Judge Orders Initial Release of $400 Million to Wronged GPB Capital Investors
A segment of investors in GPB Capital Holdings – an alternative asset management firm which acted as the general partner and fund manager for a number of limited partnership funds – are finally set to have initial assets returned to them after six years of legal delays.
Per a request by the U.S. Securities and Exchange Commission, the funds were put under the control of a receiver, Joseph T. Gardemal III, in December 2023. This decision was upheld by a federal appeals court in December 2024, allowing the receiver to proceed with asset liquidation and investor compensation.
This week, Chief Judge Brodie of the United States District Court for the Eastern District of New York issued an opinion and order granting Gardemal to distribute an initial $400 million to investors in three specific funds: GPB Automotive Portfolio, GPB Holdings II, and GPB Cold Storage. In his opinion, the judge thanked members of management and the receiver team who have worked diligently over the past four years, as well as acknowledging the patience of nearly 18,000 GPB Capital investors – thousands of which were older adults – reiterating “you have shown extraordinary patience as my team has worked to recover and return assets as soon as possible.”
This decision follows the firm’s years-long collapse under criminal and civil fraud charges.
Brodie directed his team to execute on its initial $400 million distribution as approved by the Court, as well as continuing to maximize future returns to investors and oppose further challenges. The judge said the initial distribution to certain GPB investors as outlined in the distribution plan would occur by no later than April 29, 2025 (subject to any appeals filed before this date). Gardemal retains $719 million for future distributions.
In August 2024, GPB Capital’s founder, David Gentile, and Jeffry Schneider, chief executive officer of Ascendant Capital, were convicted on charges of securities fraud, conspiracy, and wire fraud. The convictions were upheld in March 2025, with sentencing scheduled for April.
In 2021, the U.S. Department of Justice, along with the U.S. Securities and Exchange Commission, charged Gentile, Schneider and another senior executive, Jeffrey Lash, with a number of fraud charges, including creating a Ponzi-like scheme and securities fraud, wire fraud, and conspiracy.
Also in 2021, the North American Securities Administrators Association reported that seven state securities agencies had filed regulatory actions against GPB Capital Holdings LLC and others for their alleged involvement.
Between 2013 and 2018, Schneider and affiliates raised more than $1.8 billion through the sales of unregistered, high-commission limited partnership interests in a series of eight alternative asset investment funds managed by GPB Capital and Gentile. The scheme was mainly carried out through four of the eight funds managed by GPB Capital and Gentile, consisting of: GPB Automotive Portfolio LP; GPB Holdings LP; GPB Holdings II, LP; and GPB Waste Management LP. Nearly $1.7 billion was invested in these four GPB Funds.
According to court documents, Gentile had little to no experience with fund structures and could not have set up GPB Capital or the GPB Funds without substantial help. He got that help from Schneider.
GPB Capital similarly described Schneider as the “co-creator” with Gentile of the overall business plan. Both Schneider and Gentile stated under oath that they jointly developed GPB Capital and its fund structures. Others have described Schneider and Gentile as “essentially partners.”
Schneider is a former securities broker with a history of association with questionable or demonstrably fraudulent activity. Two of his former employers – J.P.R. Capital Corp. and IMS Securities Inc. – were expelled from the securities industry by the Financial Industry Regulatory Authority. While working at another firm, Paradigm Global Advisors LLC as a marketer, Schneider helped create a co-branded fund with R. Allen Stanford. Although Schneider’s fund was not accused of wrongdoing, Stanford was later convicted and sentenced to 110 years in prison in connection with a $7 billion Ponzi scheme, the second-largest in history. Schneider also marketed Ponte Negra Fund I, LLC, a private investment fund that was revealed to be an accounting fraud.
During the time period examined in the Gentile and Schneider jury trial, investors were lured with false and misleading promises of reliable monthly returns “fully covered” by operating profits, even as they increasingly relied on Ponzi financing, using new investors’ capital contributions to pay prior investors the monthly distributions.
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