NEW YORK (AP) — Three business partners in a Manhattan-based private equity firm have been charged in a high-stakes Ponzi-like scheme to use clients' money to cover fake returns.
The lawsuit alleges that the owner and CEO of GPB Capital, David Gentile, and Jeffry Schneider, the owner of GPB Capital’s placement agent Ascendant Capital, lied to investors by using their money to pay out an 8% monthly distribution to investors.
Federal and state authorities said on Thursday that the defendants had raised more than $1.7 billion by creating an "aura of success."
New York officials were seeking $700 in restitution for 1,400 investors.
“Investors put in more than $1.8 billion into GPB funds but were left without a single cent of profit,” said Attorney General James in a statement Thursday. “GPB and its operators fleeced New Yorkers and investors around the country while subsidizing their own lavish lifestyles, which is why we are filing this lawsuit and fighting to hold these bad actors accountable. We won’t let Wall Street fat cats get away with breaking the rules, as they pilfer New Yorker’s wallets in the meantime.”
A lawyer for one of the defendants said he would plead not guilty.
Messages were left with attorneys for the others.