GPB Capital Holdings

GPB Capital Holdings Legal Dox: Gentile and Schneider Seek to Get the Criminal Indictments Against Them Dismissed

In the same way that Scientologist Danny Masterson’s criminal defense attorney Phillip Cohen has asked the court for a mistrial four times in seven days — and we were in the courthouse to see it all — so too is Scientologist David Gentile’s criminal defense attorney seeking to the get the criminal charges against his client dismissed.

GPB Capital Holdings criminal defendants David Gentile and Jeffry Schneider make the claim in a recent legal filing (scroll down to read the PDF) that the Court-appointed Monitor Joseph Gardemal is a State Actor who interfered (sic) with the rights of Gentile and Schneider’s right to counsel:

One of the claims made by the GPB Capital criminal defendants is that the Court-appointed Monitor refused to use investor monies to pay their legal bills ad infinitum.

Gentile and Schneider argued that GPB Capital had a contractual obligation to pay their legal bills on an unconditional and unlimited  basis even for future appeals.

Gentile and Schneider sued in the Delaware Chancery Court. The Court, outrageously, ruled that GPB Capital had to pay the legal bills of the two on an  unconditional and unlimited  basis. The ruling was based upon the fine print in the contracts investors signed in which GPB officials are entitled to have their legal bills paid by the firm for any reason.

The cautionary tale here is threefold:

First, Gentile, Schneider, and Lash are your typical scumbag grifters who used fine print in their contracts to make GPB’s investors obligated to pay their legal bills on an unlimited basis should the need arise — and the need arose when all three of the aforementioned grifters were indicted by the US Dept of Justice.

Second, never make any major financial investment in anything unless you first read and understand the contract terms and especially the fine print. It is well worth paying a securities lawyer for a few hours of his or her time to read it for you and make recommendations. A good lawyer will see the red flags and danger signs. A $1,000 legal bill is money well spent before investing $50,000 or more.

Third, never believe or trust a Broker-Dealer who is trying to sell you a private equity investment or any other financial product. It is 100% entirely your own responsibility to perform your own due diligence and investigation. Never take the word of a commissioned salesperson at face value — and B-D salespeople are commissioned salespeople. They can have a Series 65 and all of the other licenses, but can you really trust them? A good first step is to check their name on FINRA’s broker check website.

GPB Capital’s Broker Dealers have suffered serious financial losses during FINRA arbitrations. The B-D’s are being fined and ordered to pay restitution to investors for failing to disclose relevant information about GPB Capital which, if disclosed, would have lead any prudent investor to not invest in GPB Capital.

The most recent casualty occurred in October 2022 when Kalos Capital in Atlanta, Georgia declared bankruptcy due to losses the firm incurred from selling GPB Capital paper. Financial Advisor published the story:

A toxic private equity fund complex that’s plunged multiple broker-dealers into regulatory and legal trouble has now brought one big Georgia firm to a premature end.

Kalos Capital, a firm in the Atlanta suburbs run by Daniel and Carol Wildermuth, filed for Chapter 11 protection in a federal bankruptcy court on Monday. According to the bankruptcy statement, Kalos, which once boasted 100 registered producers, $28.5 million in revenue and 60 offices, was finally overwhelmed by litigation relating to GPB Capital Holdings LLC. The New York-based private equity firm sold private placements in its funds, and Kalos reps recommended them from 2014 to 2018. GPB’s ex-chief executive was later arrested and the PE company was condemned for Ponzi-scheme-like activity by the SEC. Afterwards, the lawyers came calling, and many clients have turned on the broker-dealers who sold GPB’s private placements, saying these non-registered private placement notes were illiquid, opaque and unsuitable for most investors.

The troubled GPB funds have gotten a number of other broker-dealers pinched by Finra this year: Among the firms stung by Finra fines in the GPB debacle in are National Securities Corporation, Capital Investment Group, Sanctuary Securities, Dempsey Lord Smith, BD4RIA, and Geneos Wealth Management. Massachusetts Secretary of the Commonwealth William Galvin said in 2018 that he would be probing 63 broker-dealers who offered private placements in the firm. One class-action suit filed in West Texas named 76 broker-dealers for abetting GPB’s sales and questionable statements.

David Gentile and Jeffry Schneider now want to use Joseph Gardemal’s refusal to pay their legal bills as a reason to get the criminal charges against them dropped. Gentile and Schneider are calling Gardemal a “State Actor” and characterizing his actions and that of the courts and the SEC as massive government misconduct.

This is the typical language any criminal defense attorney would use. We expect the court to deny this motion for several reasons. Nevertheless, this particular filing shows the desperation of Gentile and Schneider to slip the noose. Indeed, the pair engage in high drama in the filing:

Good luck on this latest bit of legal nonsense Dave and Jeffry.

NB: There is still the problem of the 200 secret recordings those GPB employees who became government informants made when you two were speaking to them.

The legal filing contains interesting financial details on GPB Capital’s Automotive Fund.

2 replies »

  1. If your analysis of the sources of some of their money (Cosa Nostra and Russian Mob) is correct, they have far bigger worries than whether their lawyers will be paid from previous ill-gotten gains or whether they can steal even more from their investors even at this point.

  2. Wow, Jeff!
    You have an amazing ability to see through the bullshit in this complicated matter, cut through to the nitty gritty, and then expose the simple truth for all to see. Justice will be served when these sociopathic charlatans are sharing a prison cell somewhere.
    Hopefully by then they will have learned their lesson and won’t try to chisel their fellow inmates….. They may even learn a trade or gain some other skills that will teach them to create truly valuable products which they can then exchange with others. Possibly they might even decide to make up the damage they have done.

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