SHOCKER! Ponzi Bosses PAID INVESTORS WITH THEIR OWN DOUGH!

SEC v. GPB Capital Holdings, LLC, David Gentile, Jeffry Schneider, et al. — U.S. Securities and Exchange Commission Litigation Release No. 26290, dated April 22, 2025.

GPB Capital Holdings and its executives allegedly defrauded investors by using new investor money to pay promised distributions, rather than profits from portfolio companies. They also manipulated financial statements and violated whistleblower protections. A receiver was appointed and has now received court approval to return funds to investors.

In Plain English

Imagine you invest in a special fund that promises to pay you 8% every year from the money it makes from its businesses. But instead of using the actual profits, the people running the fund secretly used money from new investors to pay you. They also faked the fund's financial reports to make it look like the businesses were doing better than they were. Now, a court has allowed a special manager to start giving money back to the investors.

Disclaimer: all facts are drawn from the SEC's own filings; the claims described are allegations unless and until a court rules or the parties settle, and some cases end in dismissal.

How the Alleged Scheme Worked

1. Promising High Returns GPB Capital, through its owner David Gentile and placement agent Ascendant Capital led by Jeffry Schneider, marketed limited partnership funds to investors. They promised consistent 8% annualized distribution payments and additional 'special distributions,' projecting an aura of success.
2. Misrepresenting Distribution Sources Crucially, GPB Capital and its associates stressed that these distributions were paid exclusively from the operational profits of their portfolio companies (automotive retail, waste management, healthcare). This was a key selling point to attract and retain investors.
3. Using New Investor Funds for Payments In reality, GPB Capital used money from new investors to cover the shortfall between actual portfolio company profits and the promised distribution amounts. This created a Ponzi-like structure where early investors were paid with later investors' money.
4. Manipulating Financial Statements To further the deception, GPB Capital and Gentile, with assistance from Jeffrey Lash, allegedly manipulated the financial statements for the limited partnership funds. This was done to create a false appearance that the funds' income was sufficient to cover the distribution payments.
5. Concealing Fees and Conflicts The defendants also made material misrepresentations and omissions regarding millions of dollars in undisclosed fees paid to Gentile, Schneider, and Ascendant Capital. They failed to disclose inherent conflicts of interest related to acquisition decisions driven by these hidden fees.
6. Withholding Financial Information GPB Capital allegedly kept investors in the dark about the true financial condition of the funds. They failed to deliver audited financial statements for over four years and were delinquent in registering two of the funds with the SEC.
7. Violating Whistleblower Protections GPB Capital also allegedly violated securities laws concerning whistleblowers. This included including language in termination agreements that impeded individuals from reporting to the SEC and retaliating against a known whistleblower.

The Enforcement Action

On April 8, 2025, the U.S. District Court for the Eastern District of New York granted the receiver's motion to approve a plan to distribute funds to GPB Capital investors. The SEC's complaint, filed February 4, 2021, charged GPB Capital Holdings, LLC, David Gentile, Jeffry Schneider, Ascendant Capital, LLC, and Ascendant Alternative Strategies, LLC with antifraud violations of the Securities Act of 1933 and the Securities Exchange Act of 1934. Jeffrey Lash was charged with aiding and abetting. GPB Capital and Gentile were also charged with violating the Investment Advisers Act of 1940, and GPB Capital with registration and whistleblower provisions. A monitor was appointed on February 12, 2021, and later converted to a receivership on December 7, 2023, with Joseph T. Gardemal III appointed as receiver. A partial judgment was entered against Lash by consent on June 7, 2023. The Second Circuit affirmed the receivership order on December 3, 2024. The receiver filed a motion for approval of a distribution plan on January 17, 2025.

Named in this action: GPB Capital Holdings, LLC, David Gentile, Jeffry Schneider, Ascendant Capital, LLC, Ascendant Alternative Strategies, LLC, Jeffrey Lash.

Original SEC litigation release ↗ · Browse all cases