Federal prosecutors charged Gentile, 54; Jeffry Schneider, 52, owner and CEO of Ascendant Capital, which helped market GPB funds to investors; and Jeffrey Lash, 51, a former GPB managing partner who also owned dealerships, with conspiracy to commit securities fraud, conspiracy to commit wire fraud, and securities fraud. Gentile and Lash, who prosecutors said also oversaw GPB's investments in dealerships for a time, also were charged with wire fraud.
All three were arrested last week and face up to 20 years in prison if convicted. A lawyer had not yet been identified in court records for Schneider as of Friday. Gentile's lawyer, Gregory Bruch, told Automotive News that his client plans to plead not guilty. "He is looking forward to defending himself," Bruch said.
A message seeking comment was left with Lash's lawyer. That lawyer, Robert Gottlieb of New York, told The Wall Street Journal that Lash was "a good man with a spotless record" and would plead not guilty. Gentile, Lash and Schneider were released on $500,000 bonds last week after initial court appearances, according to the U.S. Attorney's Office.
Prosecutors and regulators say Gentile and Schneider promised investors they would receive monthly payments equivalent to an annualized 8 percent return, paid for with cash generated by GPB's businesses. Instead, they allege, GPB paid monthly distributions using money raised from investors.
Authorities allege Gentile and Schneider, along with Lash, created false financial statements to make it look like GPB's funds were in stronger financial shape than they were.
The SEC, in its complaint, claims GPB and related entities, Gentile, Schneider and Lash violated federal securities laws. Seven states — New York, New Jersey, South Carolina, Alabama, Georgia, Illinois and Missouri — also brought actions against GPB and the defendants. In May, the Massachusetts Secretary of the Commonwealth filed an administrative complaint against GPB, accusing it of violating state securities laws.
New York Attorney General Letitia James, for instance, claimed Gentile "reaped benefits" of more than $27 million and that he and Schneider used investor funds to aid a lavish lifestyle. Among the alleged spending from GPB and portfolio companies for personal benefit included a $355,000 Ferrari FF for Gentile's use and about $47,000 for private jets. New York is seeking "restitution for investors of more than $700 million defrauded," according to a statement from the Attorney General's Office.
GPB said in a statement that it "intends to vigorously defend itself in court where, for the first time, the firm will be able to present significant evidence in its favor. GPB remains confident that the firm acted in good faith during many years of managing funds for investors."
Gentile stepped down voluntarily, GPB spokeswoman Nancy Sterling said late last week. The company named CFO Rob Chmiel as interim CEO.