Scientologist David Gentile, CEO of GPB Capital Holdings, called a key shot in late April of 2019 in GPB’s lawsuit against former managing partner Patrick Dibre. Gentile’s decision, however, went nowhere. In its Alternative Dispute Resolution (ADR) Attorney Certification, GPB Capital indicated in the affirmative that it “presently wishes to jointly engage a mediator at an appropriate time to aid settlement.”

Defendant Patrick Dibre indicated in his ADR that he does not “presently wish to jointly engage a mediator at an appropriate time to aid settlement.”

Plaintiff GPB Capital Holdings wishes to have a mediator to aid settlement. Defendant Dibre does not want a mediator and is apparently ready to slug it out with GPB in court or, in the alternative, hold settlement talks directly without a mediator. One item of note: GPB Capital sued Patrick Dibre as an individual. GPB did did not name Dibre’s company or automotive dealerships as defendants.

In our humble, yet nevertheless cynical non-lawyer view, Dibre has cannily raised the pressure on GPB by declining mediation. GPB would have obviously preferred private mediation given its problems but Dibre has shut down that avenue. The FBI has executed two search warrants on GPB but none on Dibre. GPB owes the SEC two long overdue Form 10’s. Dibre does not. Law firms have started a trickle of FINRA arbitration filings against GPB’s brokers in the past two weeks. The pressure is on GPB Capital Holdings and the firm stopped raising new capital in April 2018. Patrick Dibre can easily drag out legal proceedings for a long time in hopes that GPB soon faces adverse developments. In such a scenario, what happens to GPB’s lawsuit against Dibre?

Patrick Dibre makes an interesting allegation in his counterclaim:

This is pure speculation on our part, however it goes to the heart of the matter. GPB Capital Holdings has sued Patrick Dibre and claimed that he accepted $42 million in payment for his automotive dealerships and never sold and relinquished these dealerships and their cash flow and profits to GPB. In the counterclaim we have cited above, Dibre alleges that GPB fraudulently reported to its investors that it owned the dealerships in question when GPB does not. Dibre further alleges that, “GPB had to conceal the fact that it no longer has access to the financial records of the dealerships.”

Dibre’s counterclaim on this point might account for why GPB Capital Holdings has to complete audits of certain funds and to restate earnings for 2015 and 2016. As we reported, in January 2019 GPB obtained a court order from the Special Master in the lawsuit compelling DiBre to turn over additional documents related to reinsurance and Accelerated Service Enterprise LLC of Richardson, Texas — one of the so-called Masi entities.

Did GPB Capital Holdings include in its 2015 and 2016 statements the income and cash flow of dealerships and companies whose ownership are now in dispute in the GPB v. Dibre lawsuit? Is this why GPB Capital is taking so long to restate its 2015 and 2016 financial statements? Is this why Crowe LLP resigned as GPB’s auditor with the statement that GPB fell outside of Crowe’s risk tolerance parameters?

Over against GPB’s lawsuit against Dibre, we note that the FBI search warrant focused on Five Star Cartage, a New York City waste management firm owned by GPB Capital Holdings. This matter is unrelated to the Dibre lawsuit and raises an entirely different set of questions.

GPB Capital Holdings Amended Complaint against Patrick Dibre. Note: Please hover your cursor over the document to invoke the page up/page down controls at the bottom of the page frame:

Patrick Dibre’s response to GPB Capital Holdings with counterclaims. Note: Please hover your cursor over the document to invoke the page up/page down controls at the bottom of the page frame: