Former GPB Capital Holdings Chief Compliance Officer Michael Cohn was criminally charged by the US Government with felony Obstruction of Justice in 2019.

 

https://scientologymoneyproject.com/2020/05/02/criminal-trial-of-scientologist-owned-gpb-capital-holdings-former-cco-michael-cohn-delayed-due-to-health-problems-pandemic/

 

Law 360 reported that the criminal trial of Scientologist-owned GPB Capital Holding’s former Chief Compliance Officer Michael Cohn has been rescheduled:

U.S. District Judge Gary R. Brown on Wednesday agreed to push back the trial of Michael S. Cohn for nearly three months, from June 15 to at least Sept. 8, after Cohn said in a letter to the judge that he suffers from health conditions that put him at greater risk of complications from the virus.

“We make this request in light of the current COVID-19 crisis to protect the health and safety of the parties, potential jurors and this court,” Cohn’s counsel said in the letter Tuesday.

While working as an examiner in the compliance section of the US Securities and Exchange Commission, Cohn allegedly leaked confidential details of the US Government’s criminal investigation into GPB Capital Holdings to GPB’s executives including Scientologist David Gentile, the owner of GPB Capital.

After leaking the information, Cohn resigned from the SEC and took a $400,000 a year job with GPB Capital as the Chief Compliance Officer in October 2018. The FBI raided GPB Capital’s headquarters in late February 2019 and Cohn was criminally charged coincident with the FBI raids. Charged with felony obstruction of justice and other charges, Cohn, 60, faces up to 20 years in prison if convicted.

A private equity firm located in New York, GPB Capital has been the target of investigations and lawsuits since 2018 when it failed to meet an SEC-mandated deadline to submit restated financials for 2015 and 2016. GPB Capital Holdings has never submitted these required statements to the SEC and has cited various reasons for its inability to do so.

We think no one inside of GPB Capital Holdings wants to sign any restated financials due to the serious liability associated with signing any untruthful financial statements and submitting them to the US government. There seems to be no other explanation. Indeed, the internal audit committee in GPB Capital Holdings resigned in November 2019. GPB’s outside auditing firm EisnerAmper said it was unable to proceed on anything due to the events surrounding the arrest of Michael Cohn.

The GPB Executive Management team link at GPB’s website was removed several months ago. GPB’s website is a proverbial case of, “The lights are on, but nobody’s home.”

The global pandemic has taken GPB Capital out of the news cycle and the firm itself is in a news blackout. The firm remains the subject of numerous lawsuits and has been called a Ponzi scheme in two lawsuits by former GPB executives Patrick Dibre and David Rosenberg.

At its zenith in 2018, GPB Capital Holdings had $1.8 billion assets under management (AUM). In a devastating blow to investors, GPB announced a staggering devaluation of its AUM to $1.1 billion. The loss of $700 million in investor money was not explained.


2017: Photo from Jeffry Schneider’s blog. Names of key GPB officials (current and former) tagged by the Scientology Money Project.

Whistleblower Toni Caiazzo Neff found ties between the purported Ukrainian-Israeli mobster Michael Cherney and GPB Capital Holdings. The alleged ties come through Cherney’s daughters Rina and Diana Chernaya who invested in an Irish online gaming concern called SeanieMac. The 2012 investment included GPB Capital’s owner David Gentile.

We covered the details in our previous article Ties to Russian Organized Crime Alleged in Blockbuster New Lawsuit Against Scientologist-Owned GPB Capital. From the news conference Neff held with her attorneys:

Russian crime connections. While the GPB Ponzi scheme formally began in 2013 the seeds of this fraud were sowed years before when David Gentile became involved with an Eastern European organized crime family headed by Michael Chernaya a/k/a Michael Cherney. Gentile’s relationship with Chernaya, his organization, and his family ultimately led to GPB’s first portfolio assets and GPB investor funds flowing to Chernaya’s organization, an organization that included David Gentile. Michael Chernaya’s ties to foreign crime syndicates, the mafia and Russian oligarchs are extensive and well-documented. He has been denied a visa by the United States. He has been barred from Bulgaria. Court documents reveal that although he is not in the United States, his two daughters, Rina and Diana Chernaya, live in Florida and have been the recipients of tens of millions of dollars from their father.


GPB Capital Holdings is also involved in waste management in New York City. GPB-owned Five Star Waste Management was also raided by the FBI coincident with the raid on GPB Capital’s headquarters. Waste management in New York City has long been a haven for organized crime.

When GPB Capital Holdings announced its devaluation from $1.8 billion AUM to $1.1 billion AUM, its Armada Waste Management Fund was the largest loss by percentage. Erez Law commented on the enormous loss:

It is alleged that GPB Capital Holdings issued more than $163 million in securities in Armada Waste Management LP. Unfortunately for investors, it is alleged that the fund is now valued at just $53 million, an almost 70% reduction in value.

How did GPB Capital lose $110 million in its Armada Waster Management fund? The easiest way to for a private equity fund to lose money is to overpay for a company or an asset it acquires. When a waste management firm in New York City is acquired, this naturally raises questions about the propriety of what went on behind the scenes leading up to the acquisition.

That GPB Capital Holdings had its Five Star Waste Management office in New York City simultaneously raided by the FBI and the BIC raises suspicions exponentially. The BIC is a New York City agency charged with keeping the mob out of waste management.


The pandemic has put many things on hold, particularly in New York City which has been the hardest hit State in the US. As things slowly return to whatever the new normal will be, the criminal case against Michael Cohn will proceed as will the lawsuits and the multi-agency US Federal investigation into GPB Capital Holdings and its Scientologist owner David Gentile.

BACKGROUND: Managing Director + Chief Compliance Officer (Michael S. Cohn) of Private Equity Firm Indicted for Obstruction of Justice

Department of Justice
U.S. Attorney’s Office
Eastern District of New York

While Employed as a Securities and Exchange Commission Examiner, Defendant Accessed and Disclosed Confidential Information to the Target of an Investigation in Connection with Taking a Job With that Firm

A superseding indictment was unsealed today in federal court in Central Islip charging Michael S. Cohn, Managing Director and Chief Compliance Officer of GPB Capital Holdings, LLC (GPB), with obstruction of justice, unauthorized computer access and unauthorized disclosure of confidential information.  Cohn, a former employee of the Securities and Exchange Commission (SEC), was arraigned this morning before United States Circuit Judge Joseph F. Bianco and released on a $250,000 bond.

Richard P. Donoghue, United States Attorney for the Eastern District of New York, William F. Sweeney, Jr., Assistant Director-in-Charge, Federal Bureau of Investigation, New York Field Office (FBI), and Carl W. Hoecker, Inspector General of the SEC Office of Inspector General, announced the charges.

“As alleged in the superseding indictment, the defendant abused the trust placed in him as an SEC employee, obstructing an active investigation,” stated United States Attorney Donoghue.  “No one gets a pass for breaching the security of government computer networks and misusing sensitive and confidential information for their own benefit.”  Mr. Donoghue expressed his appreciation to the New York City Business Integrity Commission and the New York City Police Department for their assistance during the investigation.

“When Cohn left the SEC to join GPB, he left with more than his own career ambitions. The proprietary information he allegedly retrieved—from databases he wasn’t authorized to access—included compromising information about a GPB investigation and sensitive details related to the same. The charges announced today demonstrate the FBI’s commitment to protect the securities industry, in addition to guarding the confidential information that is essential to the success of our investigations,” stated FBI Assistant Director-in-Charge Sweeney.

“The charges announced by the U.S. Attorney’s Office reflect the Office of Inspector General’s commitment to investigate individuals who obstruct SEC enforcement activities,” stated SEC Inspector General Hoecker.

As set forth in the superseding indictment and other court documents, Cohn previously worked as a Securities Compliance Examiner and Industry Specialist in the SEC’s Enforcement Division, where he assisted investigations into violations of securities laws.  In approximately October 2018, Cohn left the SEC to join GPB, a private equity firm based in Manhattan and Garden City, New York, that manages over $1.5 billion in assets.  However, prior to leaving the SEC, Cohn accessed information on SEC servers relating to an Enforcement Division investigation into GPB.  Cohn was not authorized to access this highly sensitive material, which included confidential information, privileged attorney-client work product and contacts with law enforcement and other regulatory agencies.  During discussions with GPB personnel about obtaining a job there, Cohn advised them that he had inside information about the SEC’s investigation, and on several occasions he disclosed information to members of GPB’s senior management about that investigation.

The charges in the superseding indictment are allegations, and the defendant is presumed innocent unless and until proven guilty.  If convicted, Cohn faces a maximum sentence of 20 years’ imprisonment on the obstruction of justice count, a maximum of five years’ imprisonment on the unauthorized computer access count and a maximum of one year imprisonment on the unauthorized computer disclosure count.

The government’s case is being handled by the Office’s Business and Securities Fraud and National Security & Cybercrime Sections.  Assistant United States Attorneys Artie McConnell and Lauren Howard Elbert are in charge of the prosecution.

The Defendant:

MICHAEL S. COHN
Age: 59
Norwalk, Connecticut

E.D.N.Y. Docket No. 19-CR-97 (S-1) (JFB)