GPB Capital Fund Investors: How Do You Recover Your GPB Capital Investment Losses?
Recently, we have received telephone calls from investors inquiring about whether they have suffered losses in one or more of the GPB Capital Holdings, LLC sponsored private placement investments known as:
- GPB Automotive Portfolio, LP
- GPB Waste Management Fund, LP
- GPB Holdings Fund I, LP
- GPB Holdings Fund II, LP
- GPB Holdings Fund III, LP
- GPB New York Development, LP,
- GPB Cold Storage, LP.
- GPB Holdings Qualified, LP
For some reason, these investors still believe their $50,000, $100,000 or $250,000 investments in one or more of the above-listed limited partnerships (the “GPB Funds”) are still valuable even though they invested in a company:
- that stopped making the promised distributions
- with no audited financial statements for years
- with no Audit Committee because they quit due to perceived risks in the firms books and records
- that failed to send out Form K-1s so now some IRA investors are going to be penalized
- whose Chief Compliance Officer was indicted for Obstruction of Justice
- whose former business partner sued alleging it has been engaged in a massive Ponzi -like scheme for some time
- that has failed to file mandatory SEC annual and quarterly statements for two years
- that last reported 39% and 25% declines in valuations of its two biggest funds two years ago and given no valuations since that time
- whose funds will no longer be permitted on broker-dealer platforms because they cannot be valued
- whose 2015 and 2016 financial statements admittedly needed to be restated because they were wrong
- that is under investigation by the FBI, SEC, FINRA, State of Massachusetts and NYC Business Integrity Commission
- that is a defendant in multiple class action lawsuits
GPB Capital investors are shocked when we tell them they lost 8 to 10% of their investment the second they delivered the check due to the excessive commissions paid the broker who sold them. It’s true, GPB Capital has not filed bankruptcy and the company itself has not been indicted or proven to be a Ponzi-like scheme but we will bet (dollars for doughnuts) GPB Capital investors have investment losses and so, you do not have to wait for someone to tell you it’s all gone.
But first, what exactly were those so-called investments in the GPB Funds and when are you supposed to get your money back? Investors purchased limited partnership interests that are not transferable and cannot be sold in any public market. The GPB Funds were never obligated to make any redemption or repurchase any investor’s interest in any of the funds. Yet investors were led to believe they would get all of their money back with a nice dividend up until the point of termination. However, there was never any definite termination date for return of those funds. For example, the GPB Automotive Fund stated:
While we generally expect the Dealerships to operate for approximately 2 to 5 years, the company’s term will expire on the earliest of: (i) a determination by GPB that the Company should be wound up, (ii) the date we divest our ownership interest in all of the Dealerships, (iii) the termination, bankruptcy, insolvency or dissolution of GPB, (iv) the sale of substantially all of our assets, (v) upon written consent of all our partners to terminate, (vi) an event of withdrawal of GPB, or (vii) a court decree requiring our winding up or dissolution.
This appears to be nothing more than an illusory promise about termination and when there will be a return of investor’s capital. Further, if any investment capital is going to be returned, it will not be for years and probably only after a bankruptcy, insolvency or other court ordered dissolution of GPB Capital and the funds it sponsored.
Notwithstanding, there is a way for investors to recover the amount they invested in one or more of the GPB Funds before the termination date, whenever that may be in the future. According to SEC filings, more than 60 brokerage firms sold investments in the various GPB Funds. The major players were financial advisors associated with Royal Alliance, FSC Securities, SagePoint Financial, Cetera Advisors and Woodbury Financial Services. These broker-dealers and the others who sold the limited partnership interests (otherwise known as securities) in the GPB Funds were all subject to the federal and state securities laws and regulations, as well as the Financial Industry Regulatory Authority (FINRA) rules governing the offer and sale of securities. They were responsible for conducting due diligence to make sure these investments were reasonable investments for individuals and not a fraud. These broker-dealers and their financial advisors who actually offered and sold the investments were obligated to make sure they did not misrepresent the investment and that these limited partnership interests were suitable investments for the person to whom they were offered and sold. Did they act properly or were the firms conflicted and their advisors blinded by the huge 8-10% commissions? The only avenue for investors to recover their capital invested before the termination date of the GBP Funds is to file a FINRA arbitration proceeding.
Many GPB Fund investors are reporting that the stockbrokers and investment advisors who recommended the GPB Funds to them are telling them to hold off and not be so quick to file any suit or arbitration claim. Investors are being told the funds have assets and they have suffered any losses. Why any investor would continue to believe any salesman (who received a 8 to 10% commission) is beyond comprehension given all the bad news, inaccurate financials and now the absence of any meaningful financial information? Investors need to understand those salesman are conflicted in giving you any advice. Any further delay in filing claims could be detrimental to your case and ability to obtain certain remedies under the law like rescission. If you file a timely claim under certain securities statutes you could be entitled to rescind the investment transaction and receive a return of your entire investment plus legal interest from the date of purchase (less any income received) plus attorney fees and other expenses. The six year FINRA eligibility rule and some state statutes of limitation could prevent you from even having the opportunity to recover your GPB Fund losses. Investors must not listen to any salesman giving them legal advice!
At The Law Offices of Robert Wayne Pearce, P.A., we represent investors in GPB Funds and all kinds of private placement investment disputes in FINRA arbitration and mediation proceedings. The claims we file are for fraud and misrepresentation, breach of fiduciary duty, failure to supervise, and unsuitable recommendations in violation of FINRA rules and industry standards. Attorney Pearce and his staff represent investors across the United States on a CONTINGENCY FEE basis which means you pay nothing - NO FEES-NO COSTS - unless we put money in your pocket after receiving a settlement or FINRA arbitration award.
The Law Offices of Robert Wayne Pearce, P.A. have highly experienced lawyers who have successfully handled many private placement cases and other securities law matters and investment disputes in FINRA arbitration proceedings, and who work tirelessly to secure the best possible result for you and your case. For dedicated representation by an attorney with over 40 years of experience and success in your GPB Capital private placement case contact the firm by phone at 561-338-0037, toll free at 800-732-2889 or via e-mail.