The New York City City securities law firm of Gana Weinstein LLP issued an ominous press release:
“GPB Capital unfortunately appears to be on the same collision course with reality as other failed private placement offerings,” said Adam Weinstein, a partner with Gana Weinstein LLP. “We believe the regulatory investigations are only the tip of the ice berg here.”
Gana Weinstein LLP issued another blistering press release in which it characterized GPB Capital as “merely the private equity investment arm of a plain vanilla accounting practice.” This press release slammed GPB CEO David Gentile as being completely unqualified to lead a complex private equity fund:
Our firm’s investigation has found that brokerage firms failed to conduct due diligence and investigate multiple aspects of GPB Capital’s business including its senior management, fantastical business claims, and intra-fund lending practices. For instance, with respect to GPB Capital’s senior management the company was founded by David Gentile (Gentile). Had brokerage firms investigated GPB Capital’s senior manager it would have found that prior to founding GPB Capital, Gentile’s experience was as a CPA and company advisor with the accounting practice his family ran at Gentile Pismeny & Brengel, LLP (GP&B) in New York. Nonetheless, GPB’s PPMs [Private Placement Memorandums] claimed expertise in these areas. See GPB Holdings II, LP, PPM, pg. 9 (Apr. 13, 2015) (“GPB’s senior management have a great deal of experience investing in the Automotive Retail, Managed IT Services and Life Sciences sectors.”). Any investigation would have revealed that GPB Capital is merely the private equity investment arm of a plain vanilla accounting practice. There is no evidence that GPB Capital’s senior management had the knowledge, industry experience, or investment experience to run the operations of a $1.8 billion dollar multi-asset strategy private equity fund and should not have been entrusted with investor funds.
Former GPB Capital partner Patrick Dibre argued that GPB’s lawsuit against him was an attempt to, “divert attention away from the fact that the losses occasioned by GPB were in fact caused by a very complicated and manipulative Ponzi scheme.”
GPB’S $700 MILLION VALUATION LOSS
Automotive News reported the following in its article of April 1, 2019:
GPB’s troubles mounted last year. In a Dec. 20 [2018] letter to investors obtained by Automotive News, GPB said it failed to meet performance expectations in 2018 and expected to have an intangible asset impairment charge — essentially writing down the value of its assets — on its audited financial statements. It also planned to divest underperforming stores this year, after already disposing of “certain underperforming assets, which will report a net loss from operations for the company for fiscal year 2018.”
GPB said it would provide more detail on divestitures in forthcoming audited financial statements. In February, GPB sold two Pittsburgh-area Kenny Ross dealerships that it had held a majority interest in since 2017
GPB’s “intangible asset impairment charge” was presaged recently with GPB’s announcement that its value had dropped from $1.8 billion to $1.1 billion. GPB did not explain how the losses occurred and has not released audited financial statements. According to former GPB insider Patrick Dibre, GPB is a Ponzi scheme. Conversely, GPB claims an intangible asset impairment charge. In GPB’s case this could be a “goodwill impairment charge” which Investopedia defines as follows:
Goodwill is an intangible asset associated with the purchase of one company by another. Specifically, goodwill is recorded in a situation in which the purchase price is higher than the sum of the fair value of all identifiable tangible and intangible assets purchased in the acquisition and the liabilities assumed in the process. The value of a company’s brand name, solid customer base, good customer relations, good employee relations, and any patents or proprietary technology represent some examples of goodwill.
Because many companies acquire other firms and pay a price that exceeds the fair value of identifiable assets and liabilities that the acquired firm possesses, the difference between the purchase price and the fair value of acquired assets is recorded as a goodwill. However, if unforeseen circumstances arise that decrease expected cash flows from acquired assets, their fair value can be lower than what was originally paid for them, and a company must book a goodwill impairment.
Did David Gentile significantly overpay for car dealerships in his haste to become one of the largest players in US automotive retail? Automotive News reported on GPB’s Prime Automotive Group:
Prime Automotive rose to No. 11 on Automotive News‘ list of the top 150 dealership groups based in the U.S. ranked on 2018 new-vehicle retail sales. That was up two spots from a year earlier, when it surged 53 spots in the ranking in the wake of the Prime Motor-GPB deal. In 2018, Prime Automotive retailed 45,665 new vehicles and reported revenue of $3.29 billion.
With 2018 revenues of $3.29 billion Prime Automotive has significant revenues; so what accounts for the 39% devaluation from in GPB’s Automotive Portfolio? How can an automotive portfolio of dealerships sell 45,665 new vehicles and still lose 39% of its value? New car sales also include profitable extended warranties and the profits from financing and trade ins.
The enormous devaluation of GPB Capital Holdings funds — whatever their causes — bolsters Gana Weinstein’s assertion that GPB CEO David Gentile and the others in GPB’s senior management were unqualified to manage a complex $1.8 billion dollar private equity management fund.
Prior to GPB’s announced devaluation, the FBI had executed search warrants on the firm’s headquarters and its Five Star Waste Management company in New York City. A judge was presented with sufficient reasons to sign search warrants. GPB claimed that the “unannounced FBI visit” was related to allegations made by Patrick Dibre. Whatever the reason, an FBI raid means there is an ongoing investigation.
Adverse events at GPB Capital are accelerating at a pace that seems far beyond GPB’s ability to control. We will continue to monitor developments on this Scientology-related story. According to our investigation, there are several Scientologists who hold, or have held, positions in GPB Capital or companies owned or controlled by GPB Capital. This lead us to ask if there is a Scientology inner circle and then everyone else; this as happens at so many companies owned by Scientologists.
One intangible we have been following since 2005 is Scientology and the Curse of July 8. Many bad things happen to Scientology and Scientologists on July 8. We’ll stand by to see what next Monday — July 8, 2019 — brings for both GPB Capital and the Church of Scientology.
GPB Capital has raised $1.8 billion in the following ten funds:
1. GPB Automotive Portfolio, LP
2. GPB Cold Storage, LP
3. GPB Eurobond Finance PLC
4. GPB Holdings II, LP
5. GPB Holdings, III, LP
6. GPB Holdings Qualified, LP
7. GPB Holdings, LP
8. GPB NYC Development
9. GPB Scientific, LLC
10. GPB Waste Management, LP formerly: GPB Waste Management Fund, LP
Categories: The Scientology Money Project
