SEC v. David Gentile; Jeffry Schneider; GPB Capital Holdings, LLC; Ascendant Alternative Strategies; Ascendant Capital; and Jeffrey Lash, No. LR-26290, Eastern District of New York (Apr. 22, 2025) — Press Release
raw: GPB Capital Holdings, LLC, et al.
GPB Capital Holdings, LLC, et al., No. LR-26290 (E.D.N.Y. Apr. 22, 2025)
summary
GPB Capital Holdings and its executives misled investors by using new capital to fund distributions, leading to a court-approved plan to return funds to investors via a receiver.
paragraph
The SEC charged GPB Capital Holdings, CEO David Gentile, and Jeffry Schneider with violating antifraud, registration, and whistleblower provisions of the Securities Act, Exchange Act, and Advisers Act. The defendants allegedly manipulated financial statements to hide that investor funds were being used to pay annualized distributions instead of portfolio company income. The litigation seeks disgorgement of ill-gotten gains, prejudgment interest, and penalties.
narrative
The SEC charged GPB Capital Holdings, CEO David Gentile, Jeffry Schneider, and Jeffrey Lash with orchestrating a fraud that misrepresented the source of investor distribution payments. To conceal the truth, the defendants allegedly manipulated financial statements to show sufficient income while actually using new investor capital to fund distributions. The case also involved violations of whistleblower provisions through retaliatory practices and restrictive separation agreements. Following the conversion of a monitorship into a receivership, the U.S. District Court for the Eastern District of New York recently approved a motion to distribute funds back to GPB Capital investors. This distribution plan, filed by Receiver Joseph T. Gardemal III, marks a key milestone in the ongoing litigation. The SEC continues to seek disgorgement, interest, and penalties against the defendants.
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Statutes
Parties
Securities and Exchange CommissionDavid GentileJeffry SchneiderGPB Capital Holdings, LLCAscendant Alternative StrategiesAscendant CapitalJeffrey Lash
Keywords
gpbcapitalseccapital holdingssecuritiesdistributioninvestorssecurities exchangedistribution paymentsprovisions securitiesviolating antifraudantifraud provisionsmonitorship receivershipexchangefunds
Extracted insights
Entities 8
- person david gentile
- company gpb capital
- person jeffry schneider
- person joseph t. gardemal iii
- company joseph t. gardemal iii as monitor of gpb capital
- person second circuit
- agency Securities and Exchange Commission
- court u.s. district court for the eastern district of new york
Triples 17
- U.S. Securities And Exchange Commission charged David Gentile, Jeffry Schneider, GPB Capital, Ascendant Alternative Strategies, and Ascendant Capital with violating the antifraud provisions of the Securities Act of 1933 and the Securities Exchange Act of 1934
- U.S. Securities And Exchange Commission charged Jeffrey Lash with aiding and abetting certain violations of the Securities Act of 1933 and the Securities Exchange Act of 1934
- U.S. Securities And Exchange Commission charged GPB Capital and David Gentile with violating the antifraud provisions of the Investment Advisers Act of 1940
- U.S. Securities And Exchange Commission charged GPB Capital with violating the registration and whistleblower provisions of the Securities Exchange Act of 1934 and the Investment Advisers Act of 1940’s custody and compliance rules
- GPB Capital used investor money to pay portions of annualized distribution payments
- David Gentile lied to investors about the source of money used to make annualized distribution payments
- Jeffry Schneider lied to investors about the source of money used to make annualized distribution payments
- GPB Capital manipulated financial statements to give false appearance of sufficient income to cover distribution payments
- GPB Capital violated whistleblower provisions of the securities laws by including impediment language in termination agreements and retaliating against a whistleblower
- U.S. District Court for the Eastern District of New York appointed Joseph T. Gardemal III as monitor of GPB Capital
- U.S. Securities And Exchange Commission moved to convert monitorship into receivership due to GPB’s alleged breach of monitor order
- U.S. District Court for the Eastern District of New York entered partial judgment against Jeffrey Lash by consent, permanently enjoining him from violating antifraud provisions of the Securities Act and Exchange Act
- U.S. District Court for the Eastern District of New York appointed Joseph T. Gardemal III as receiver over GPB Capital and affiliated entities
- Second Circuit affirmed Court’s order converting monitorship to receivership
- Joseph T. Gardemal III filed motion seeking approval of plan to distribute funds to GPB investors
- U.S. District Court for the Eastern District of New York granted motion for disbursement of funds to GPB investors
- U.S. Securities And Exchange Commission sought disgorgement of ill-gotten gains plus prejudgment interest and penalties
Extracted body text (3,462c)
U.S. SECURITIES AND EXCHANGE COMMISSION Litigation Release No. 26290 / April 22, 2025 SEC v. GPB Capital Holdings, LLC, et al., 21-cv-583 (filed Feb. 4, 2021) (E.D.N.Y.) Court Grants Receiver’s Distribution Request to Return Funds to GPB Capital Investors On April 8, 2025, the U.S. District Court for the Eastern District of New York granted the motion of the receiver of GPB Capital Holdings, LLC seeking approval of a plan to distribute funds to GPB Capital investors. According to the SEC’s complaint, David Gentile, the owner and CEO of GPB Capital, and Jeffry Schneider, the owner of GPB Capital’s placement agent Ascendant Capital, lied to investors about the source of money used to make an annualized distribution payment to investors. Investors were allegedly told that the distribution payments were paid exclusively with monies generated by GPB Capital’s portfolio companies, but GPB Capital actually used investor money to pay portions of the annualized distribution payments. To perpetuate the deception, GPB Capital allegedly manipulated the financial statements to give the false appearance that the funds’ income was closer to generating sufficient income to cover the distribution payments than it was. GPB Capital also allegedly violated the whistleblower provisions of the securities laws by including language in termination and separation agreements that impeded individuals from coming forward to the SEC, and by retaliating against a known whistleblower. The SEC’s complaint, filed in federal court for the Eastern District of New York, charged Gentile, Schneider, GPB Capital, Ascendant Alternative Strategies, and Ascendant Capital with violating the antifraud provisions of the Securities Act of 1933 (“Securities Act”) and the Securities Exchange Act of 1934 (“Exchange Act”), and Jeffrey Lash with aiding and abetting certain of those violations. The complaint also charged GPB Capital and Gentile with violating the antifraud provisions of the Investment Advisers Act of 1940 (“Advisers Act”) and charged GPB Capital with violating the registration and whistleblower provisions of the Exchange Act and the Advisers Act’s custody and compliance rules. The complaint sought disgorgement of ill-gotten gains plus prejudgment interest and penalties. On February 12, 2021, the Court appointed a monitor, Joseph T. Gardemal III, to oversee GPB Capital. On June 13, 2022, the SEC moved to convert the monitorship into a receivership because of GPB’s alleged breach of the monitor order. On June 7, 2023, the Court entered a partial judgment against Lash by consent in which he agreed to be permanently enjoined from violating the antifraud provisions of the Securities Act and the Exchange Act. On December 7, 2023, the Court granted the SEC’s motion to convert the monitorship to a receivership, and on December 8, 2023, the Court appointed Mr. Gardemal as receiver over GPB Capital and numerous affiliated entities. On December 3, 2024, the Second Circuit affirmed the Court’s order converting the monitorship to a receivership. On January 17, 2025, Mr. Gardemal filed a motion seeking approval of a plan of distribution to return funds to GPB investors. On April 8, 2025, the Court granted that motion for disbursement of funds. The litigation is being led by David Stoelting, Neal Jacobson, Kristin M. Pauley, and Lindsay S. Moilanen, and is being supervised by Sheldon L. Pollock and Daniel Loss of the SEC’s New York Regional Office.
OCR text (3,462c · html-text · 99% conf)
U.S. SECURITIES AND EXCHANGE COMMISSION Litigation Release No. 26290 / April 22, 2025 SEC v. GPB Capital Holdings, LLC, et al., 21-cv-583 (filed Feb. 4, 2021) (E.D.N.Y.) Court Grants Receiver’s Distribution Request to Return Funds to GPB Capital Investors On April 8, 2025, the U.S. District Court for the Eastern District of New York granted the motion of the receiver of GPB Capital Holdings, LLC seeking approval of a plan to distribute funds to GPB Capital investors. According to the SEC’s complaint, David Gentile, the owner and CEO of GPB Capital, and Jeffry Schneider, the owner of GPB Capital’s placement agent Ascendant Capital, lied to investors about the source of money used to make an annualized distribution payment to investors. Investors were allegedly told that the distribution payments were paid exclusively with monies generated by GPB Capital’s portfolio companies, but GPB Capital actually used investor money to pay portions of the annualized distribution payments. To perpetuate the deception, GPB Capital allegedly manipulated the financial statements to give the false appearance that the funds’ income was closer to generating sufficient income to cover the distribution payments than it was. GPB Capital also allegedly violated the whistleblower provisions of the securities laws by including language in termination and separation agreements that impeded individuals from coming forward to the SEC, and by retaliating against a known whistleblower. The SEC’s complaint, filed in federal court for the Eastern District of New York, charged Gentile, Schneider, GPB Capital, Ascendant Alternative Strategies, and Ascendant Capital with violating the antifraud provisions of the Securities Act of 1933 (“Securities Act”) and the Securities Exchange Act of 1934 (“Exchange Act”), and Jeffrey Lash with aiding and abetting certain of those violations. The complaint also charged GPB Capital and Gentile with violating the antifraud provisions of the Investment Advisers Act of 1940 (“Advisers Act”) and charged GPB Capital with violating the registration and whistleblower provisions of the Exchange Act and the Advisers Act’s custody and compliance rules. The complaint sought disgorgement of ill-gotten gains plus prejudgment interest and penalties. On February 12, 2021, the Court appointed a monitor, Joseph T. Gardemal III, to oversee GPB Capital. On June 13, 2022, the SEC moved to convert the monitorship into a receivership because of GPB’s alleged breach of the monitor order. On June 7, 2023, the Court entered a partial judgment against Lash by consent in which he agreed to be permanently enjoined from violating the antifraud provisions of the Securities Act and the Exchange Act. On December 7, 2023, the Court granted the SEC’s motion to convert the monitorship to a receivership, and on December 8, 2023, the Court appointed Mr. Gardemal as receiver over GPB Capital and numerous affiliated entities. On December 3, 2024, the Second Circuit affirmed the Court’s order converting the monitorship to a receivership. On January 17, 2025, Mr. Gardemal filed a motion seeking approval of a plan of distribution to return funds to GPB investors. On April 8, 2025, the Court granted that motion for disbursement of funds. The litigation is being led by David Stoelting, Neal Jacobson, Kristin M. Pauley, and Lindsay S. Moilanen, and is being supervised by Sheldon L. Pollock and Daniel Loss of the SEC’s New York Regional Office.