SCIENTOLOGIST DAVID GENTILE, Jeffry Schneider (the owner + CEO of Ascendant Capital LLC) + Jeffrey Lash (a former managing partner of GPB) 2/21 ARRESTED BY FBI ON CHARGES Related to His $1.8B GPB Capital Holdings Ponzi Scheme that cheated more than 17,000 investors. WILL KIMBERLY ANN GOGUEN OCG BE NEXT?
ABOVE + BELOW – David Gentile + Jeffry Schneider
ABOVE – Gentile, a Scientologist who lives in Manhasset, New York, founded GPB back in 2013. He and his associates are accused of cheating more than 17,000 retail investors who were falsely promised steady returns on their investments. He is pictured with family members in 2015
ABOVE – Schneider, of Austin, Texas, owned GPB’s affiliated company Ascendant Capital LLC. He is pictured here with his wife Julie
BELOW – Gentile lives in Manhasset, New York
Scientologist and Clearwater, Florida resident David Gentile, 54, was taken into custody today by the FBI on five felony charges related to his $1.8 billion GPB Capital Holdings Ponzi scheme. Gentile was arrested in Boston. Also arrested were two of Gentile’s accomplices. Jeffry Schneider was taken into custody in Austin, Texas. Jeff Lash was arrested in Naples, Florida.
The arrests are the culmination of a sweeping and comprehensive multi-agency investigation into what Massachusetts securities regulators called the “structurally complex” nature of the GPB Capital and its myriad conflicts of interest and self-dealing. This complexity includes the fact that GPB has hundreds of bank accounts under its control that are owned by dozens of different entities — most of which we presume were unknown to investigators until the FBI raid on GPB Capital in February 2019.
Since its beginnings in 2012, GPB Capital Holdings has raised $1.8 billion from ~17,000 investors. GPB Capital stated in a July 2020 regulatory filing that its assets were down to $239 million. Our opinion is that GPB likely has more than the stated $239 million. We believe there may be deception going on due GPB’s evasive internal accounting methods and perhaps even the fraudulent conveyance of assets. Nevertheless, GPB has lost a substantial portion of the money its Broker-Dealers raised from mostly retail investors. The indictment issued by the Eastern District of New York (scroll down to read) alleges that Gentile and Schneider paid themselves and their network of Broker-Dealers about $300 million of investor monies in the form of 11% sales commissions, wholesale fees, acquisition fees and other fees. Investors unknowingly suffered an immediate 14% loss of their investment to these undisclosed up front fees.
We reported last year on a leaked FBI Intelligence Bulletin which mentioned “more than $100 million in wire transfers” that came from a Russia-based company and flowed into the coffers of a NYC private equity firm:
We asked if this New York-based private equity firm could be GPB Capital Holdings whose sole owner is Scientologist David Gentile. In support of our question, we cited the ties of both David Gentile and GPB Capital to the purported Russian mobster Michael Cherney via his daughters Rina and Diana Chernaya. Gentile also has ties to Cherney’s US business agent Robert Kessler. Indeed, Chernaya and Kessler money were behind GPB Capital’s first major acquisition of a Volkswagen of America car dealership.
In our previous article on the FBI Intelligence Bulletin we were careful to state that no conclusions could be made absent solid evidence. We have since continued to watch for any developments. Nevertheless, we note the work of journalist Tracey McManus of the Tampa Bay Times. Her incredibly well-researched article in 2019 opened with a bombshell revelation:
THE CHURCH OF SCIENTOLOGY and companies run by its members spent $103 million over the past three years buying up vast sections of downtown Clearwater… Most of the sales have not previously been reported. The Tampa Bay Times discovered them by reviewing more than 1,000 deeds and business records, then interviewed more than 90 people to reconstruct the circumstances surrounding the transactions…
Nearly all of the properties were bought through limited liability companies, which are required to disclose their operators but not their owners. Although that arrangement is standard in real estate, it makes it impossible to know whether the properties are owned by the Scientologists who manage the companies, the wealthy church or another hidden party.
But companies controlled by different parishioners bought neighboring properties that create clear assemblages of land.
This takes us back, once again, to what the Commonwealth of Massachusetts stated in its recently-filed civil lawsuit against GPB Capital Holdings:
By its nature, GPB Capital is structurally complex. Its funds have a number of sub-funds, and those sub-funds have various ownership interests in portfolio companies.
Some of GPB Capital’s funds jointly own portfolio companies, like the Prime Automotive Group. Moreover, the property on which many dealerships sit is owned by separate companies under the GPB Capital umbrella.
GPB Capital has many hundreds of bank accounts under its purview.
The time frame of the $103 million in Scientologist-controlled real estate purchases in Downtown Clearwater occurred from February 2017 to the fall of 2019 when GPB was awash in cash. Indeed, as the Massachusetts lawsuit noted:
As time went on and GPB Capital raised more money, it was unable to deploy its capital efficiently.
GPB Capital couldn’t spend its $1.8 billion fast enough. To this point, we previously reported on how Scientologist David Gentile, the sole owner of GPB Capital Holdings, offered his fellow Scientologist Larry Feldman anywhere between $70-$105 million in financing to begin construction on Feldman’s Riverwalk Development. These figures were mentioned in a July 2018 article in Business Observer article. As McManus reported in March 2020, Feldman exited the Riverwalk project. Feldman’s exit was inexplicable given that Feldman had invested tens of millions of dollars and many years into the project.
Is it possible that David Miscavige ordered long-time Scientologist Larry Feldman to “take one for the team” so that the $105 million maximum available in liquid cash from GPB Capital could be diverted to allow Scientology to buy up as much property as possible in Downtown Clearwater?
Our reporting includes a detailed look into the dubious, yet fascinating, origins of GPB Capital. We further broke the story of how some of the money embezzled in the $5 billion Petrobras scandal in Brazil found its way into GPB Capital’s accounts. This scandal lead to the impeachment of Brazilian President Dilma Rousseff in August 2016. Eduardo Cunha, the former President of the Chamber of Deputies of Brazil, was arrested in the scandal and sentenced to 15 years in prison.
AN OCEAN OF CASH
GPB had an ocean of cash available to spend in 2017. McManus cited a stunning fact about the Scientologist-controlled real estate purchases:
All together, 32 companies bought 92 downtown properties since 2017. Of the $103 million spent, $99 million was paid in cash… The greatest number of properties were bought by companies controlled by either Israeli businessman Itzhak Zano or another Scientologist who represents him.
Did the $103 million in Scientologist-controlled Clearwater real estate purchases come from one of GPB Capital’s sub-funds? How is it that Scientologists suddenly had a war chest of $99 million in cash in 2017 just as Scientology Capo di tutti capi David Miscavige decided he needed to punish Clearwater by buying a huge amount of land Downtown in order to cripple any possibility of a sorely-needed redevelopment?
Miscavige was furious that the City of Clearwater refused to sell him a parcel of valuable land he wanted Downtown. At that time, GPB Capital had money pouring in as a result of the excessive commissions it was paying its Broker-Dealers. There is certainly a reasonable argument to be made that GPB Capital purchasing $100 million in prime Downtown Clearwater real estate was a good investment in 2017; particularly if David Miscavige had privately committed to put his support behind a redevelopment effort that was owned and controlled by wealthy individual Scientologists and the Church of Scientology. This hypothesis was plausible in 2017.
This is speculation on our part; but the theory does connect some dots. Our disclaimer having been made, our underlying question remains valid: Where did the $103 million Scientologists used to purchase real estate in Downtown Clearwater in 2017 come from? We are also curious about Israeli mystery man Itzhak Zano.
The arrests today of Gentile, Schneider, and Lash are just the tip of the iceberg. There will be more stories as the civil and criminal cases begin. Subscribe to the Scientology Money Project to get alerts when we publish a new story. To subscribe click the big blue Follow button in the right hand column of our blog.
The Bottom Line: Scientologist David Gentile will not be enjoying the glistening waters of Tampa Bay in his luxury yacht anytime soon.
USA DOJ ANNOUNCEMENT: GPB Capital Founder + CEO Among 3 Individuals Indicted in Private Equity Investment Fraud
An indictment was unsealed today in federal court in Brooklyn charging three individuals affiliated with GPB Capital Holdings, LLC (“GPB”) with securities fraud, wire fraud and conspiracy. Defendants David Gentile, the founder, owner and Chief Executive Officer (“CEO”) of GPB; Jeffry Schneider, the owner and CEO of Ascendant Capital LLC (“Ascendant”); and Jeffrey Lash, a former managing partner of GPB, are charged with engaging in a scheme to defraud investors by misrepresenting the source of funds used to make monthly distribution payments to them and the amount of revenue generated by two of GPB’s investment funds, GPB Holdings, LP and GPB Automotive Portfolio, LP. The defendants were arrested today, and Gentile will appear this afternoon in federal court in Boston, Massachusetts, Schneider will appear in federal court in Austin, Texas, and Lash in federal court in Fort Myers, Florida.
Seth D. DuCharme, Acting United States Attorney for the Eastern District of New York, and William F. Sweeney, Jr., Assistant Director-in-Charge, Federal Bureau of Investigation, New York Field Office (FBI), announced the charges.
“As alleged, by paying investors from an undisclosed and improper source such as investor capital, the defendants repeatedly misled investors about the health and performance of their investments,” stated Acting United States Attorney DuCharme. “This Office is committed to ensuring honesty and integrity in the management of investment funds.”
Mr. DuCharme expressed his grateful appreciation to the Securities and Exchange Commission, New York Regional Office, for their significant cooperation and assistance during the investigation, and thanked the Business Integrity Commission and the New York City Police Department and for their support during the investigation.
“As alleged, the defendants misrepresented the holdings of GPB Capital through deceptive marketing practices, luring investors with promises of monthly distributions that would be covered by funds from the investments and not drawn from underlying invested capital. As we allege today, however, this was all a lie. In truth, a significant portion of GPB’s distributions were paid directly from investor funds. Investment fraud schemes are not only problematic for the victims they claim, but for the overall investing public who loses faith in a free-market system every time they hear of crimes like this. Along with our partners, we’re committed to exposing these frauds whenever and wherever we find them—and holding the fraudsters accountable,” stated FBI Assistant Director-in-Charge Sweeney.
As detailed in the indictment and other court documents, GPB, founded by Gentile in or around 2013, was a New York-based investment advisor registered with the SEC. GPB served as the general partner of several investment funds, including GPB Holdings, LP (“Holdings I”), GPB Holdings II, LP (“Holdings II”), GPB Automotive Portfolio, LP (“Automotive Portfolio”), GPB Waste Management, LP (“Waste Management”) and GPB Cold Storage, LP (“Cold Storage”) (collectively, the “GPB Funds”). The business of GPB Capital was to manage the GPB Funds, which raised and invested capital in a portfolio of private equity investments. Gentile and Schneider worked closely together on the founding, development, operation and marketing of the GPB Funds. From 2013 through early 2018, Lash was responsible for overseeing the GPB Funds’ investments in car dealerships, which made up a sizable percentage of GPB’s portfolio companies.
Between August 2015 and December 2018, the defendants, together with others, allegedly engaged in a scheme to defraud investors and prospective investors in the GPB Funds through material misrepresentations and omissions.
Specifically, Gentile and Schneider, both individually and through employees at Ascendant, represented to investors in Holdings I, Holdings II and Automotive Portfolio that the GPB funds would make a monthly distribution payment to investors that would be fully covered by funds from operations, meaning that the companies purchased by the funds would be sufficiently profitable for the monthly payments to be made from the companies’ cash flow, without drawing from capital raised by investors.
In reality, despite the defendants’ representations, investor capital was used to pay for a significant portion of the distributions made to investors in each of these funds. Gentile and Schneider were aware that the GPB Funds were underperforming, and authorized repeated distribution payments that used investor funds to cover income shortfalls, to the obvious detriment of investors.
The charges in the indictment are allegations, and the defendants are presumed innocent unless and until proven guilty. If convicted, the defendants each face up to 20 years’ imprisonment.
The government’s case is being handled by the Office’s Business & Securities Fraud Section. Assistant United States Attorneys Lauren Howard Elbert, Artie McConnell and Garen Marshall are in charge of the prosecution.
Manhasset, New York
E.D.N.Y. Docket No. 21-CR-54 (DG)