Recover Their Value?

If your shares rebound and regain 100% or more of their value, then we will dismiss our claims and you will owe us nothing.

Do you Ask for Attorney Fees and Punitive Damages?

When the circumstances of a particular case make it appropriate to do so, we include demands  for attorney fees and punitive damages. We also request costs of suit and all other damages the arbitration panel sees fit to award our clients.

How Much Time Do I Have to File a Claim?

If you have suffered GPB losses, you should seek legal advice promptly. State, federal, and regulatory statutes of limitation may apply to your claims. This means even if you have a viable claim, you may be barred from bringing it because you waited too long.

Do I Have a Choice Between Arbitration and Court?

Most large brokerage firms include an “arbitration selection clause” in the agreements they enter into with their customers. Courts almost invariably uphold and enforce these arbitration selection clauses. So, if you wish to bring a claim against your broker or a broker-dealer firm, you will probably have to do so in FINRA arbitration.

What is FINRA Arbitration?

FINRA, or the Financial Industry Regulatory Authority, is the forum in which most brokerage firms require customers to arbitrate. Arbitration is much like a court proceeding.  There is a panel of three arbitrators that act as judge and jury, opening and closing statements and witness testimony with direct and cross examinations. The main differences are that FINRA arbitrations are generally shorter and less expensive than court and there is no traditional appeal process. At the end of the proceedings, the arbitrators will make a decision that is final and binding, meaning it cannot be overturned except under extreme or unusual circumstances.

Author: John S. Chapman

John S. Chapman is a Principal at ChapmanAlbin, the investor rights law firm. He has spent over twenty years fighting for investors who have been harmed due to broker misconduct. John and the attorneys at ChapmanAlbin have helped recover millions in lost investor savings, and continue to fight for rights of investors across the country.

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