Rosenberg filed a lawsuit July 19 in Massachusetts' Norfolk County Superior Court alleging GPB failed to make a July 1 payment of $5.9 million to him in "an act of retaliation" against his efforts to address fraudulent activity at the firm.
Rosenberg’s attorney, Jack Pirozzolo of Sidley Austin in Boston, issued the following statement on behalf of his client Monday: “Today’s announcement by GPB Capital represents further retaliatory action taken against David Rosenberg for reporting evidence of financial misconduct at GPB. Company leadership not only ignored Mr. Rosenberg’s initial call for corrective steps within GPB’s legacy auto dealership operations, they attempted to silence him and other members of the Prime Automotive Group team when misconduct was discovered. Now they have wrongfully terminated Mr. Rosenberg for acting responsibly and ethically and in the best interests of the dealerships and GPB investors, and for asserting his rights to certain payments that GPB was contractually obligated to make to him by July 1 -- but which Mr. Rosenberg has not received to date.”
GPB spokeswoman Nancy Sterling said Rosenberg was not let go because of the lawsuit, but she declined to say why he was removed. Rosenberg also was removed from serving as CEO of Prime Motor Group, GPB said.
GPB has confirmed that the FBI and a New York City agency searched its offices in February and it faces inquiries by the U.S. Securities and Exchange Commission, which it said center on potential violations of securities law. Massachusetts also is investigating broker-dealers who worked with the company.
Prime ranks No. 11 on Automotive News' list of the top 150 dealership groups based in the U.S. GPB is the majority owner of Prime Automotive Group and began investing in dealerships in 2013. Prime Automotive formed in October 2017 through the combination of Rosenberg's Prime Motor Group and GPB Capital's Capstone Automotive Group.
Westfall has more than 40 years of auto industry experience, including 16 years at AutoNation, the largest new-vehicle retailer in the U.S. There he was senior vice president of sales for seven years. Before that, Westfall founded and was president of BMW's captive finance arm BMW Financial Services, helping to grow the company from $700 million to $7.2 billion in assets over seven years. He also managed Chrysler Financial's retail lease portfolio and founded World Automotive Sales and Leasing.
"Kevin brings a wealth of automotive industry knowledge and management experience to the table," Jovan Sijan, senior managing director for GPB Capital, said in a statement. "The leadership Kevin has displayed in his time over the past several months as chairman has clearly demonstrated he is the right choice to guide the business."
Westfall told Automotive News he will work from Prime Motor Group’s offices in suburban Boston and that he met with a number of employees Monday to provide them an update.
“The focus is always about taking care of consumers,” he said. “They’re our No. 1 priority.”
Westfall said he wants to create great customer service across all areas of the dealerships and is looking at synergies to “drive some cost out of” the portfolio of stores.
Prime Automotive has 56 dealerships across eight states, down from 61 earlier this year. GPB said the group is expected to generate about $3.2 billion in revenue this year.