Following the felony convictions of Scientologist David Gentile and his co-defendant Jeffry Schneider on all counts, the US Second District Court yesterday lifted the stay on a lower court’s order to place GPB Capital Holdings into Receivership and impose a litigation injunction on the firm. Our video on the convictions.

The stay had been put in place pending the outcome of the criminal trial of Gentile and Schneider.

David Gentile has now lost control of GPB Capital Holdings LLC of which he was the sole owner, manager, and member. Gentile’s sentencing is scheduled for March 2025 and he is facing 20 years in US Federal prison.

Joseph Gardemal will transition from GPB Capital’s court-appointed Monitor and become the Receiver. Gardemal will liquidate the remaining assets of the firm and pay all monies owed to various parties.

GPB Capital’s estimated $1.1 billion in cash, which came from the previous sales of GPB Capital’s portfolio companies, will be distributed to the firm’s 15,000 investors, 4,000 of whom are senior citizens. The estates of those investors who have passed will also receive distributions. 

The losses to investors appear to exceed $600 million. However, the real number will be much higher as the investors have not access to their money or been paid dividends since 2018. The lost income opportunity costs in this time frame are immense.

What triggered the Receivership order was David Gentile’s May 2022 attempt to wrest back control of the company after he stepped down as CEO. We reported on this failed coup; the brief details: 

1. Joseph Gardemal supervised the sale of $1 billion in GPB Capital Holdings assets. This cash is intended to be distributed to investors at some future date.

2. This pile of free cash apparently triggered a psychotic episode in David Gentile in which he
attempted a coup to wrest control of GPB Capital Holdings from the court-appointed Monitor. Gentile tried to enact his coup by expanding the number of GPB managers.

3. Gentile chose as one of his new managers his Scientology pal Matt Judkin who, along with his fellow Scientologists Adolfo Quintero, John Woodruff, and Herb Zerden signed a 2006 Agreed Final Judgment and Permanent Injunction with the State of Texas. The injunction related to a mortgage foreclosure scam these Scientologists had been operating in Texas.

4. Joseph Gardemal responded by calling for GPB Capital Holdings to be placed into a court receivership. The stage is set for a legal battle between the US Securities Exchange Commission and Gentile and his managers. Scientologist and lawyer Steven Hayes filed a motion to appear pro hac vice in the case. As we noted at Tony Ortega’s Underground Bunker:

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 sent to babysit Judkin and Gentile at the orders of Scientology mob boss David Miscavige.

The Summary Order from the US Second Circuit Court of Appeals: