Following his February 2021 criminal indictment on felony charges related to allegations of running his company GPB Capital Holdings as a $1.8 billion Ponzi scheme, Scientologist David Gentile agreed to resign as CEO of GPB Capital. Gentile further agreed to allow his company, of which he is the sole owner, to be taken over by court-appointed monitor Joseph Gardemal. As a condition of the court-appointed monitorship, David Gentile stepped away from any involvement in managing the day to day affairs of his company.
The request for the appointment of an outside monitor was initiated by the US Securities and Exchange Commission. The SEC made its request to protect GPB’s investors after David Gentile and his two cohorts Jeffry Schneider and Jeff Lash were criminally indicted.
With Gentile out of the picture, Gardemal and the Highline Management team (Highline is the operating arm of GPB Capital) got busy selling off assets to protect shareholder value. The largest single sale was GPB’s Automotive Portfolio a/k/a Prime Automotive Group which which was sold to Group 1 Automotive for $880 million. According to a press release issued by Group 1 Automotive, Inc., Prime Automotive generated $1.8 billion in annual revenues in 2020.
The sale of the Automotive Portfolio and other assets left GPB Capital Holdings with a reported $992 million in cash in its accounts.
The lure of almost $1 billion in cash in accounts belonging to the company he owns proved too strong for David Gentile. As we reported on June 8, 2022, Gentile attempted to stage a Memorial Day coup and seize back control of the company from Monitor Gardemal.
GPB Capo de Tutti Capo David Gentile’s coup was simple. He wrote a letter to GPB Capital appointing three of his hand-picked crew as Directors of GPB Capital. Gentile’s guys were supposed to simply walk back into GPB’s headquarters and take control of the company and the $993 million in cash. According to Gentile, the court-appointed Monitor and the Highline managers were supposed to run every decision by Gentile’s guys who would approve or deny all decisions. Gentile had incentivized his three appointees by promising them salaries of up to $400,000 per year.
Gentile’s attempted palace coup was his transparent effort to use proxies to reassert control over his company by bypassing the court-appointed monitor. In Scientology-think, a “bypass” is called for in any situation of danger. The Danger Formula in Scientology as written by L. Ron Hubbard is revealing in Gentile’s situation (emphasis ours):
A person uses the Personal Danger Formula himself when:
- He has applied the Non-Existence Formula and moved up to the Condition of Danger.
- He is in a situation where there is a risk or possibility of harm or loss to himself or his position, or some area of his life.
- His personal statistic on his graph is down (more than slightly).
David Gentile definitely perceived himself to be in a condition of Danger as he stood on the precipice of utter ruination. As we wrote previously:
What triggered David Gentile’s attempt to retake control of GPB Capital via proxies? Perhaps he feared that the Monitor planned to place GPB Capital into receivership. Once placed into receivership the proceeds would be distributed to investors. The firm would then be wound up and dissolved. It is game over for David Gentile. All that remains for him would be his criminal trial followed by eight US State Attorneys General lawsuits for securities fraud and other causes of action. This is a “do or die” for criminal defendant Gentile
David Gentile’s worst fears were realized when Joseph Gardemal responded to the coup attempt by filing papers with the court to immediately convert GPB’s monitorship into a receivership. Gardemal basically called for a “game over” in which the money would be distributed to shareholders, the remaining debts paid off, and GPB dissolved. The stage is now set for a court battle in the Eastern District of New York. The opposing parties are the US Securities and Exchange Commission and Joseph Gardemal v. David Gentile and his appointees Matt Judkin, Rick Brown, and Michael Fasano.
Among other things in his legal filings, David Gentile absurdly claims that Gardemal dissipated GPB’s assets by selling them off at bargain prices. This makes no sense at all. For example, GPB Automotive, which had raised almost $600 million in private placement sales, reported a staggering 39% loss in 2018 according to Bruce Kelly of Investment News. The devalued fund would have been worth $366 million. After David Gentile stepped down, Joe Gardemal and Highline Management appear to have turned Automotive around and sold it for $880 million.
We reported that David Gentile appointed his fellow Scientologist Matt Judkin as one of three new Directors in his battle to wrest back control of his company. Of note here is that David Gentile’s criminal defense attorney Daniel Horowitz has filed a Pro Hac Vice motion to obtain permission for longtime Scientologist and lawyer Steven Hayes, 75, of Florida to appear on behalf of Matt Judkin and the other two men Gentile appointed as Directors.
What the appearance of Steven Hayes suggests to us is that Scientology leader David Miscavige has intervened behind the scenes. We say this as Hayes is in way over his head on this case and was likely appointed to be Judkin’s Scientology handler at the behest of Miscavige.
Hayes would also, in our view, be tasked with keeping an eye on David Gentile to look at his “indicators” to see if they are in or out. In Scientology “out indicators” occur when a person’s body language, tone level, and general demeanor fall outside of the standards of expected conduct and appearance within Scientology. Out indicators can also called “Bad Indicators” or “BI’s” for short. Used in a sentence, one Scientologist might report on another Scientologist by saying, “Bill had BI’s when I asked him if was planning on attending the Ideal Org fundraising event.”
Steven Hayes has no legal experience within the area of private equities, securities law, or white collar criminal defense. That Hayes has no experience in the big league US Federal Eastern District Court of New York reinforces our estimation that the 75 year-old Hayes is being in sent to babysit Judkin and Gentile at the orders of Miscavige. Indeed, Hayes’ own website offers us this underwhelming summary of his experience:
Steve Hayes practiced law in California until 2006 when he moved to Florida to start and become the director of Novus Medical Detox. In 2010, he was admitted to the Florida Bar and now practices law in Largo, Florida. Steve is a Florida Supreme Court Certified Family and Circuit mediator. Steve also has worked with many businesses and individuals solving their legal problems.
Attorney Hayes is notorious in our circles for having purchased the assets of the Cult Awareness Network (CAN) in its bankruptcy. That CAN is now owned by the Church of Scientology is a sick, cruel, and demented farce. Hayes’ page from Scientology’s Freedom Magazine:
Daniel Horowitz’s Pro Hac Vice motion to admit Steven L. Hayes PA:Matt.Judkin.Pro.Hac.Vice
Categories: The Scientology Money Project
I’m not a journalist, and have never studied journalism, but I still want to say that I find your covering of this whole case to be OUTSTANDING. The amount of research, the fantastic writing, and the explanations of some of the technical legal and business issues involved have been amazing. How can I say that when I know nothing about those two subjects either? Because you’ve described these matters in such a way that even in my ignorance I can follow and understand. And considering it’s me, that’s a high achievement!
This whole thing feels like a giant mountain, and the summit may be approaching. I’ve learned not to get my hopes too high when it comes to courts and $cientology, but I can’t deny some excitement as the big climax arrives. Thank you for all that you’ve done with this (and other cases). You do a massive amount of research, cite sources, tie together links, and then distill it all into a form that lay people such as myself can digest comfortably. A very sincere, admiring THANK YOU. And I really am looking forward to the next steps in the Gentile saga!
Between this, the Masterson cases… these are big. Will these put notable dents into the fading, but still feebly-kicking, Scientology juggernaut? I’m not unrealistic, I know Scientology in some form will continue for decades. Chris Shelton has repeatedly cited some minor fringe cult that lasted hundreds of years after it was proven utterly bogus (I’m blanking on its name right now), and I imagine Scientology got famous enough to have its echoes last for many years to come. To have some of its remaining stingers removed in a couple of widely-covered, serious court cases would be a nice kick down the path toward achieving that utter irrelevance and impotence that Hubbard’s legacy has been deserving since 1950.
Between the criminal defendant in waiting and his lawyer, it’s remarkable how scientologists are attracted to industries that require a great degree of trust, even despair, on the client’s part and that are rife with fraud perpetrated by “experts” against the hapless and helpless.
Who wouldn’t want to take financial advice from a fool who funnels as much of their network as possible to a cult? Who wouldn’t want to deal with a deadly addiction by sitting in a sauna gobbling up supplements and turning over a new leaf by being indoctrinated into a cult? These kind of advisers are sure to “find your ruin”, the imagined one, and guide you to absolute real-world ruin!
Particularly alarming in this case: The recovery center the lawyer is involved in promises “medical detox” to its clients (students, wink wink). Even more concerning and bizarre, it claims to treat dual diagnoses, i.e. the intersection of addiction and psychiatric disorders. (This is particularly important as in many, if not most, instances addicts self-medicate emotional problems they are suffering). Given the lawyer’s non-negotiable “religious” commitment to the eradication of evidence-based treatment, this treatment promise smacks of fraud against clients unprepared to follow elron straight into the gates of insanity and death.
Thank you for your very kind words Joshua. We appreciate them.
17,000 investors were harmed by GPB Capital Holdings. 40% of the investors were over 65 and are past their income-earning years. Part of the work we do is to cover the GPB Capital Holdings case for the investors. We want them to know the very specific details that typically do not make it into the general coverage of the story.
We also cover the story to highlight and emphasize the pervasive culture of white collar criminality that is permitted to go on inside of the Church of Scientology. So long as the Church gets a cut and has deniability, it seems anything is permitted. The Chase Wave credit card fraud was just the most recent case.
In the 1990’s, Scientologist Reed Slatkin swindled investors out of $600 million. Scientology refused to disgorge the money it received from Slatkin and the Feds had to go to court. Only a partial recovery was made.
And then there is the shocking story of Raul Lopez…
Excellent research again Jeff. I suspect that GPB will have to go into receivership shortly. A horse can’t have 2 riders telling it what to do. Dave Gentile and his cohorts need a time out at a minimum security federal prison. Now, how much can Gentile and his minions forfeit and how much in ‘donations’ can the Feds claw back from Dave Miscavige’s money bin?