David Rosenberg sold his New England-based Prime Motor Group car dealerships to GPB Capital Holdings in 2017. This was during GPB’s halcyon days before the lawsuits; the massive FBI raid; and the US Federal criminal charges.

Rosenberg sold Prime Motor Group for $235 million plus future installment payments of $23.6 million. Rosenberg retained a reported 7.4% interest in this new GPB Capital venture which was named Prime Automotive Group.

As part of the deal, GPB Capital kept Rosenberg on as the CEO of Prime Automotive Group.

In his typically byzantine and covert fashion, David Gentile created a company called Automile Parent Group which, in turn, operated all of the car dealerships in Prime Automotive Group. In our opinion, this allowed Gentile to, among other things, skim money off the operation.

By 2017, Prime Automotive Group was ranked as the 10th largest automotive dealership in the US.

Rosenberg had grown up in the automotive business. His father Ira Rosenberg was a highly successful owner of many automotive dealerships in New England.

When he became a part of GPB Capital through his role as the CEO of Prime Automotive Group, Rosenberg did not like what he saw internally. The financial accounting was blatantly false and misleading and likely illegal as Rosenberg saw it. Accordingly, he went to the SEC and reported it.

According to our sources, the FBI got involved and Rosenberg wore a wire into meetings with GPB’s then CEO David Gentile and his business partner Jeffry Schneider. Gentile and Schneider would later become criminal co-defendants in a case filed by the US DoJ.

David Gentile fired David Rosenberg in 2019 as the relationship between the two men fractured into an acrimonious and open war. Rosenberg sued for monies he was owed. GPB Capital thereafter waged an expensive, irrational, and ultimately futile legal war only to settle the case with Rosenberg for $30 million.

Beyond the money, the settlement was a moral vindication for David Rosenberg who did the right thing by reporting David Gentile and his sleazy associates to the SEC and calling public attention to what was going on inside of GPB Capital Holdings.

Following his indictment and arrest on criminal charges in 2021, David Gentile voluntarily agreed to step down as CEO of GPB Capital.

Gentile further agreed to allow a court-appointed monitor to run the company. The monitor is Joseph Gardemal of the firm Alvarez & Marsal Disputes and Investigations LLC. The firm’s legal team is Hogan Lovells.

Gardemal and his firm, along with its lawyers, charge GPB Capital Holdings about $500,000 a month on average for their services.

As part of his services, Gardemal worked with Rob Chmiel, the acting CEO of GPB Capital, to sell Prime Automotive Group for $880 million to Group 1 Automotive in September 2021.

According to reports, the sale netted $550 million and part of that money went straight into David Gentile’s pocket.

February 2024: David Rosenberg is suing David Gentile as an individual in the US District Court of Massachusetts for $40 million.

The complaint alleges that Gentile’s deceptive and labyrinthine accounting methods used by Automile Parent Group deprived Rosenberg of his share of the $880 million sale of Prime Automotive Group.

The complaint is meticulous in documenting the sophisticated financial criminality of David Gentile. Indeed, even after he stepped down as CEO of GPB Capital, Rosenberg alleges that Gentile continued to secretly run the company based on the duplicitous financial accounting methods he had set up when he was CEO.

Rosenberg is seeking $40 million as his part of the sale. An excerpt from the complaint which is posted below:

2. Automile Parent was a successful business, which operated a network of automobile dealerships known as Prime Automotive Group (“PAG”). Year after year, unbeknownst to the Rosenberg Group, Mr. Gentile, who controlled both Automile Parent and its majority shareholder GPB Prime, caused 100% of net cash flow to be allocated to GPB Prime, with none allocated to Mr. Rosenberg, in violation of the Operating Agreement and of Mr. Gentile’s fiduciary duties to the Rosenberg Group. Indeed, Mr. Gentile established accounting systems and protocols so that even following his departure from the board of Automile Parent, he caused that misallocation to continue. Indeed, on information and belief, even following his technical withdrawal from the board, he continued to control the actions of members of the board from behind the scenes.

3. The misallocation of proceeds ultimately led to the sale of PAG to another group of automotive dealerships, Group 1 Automotive Group, Inc. (“Group 1”), on November 17, 2021 for $880 million. On information and belief, the net cash flow from that sale was $550 million. As a direct result of the systems that Mr. Gentile established through his control of PAG to ensure that the Rosenberg Group did not receive its proportionate share of eventual distributions, 100% of the net cash flow of the sale was allocated to GPB Prime. On information and belief, the entirety of that net cash flow, together with the previously misallocated funds, were distributed to GPB Prime and ultimately to its owners, including Mr. Gentile, on or about November 17, 2021.