Investors Victor Wade and Karen Loch have filed a class action lawsuit against GPB Capital Holdings and certain affiliates and senior executives seeking, among other things, that the company provide accurate financial statements to its investors.
Wade invested $50,000 in GPB Holdings II, and Loch invested $75,000 in GPB Automotive.
“By bringing this lawsuit requiring GPB to immediately produce the financial statements they promised investors, our clients are giving GPB one last chance to come clean before they sue for more comprehensive relief,” said Daniel Girard of Girard Sharp LLP, who is representing the plaintiffs along with David Stein of Gibbs Law Group.
GPB Capital is a New York-based alternative asset management firm, that focuses on acquiring income-producing private companies in various industries, including the automotive retail and waste management sectors, and has raised $1.5 billion in investor equity through various private placement offerings.
As previously reported by The DI Wire, GPB has experienced regulatory headwinds since announcing its decision in August 2018 to temporarily halt raising new money and suspending redemptions to focus on accounting and financial reporting on two of its funds, the GPB Automotive Portfolio and the GPB Holdings II.
In March 2019, representatives from the Federal Bureau of Investigation and the New York City Business Integrity Commission made an unannounced “visit” to the company’s headquarters in Manhattan. At the time, GPB said that the agencies obtained a search warrant to collect materials from the premises and believed that the visit was a continuation of previous ongoing inquiries.
Specifically, the company disclosed that in the summer of 2018 it received a subpoena from the U.S. Attorney’s Office – Eastern District of New York that requested documents related to a waste management fund in connection with the NYC Business Integrity Commission’s investigation.
Additionally, the firm has received subpoenas from the Securities and Exchange Commission and the New Jersey Bureau of Securities and said that it is cooperating with the various agencies and their document requests.
While GPB was not told the cause of the investigations, other than they are in connection with potential violations of general securities laws and regulations, the company pointed out that much of the information requests concern issues raised by former operating partner, Patrick Dibre.
GBP sued Dibre in July 2017 for allegedly reneging on the sale of multiple car dealerships in the New York metropolitan area, and the company is seeking the return of $42 million it had paid to the former business partner.
GPB is in the process of completing its audit after hiring a new firm, EisnerAmper LLP, to replace Crowe LLP, which resigned “due to perceived risks…that fell outside of their internal risk tolerance parameters.” The audit should be finished this September.
Defendants in the case include GPB Capital Holdings LLC, GPB Holdings II LP, GPB Automotive Portfolio LP, chief executive officer David Gentile, chief operating officer Roger Anscher, and chief financial officer William Jacoby.