NEW YORK — The head of a New York money manager that holds a controlling stake in the nation’s 11th-largest auto dealership group was criminally charged along with two associates on Thursday with running what authorities called a $1.8 billion Ponzi-like fraud where thousands of victims were falsely promised steady returns on their investments.
David Gentile, CEO of GPB Capital Holdings LLC, was accused of using new money to repay earlier investors, and together with his co-defendants siphoning millions of dollars to pay themselves and fund luxury expenses, including a Ferrari for Gentile. The federal indictment was unsealed in U.S. District Court in Brooklyn, N.Y.
Authorities said more than 17,000 retail investors were taken in by promises that GPB would provide consistent 8 percent annual returns plus occasional “special” distributions.
Criminal charges were also brought against Jeffry Schneider, the owner of GPB’s placement agent Ascendant Capital, and Jeffrey Lash, a former GPB managing partner.
Auto dealership ties
GPB Capital Holdings is the majority owner of Prime Automotive Group of Westwood, Mass., which ranks No. 11 on Automotive News’ list of the top 150 dealership groups based in the U.S., retailing 45,050 new vehicles in 2019.
Prime as of fall 2020 had about 40 dealerships in the Northeast.
The group was formed in late 2017 when dealer David Rosenberg’s Prime Motor Group and GPB Capital’s Capstone Automotive Group combined.
Rosenberg, Prime’s former CEO, and Rosenberg family trusts sued GPB in 2019 in Massachusetts Superior Court, seeking money Rosenberg says he was owed after he opted in April 2019 to sell his stake in the dealership group. Rosenberg was fired from his CEO role in September 2019.
Several automakers since have demanded that GPB sell some of its stores, out of concern over its handling of Rosenberg’s departure.
GPB and Prime did not immediately have a comment when reached by Automotive News. Messages seeking comment were left with current Prime Automotive CEO Todd Skelton.
Civil charges
In addition to the federal criminal charges, related civil charges were filed by several state regulators and the U.S. Securities and Exchange Commission, which accused GPB of silencing a known whistleblower and contractually forbidding former employees from talking with the agency.
Lawyers for the individual defendants did not immediately respond to requests for comment.
The Department of Justice said Gentile, 54, lives in Manhasset, N.Y., while Schneider, 52, lives in Austin, Texas and Lash, 51, in Naples, Fla.
According to an indictment unsealed on Thursday, GPB claimed to manage just $239 million as of December 2020, despite having raised more than $1.8 billion since its 2013 founding.
New York Attorney General Letitia James said GPB’s victims were defrauded out of more than $700 million.
In a statement, James said: “We won’t let Wall Street fat cats get away with breaking the rules.”
Automotive News staff and Bloomberg contributed to this report.
