https://www.silverlaw.com/blog/gpb-capital-scientology/

 

GPB Capital Holdings, the troubled alternative asset management firm that’s being investigated by the FBI, SEC, and others, and is accused of operating like a Ponzi scheme, allegedly has significant ties to the Church of Scientology.

Scientology is a system of religious beliefs and practices created by American science fiction writer L. Ron Hubbard in 1952. The religion has had many controversies over the years, including “Operation Snow White” in the 1970s, in which up to 5,000 agents infiltrated US government agencies to remove unfavorable evidence about Scientology and L. Ron Hubbard.

Scientology And GPB Capital

The Scientology Money Project refers to GPB Capital as a Scientology-owned company. An article on their website states: “An older listing found online shows GPB Capital to be a Scientology WISE Company. “WISE” is an acronym for “World Institute of Scientology Enterprises” and is a private membership group for Scientologist-owned businesses. It is unknown if GPB Capital is still a member of WISE or if Scientology course rooms exist within GPB facilities.”

The Scientology Money Project says it’s not known if GPB has financial links to the Church of Scientology, but names people working for the company who it says are known Scientologists, including:

  • David Gentile, founder and CEO of GPB Capital Holdings.
  • Manuel Vianna, GPB’s managing director.
  • Brian Marshall, Vice President of GPB’s Prime Automotive Group (former member of Scientology’s Sea Org, which requires members to sign a billion-year contract.)

Also, in July, 2018 GPB announced that it would invest in a 53-story condo in Tampa called Riverwalk, which belongs to Feldman Equities, a company owned by Scientologist Larry Feldman.

GPB Capital And It’s Problems

Scientologist David Gentile founded GPB Capital Holdings in 2013. The company raised $1.8 billion by having brokers sell private placements in its funds to retail investors. Though the private placements were illiquid, investors were attracted to the 8% dividend the company paid.

Owning GPB funds has not turned out the way investors had hoped. GPB missed an April, 2018 filing deadline, saying it needed time to restate its 2015 and 2016 financials for its two biggest funds, GPB Automotive Portfolio and GPB Holdings II.

In November, 2018, GPB’s outside auditing firm, Crowe LLP, resigned because its risks were “outside of their financial risk tolerance parameters.” In December, 2018, GPB stopped paying investors dividends.

In 2019, the news went from bad to worse. The FBI raided GPB’s offices and class action lawsuits were filed. The company is the subject of investigations by FINRA, the SEC, and New York’s Business Integrity Commission.

In June, GPB reported that the value of its two biggest investment funds, GPB Holdings II and GPB Automotive Portfolio, had declined by 25% and 39%, respectively.

In October, 2019, GPB’s Chief Compliance Officer and Managing Director, Michael S. Cohn, was indicted on charges of obstruction of justice and unauthorized disclosure of confidential information. Cohn, a former SEC investigator, is accused of giving GPB inside information about a law enforcement investigation into the company.

Investors now know that their investment in GPB private placements was doomed from the start. With the 8% commission GPB paid to brokers who sold their funds, plus the fees GPB paid itself, it was virtually-impossible for the company to make enough of a return to continue to pay them the dividends they were promised or even to maintain value.

The Scientology Money Project notes that “GPB sure looks like it has a lot in common with Scientology itself: excessive secrecy, a lack of financial transparency, and one-sided contracts in which GPB has all the power and the investors have virtually no power and no say in how their money is spent.”

If you were sold an investment in GPB Capital you may be able to recover losses through FINRA arbitration. Broker-dealers must recommend suitable investments to their clients and perform due diligence into the products they sell. FINRA-registered brokers and broker-dealers are subject to arbitration to resolve securities-related disputes.

Silver Law Group has filed arbitration claims against broker-dealers who sold GPB, including SagePoint Financial and others.

Silver Law Group Represents Investors To Recover GPB Losses

Silver Law Group represents the interests of investors who have been the victims of investment fraud or unsuitable recommendations from their brokers. Scott Silver is the chairman of the Securities and Financial Fraud Group of the American Association of Justice and represents investors around the nation in securities investment fraud cases. Please contact Scott Silver of the Silver Law Group for a free consultation at [email protected] or toll free at (800) 975-4345.

BACKGROUND: Scientologist Owned GPB Capital Update – GPB Exec & Former SEC Official Michael Cohn Arraigned Today for Obstruction of Justice

 

https://scientologymoneyproject.com/2019/10/23/scientologist-owned-gpb-capital-update-gpb-exec-and-former-sec-official-michael-cohn-arraigned-today-for-obstruction-of-justice/

 

                                                                      Michael Cohn

Breaking news from the Financial Times:

A former employee of the Securities and Exchange Commission was charged on Wednesday for allegedly leaking information about an investigation into a private equity group that he subsequently joined.

Michael Cohn, who was a securities compliance examiner in the SEC’s enforcement division, was accused by federal prosecutors in Manhattan of giving investigative information to senior management at GPB Capital Holdings.

This is blockbuster news. The end is near for GPB Capital now that obstruction of charges have been filed against GPB’s so-called “Compliance Officer.”

This news could portend the arrest of other GPB officials including Scientologist David Gentile, the CEO and owner of GPB Capital.

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

Managing Director and Chief Compliance Officer of Private Equity Firm Indicted for Obstruction of Justice

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)

and more BACKGROUND: GPB Capital Update + The Scientologist Owned Réaliste Pooled Investment Fund


Dustin Muscato

Like so many others who work at, or have worked at GPB Capital Holdings, Scientologist Dustin Muscato does not list the firm by name on his LinkedIn page — and who can blame him? As we previously reported, the entire senior management of GPB Capital has removed itself from the firm’s website.

GPB Capital’s CEO David Gentile is leading this group vanishing act. According to his LinkedIn page, Gentile has given himself a big demotion. He is no longer the CEO of an NYC private equity firm with $1.7 billion AUM. Rather, he is now merely a partner at his father’s plain vanilla Long Island CPA firm Gentile, Pismeny & Brengel:

What is happening at GPB Capital Holdings? Why have the current and former executives gone into stealth mode? Is there an internal collapse in progress?

SCIENTOLOGY: ENABLE STEALTH MODE

Just as he does not list GPB Capital Holdings by name on his resume, Dustin Muscato also does not list by name the ten years he served as an Executive Director for Scientology Orgs in New York and Long Island.  Following the trajectory of a few other smart young Scientologists like GPB’s Brian Marshall, Muscato left Scientology staff, earned a college degree with honors, and then entered the business world where he could make some real money instead of the exploitative slave wages Scientology paid him as a religious worker.

RESUME SMOOTHING

Many former Scientology Sea Org and staff members struggle with how to write a resume which avoids any explicit mention of Scientology. This is understandable given the toxic reputation of Scientology has created for itself by its decades of malicious Fair Game, Disconnection, etc.  Scientologists support  this with their financial donations and are thus complicit.

What Scientologist working professional wants his or her name associated with the vile hate pages and websites created by the vicious lunatics who work in Scientology’s Office of Special Affairs? Many Scientologists are extremely secretive about being Scientologists for this exact reason: Scientology is a sleazy organization that does sleazy, dishonest, and depraved things to its own members, critics, journalists and everyone else. While Scientologists feel they benefit personally from auditing, they abjure the organization and thus become stealth Scientologists in the workplace.

Dustin Muscato sweeps his ten years on Scientology staff under the rug in one of the smoothest and most professional resume transitions we have ever seen:

Prior to GPB, Mr. Muscato managed a portfolio of non-profits, executing strategic initiatives and ultimately leading a successful turn-around before exiting the non-profit sector.

Translation: When he worked for the Church of Scientology, Dustin Muscato was given a group of insolvent Scientology Orgs and engaged in a massive Scientology “stat push” to make the numbers look good for David Miscavige. It is axiomatic in Scientology that any Org can be turned around for a short time but will always come crashing back down to Earth. Nevertheless, Muscato’s statement is a deft rephrasing of having managed “a portfolio of non-profits” and then “exiting the non-profit sector.” Well played Mr. Muscato. Other former Sea Org and staff should take your lead when exiting “the non-profit sector” for the secular business world.

Muscato’s choice to take a job with GPB Capital right out of university was, in hindsight, unfortunate. However, how could have anyone known? GPB looked so good on paper at the time.

THE SCIENTOLOGIST-OWNED REALISTE POOLED INVESTMENT FUND IN NASHVILLE

Muscato’s resume shows him presently serving as a board advisor of a new Scientologist-owned Nashville pooled investment fund called The Réaliste Fund. Scientologists Megan Epstein and her husband Stephen own the Réaliste Fund .

Stephen Epstein has spoken at Scientology’s prosperity events in the past. Click here for Stephen Epstein’s Scientology Service Completions.

Megan Epstein founded her Nashville real estate development company CA South in 2015.

She and her husband Stephen founded their Réaliste Fund in 2019.

One section of the Réaliste Fund website reads as if CA South and Réaliste are separate entities:

The Réaliste Fund has partnered with local developer Megan Epstein of CA South Development to fast-track the development of desperately needed residential condominiums, office condominiums, and flex-office space which the market is not currently offering in adequate supply for a variety of tax reasons and the difficulty in getting such projects debt financing.

It is obvious that the Epstein’s created Réaliste Fund to finance CA South’s projects. Indeed, the Réaliste Fund goes on to state:

The Fund’s proprietary equity and debt relationships allow for creative deal structuring and financing, which opens a whole universe of transactions not otherwise available to other local developers who are forced to use traditional bank financing.

Réaliste’s advantageous “proprietary equity and debt relationships” exist because CA South and Réaliste are both owned by the Epstein’s. A Réaliste press release shows the arrangement without mentioning ownership:

The Réaliste Fund is a private equity fund that backs real estate development projects in Nashville sponsored by CA South Development.

The Réaliste Fund is, essentially, the captive finance arm of CA South. According to the Réaliste Fund’s SEC Form D filing of February 2019, the firm is looking to raise $100 million USD. The Réaliste Fund stated in its Form D that it expects 15% of the $100 million to be spent on management fees:

Payments for functional services, e.g. investment management fees, development fees, and profits interests are estimated at $15 million over the fund’s life.

Réaliste’s Form D further shows that the firm paid $2.2 million in commissions to its broker BA Securities LLC of West Conshohocken, Pennsylvania on $15 million in sales, thus pushing its commissions above 10% and into GPB Capital territory.

REALISTE FUND FOUNDER SCIENTOLOGIST MEGAN EPSTEIN

Réaliste Fund founder Megan Epstein’s webpage is an exercise in stealth; Scientology is nowhere mentioned. Instead, she slips in this innocuous mention:

I spend a significant amount of my time doing philanthropic work and hold an active role in a local Human Rights charity, supporting the local Nashville chapter called CCHRnashville.org in its efforts to empower parents and protect children from prescription drug abuse and over-drugging.

CCHR is, arguably, the most insane part of Scientology. However, this is open to debate when we consider David Miscavige’s Religious Technology Center. CCHR is an acronym for the Citizens Commission on Human Rights. The goal of CCHR is to criminalize and destroy Psychiatry. Scientologist John Alex Wood stated this on Twitter:


L. Ron Hubbard taught that Psychiatrists — or “Psychs” as he called them — came to Earth from a planet called Farsec. The goal of the Psychs, according to Hubbard, is to enslave humanity using electronic implants and psychiatric drugs. The only way out of this trap is Scientology’s $360,000 program of auditing in which the systematic telepathic exorcism of body thetans is accomplished over a period of 5-10 years or more.

In order for Scientology to triumph over Earth, then, Psychiatry must be destroyed. This is what Stephen and Megan Epstein and all other Scientologists believe. This is why you will see Scientologists protesting outside of meetings of the American Psychiatric Association making absurd and hysterical claims such as this one: Psychiatrists are manically engaged in the mass-electroshocking of our children:

Given their goal as Scientologists to destroy Psychiatry in favor of Scientology, one can see why Stephen and Megan Epstein would want to go into stealth mode and not explicitly mention Scientology while trying to raise $100 million for their Réaliste Fund. The Epstein’s are big Nashville boosters. However, they have a definite purpose as Scientologists to destroy the psychiatric and mental health infrastructure of Nashville, and this while hoping to become wealthy by developing and building new properties in Nashville using pooled investment funds. This is schizophrenic, this desire to get rich off a community while simultaneously working to destroy its mental health infrastructure that non-Scientologists want and need. This conduct and thinking explains why Scientologists are insular and don’t fit into the larger Culture.

The Epstein’s Scientology beliefs aside, any potential investors must ask direct questions about the seemingly high management fees collected by the Réaliste Fund and the equally high commissions it appears to be paying its broker BA Securities, LLC of West Conshohocken, Pennsylvania. This same approach applies to investing in any pooled investment, private equity firm, REIT, etc.

Réaliste Fund advisor Dustin Muscato has brought GPB Capital DNA into the mix at Réaliste Fund. What, if anything, does this portend for Réaliste? And is Muscato still employed by GPB Capital?

and more BACKGROUND: GPB Capital Holdings: Where in the World is Manuel Vianna?

 

https://scientologymoneyproject.com/2019/04/08/gpb-capital-holdings-where-in-the-world-is-manuel-vianna/

 


Manuel Vianna

Manuel Vianna, the Managing Partner of David Gentile’s GPB Capital Holdings has suddenly left the company without any announcement.

Both Gentile and Vianna are Scientologists.

Within the culture of the Church of Scientology, the sudden and unexplained departure of a member of the group is not unusual; nor is making such an individual a non-person.

In terms of being made a non-person, we note that Manuel Vianna’s webpage has been scrubbed from GPB’s website. Vianna’s LinkedIn page has been scrubbed and does not show Vianna to have ever been associated with GPB Capital. GPB Capital’s page at Bloomberg no longer shows Vianna’s name.

Manuel Vianna’s webpage showing him to be the Managing Partner at GPB Capital is still up at Crunchbase and a few other websites. We suspect these pages will be quickly scrubbed.

GPB Capital Holdings has been quick to issue press releases in the past several months. However, Vianna’s disappearance has been left unexplained. So that we have a baseline as of today, April 8, 2019 below is a screenshot from Bloomberg.com of the key executives of GPB Capital Holdings. This baseline will allow us to track any future changes:

The Scientology Money Project has covered Manuel Vianna in the past, specifically when he was the #2 executive at Matt Feshbach’s Okyanos Heart Institute in the Bahamas. Feshbach’s Okyanos was sold under somewhat curious circumstances as we also covered.

Where in the world is Manuel Federico Vianna?

Why is Manual Vianna no longer with GPB Capital?

Why has GPB Capital Holdings made Manuel Vianna a non-person?

On a related matter, we found a GPB document online. Entitled GPB Holdings III, LP $1.5 billion dollar Class B-1 “CONFIDENTIAL PRIVATE PLACEMENT MEMORANDUM, the document is dated January 2018. The pages are stamped “ Due Diligence Use Only – Not For Distribution.” We take this to mean that the document must be shared online as a matter of public interest.

It is worth noting that as of January 1, 2018 GPB Capital was, apparently, looking to raise $1.5 billion in a private placement offering. This was in addition to the $1.8 billion which had already been raised by other GPB entities.

and more BACKGROUND: Scientologist David Gentile’s GPB Capital Holdings Continues Its Meltdown

 

https://scientologymoneyproject.com/2019/09/15/scientologist-david-gentiles-gpb-capital-holdings-continues-its-meltdown/

 

Image result for David Gentile

    David Gentile

David Gentile’s GPB Capital announced a staggering devaluation of its funds from $1.8 billion to $1.1 billion. This took place in June. Our impression at the time was that the $700 million dollar write down was a necessary prelude to GPB releasing its restated, and long-awaited, 2015 and 2016 financial statements. GPB had promised to release these SEC-required statements on September 30, 2019.

On September 10th, the eve of the somber remembrance of the 9-11 attacks, GPB issued a notice stating that it would not meet its promised date of September 30, 2019. That GPB Capital sought to bury this announcement in the 9-11 news cycle shows GPB’s nervous PR strategy. The timing was no different than releasing bad news late Friday afternoon or during the weekend.

Reporting on the delayed financials last week, Investment News quoted an e-mail written by GPB’s director of communications Mr. Brian Weisenberger:

The firm’s managing director of communications, Brian Weisenberger, wrote in an email that “In response to the allegations Mr. Rosenberg made, which GPB Capital is defending against, GPB Capital’s Audit Committee has proactively engaged a law firm to independently investigate the accusations.”

“The need for an independent investigation has led to further audit delays,” Mr. Weisenberger wrote, “as both the audit committee and the auditor of the affected partnerships are requiring that the independent investigation be completed prior to releasing the audited financial statements.”

David Rosenberg filed a lawsuit against GPB in which he made explosive allegations of financial irregularities inside of GPB’s Automotive group. Rosenberg is in a position to make his allegations as he sold GPB a majority interest in his Prime Automotive Group for $265 million. As part of the deal, Rosenberg remained in place as CEO of Prime Automotive. Once GPB took over Prime, Rosenberg alleges that he witnessed serious financial irregularities taking place inside of GPB’s Automotive component. Rosenberg’s concerns were such that he went to the US Securities & Exchange Commission. When he told GPB executives that he had gone the SEC, GPB retaliated, he alleges, by reneging on a multi-million dollar payment he was owed. Rosenberg’s complaint lays out very specific and detailed allegations.

Sept. 16, 2019 UPDATE: GPB Capital Holdings announced today that David Rosenberg has been relieved of his duties as CEO of Prime Automotive. Rosenberg’s replacement as CEO is David Westfall. Read the GPB press release. We note that GPB Managing Partner Jovan Sivan was quoted in the press release and Mr. Gentile was not. Why was the announcement of a key executive being relieved of his duties and replaced not made by CEO David Gentile?

Why would GPB Capital hire lawyers to defend against the allegations in Rosenberg’s lawsuit, and, also hire a separate law firm “to independently investigate the accusations” as spokesman Weisenberger states? GPB already knows if the allegations are true or false.

GPB’s independent legal team appears to be part of a larger pretrial defense effort to determine how GPB would fare during discovery and at trial. Such efforts are always part of damage control: Is it cheaper to offer Rosenberg a confidential pretrial settlement or will GPB’s independent legal team determine that GPB can fight the case and win a jury trial? Such pretrial exercises are common in high stakes business litigation. These exercises are analogous to software companies writing software programs and then hiring independent hackers to search for vulnerabilities and see if the new software can be hacked. GPB’s independent legal team will look to tear apart the work done by GPB’s legal defense team. A mock trial is usually held using juror surrogates.

For GPB to claim that Mr. Rosenberg’s lawsuit is a barrier to issuing its restated 2015 and 2016 financial statements seems non-sequitur — unless the restated financial statements could become damaging documents Rosenberg can introduce as evidence at trial. Spokesman Weisenberger seemed to affirm this when he stated:

“The need for an independent investigation has led to further audit delays,” Mr. Weisenberger wrote, “as both the audit committee and the auditor of the affected partnerships are requiring that the independent investigation be completed prior to releasing the audited financial statements.”

GPB’s internal audit committee and its independent auditing firm EisnerAmpner have both apparently taken the decision to delay signing off on, and releasing, the 2015 and 2016 financial statements until the independent legal team reviews the situation. The implications of this decision are disturbing.

GPB’s previous auditing firm Crowe LLP resigned in November 2018. Crowe resigned “due to perceived risks that Crowe determined fell outside of their internal risk tolerance parameters” according to a letter released by David Gentile. It seems GPB’s new auditing firm of EisnerAmper has dug in its heels on the matter of the Rosenberg allegations. Further, GPB’s Chief of Compliance Michael Cohn would have likely taken part in this decision on behalf of GPB.

GPB’s $700 million dollar devaluation and its latest refusal to release its 2015 and 2016 numbers until an independent investigation is completed suggests that EisnerAmper and Michael Cohn are asserting themselves internally at GPB. The FBI raid earlier this year on GPB’s NYC HQ and its Five Star waste management company put all parties on notice that there is no more room for obfuscation or evasion. Where does this leave David Gentile? Does he need to resign as CEO?

GPB is now saying that it will release the 2015 and 2016 financial statements by the end of 2019. However, many of us watching the GPB meltdown take place have learned to not rely upon any statements made by GPB Capital Holdings. We’ll believe it when we see the restated numbers released under EisnerAmper’s signature.

and more BACKGROUND: Scientologist David Gentile, Founder and CEO of GPB Capital Holdings: Company Under SEC & FINRA Investigation

 

https://scientologymoneyproject.com/2019/01/12/scientologist-david-gentile-founder-and-ceo-of-gpb-capital-holdings-company-under-sec-finra-investigation/

 


David Gentile

Increasingly, as Tony Ortega has shown with reports about ‘whales,’ Scientology and David Miscavige are relying not on growing membership but extracting as much money as possible from Scientology’s wealthiest donors. So, we like to keep an eye on those rich church members, which has been getting more and more interesting lately.

In particular, we’ve been looking at a wealthy Scientologist named David Gentile (pronounced “gen-TILLY”). In 2013, Gentile founded GPB Capital Holdings, an investment company headquartered in New York. The company’s website shows that its managing director is another Scientologist, Manuel Vianna, someone we’d noticed was working with fellow Scientologist Matthew Feshbach at Feshbach’s Okyanos Heart Institute in the Bahamas.


Matt Feshbach + Manuel Vianna. Feshbach owes the IRS $3.8 million in back taxes. The US
Appeals Court refused to allow him to discharge this debt in bankruptcy.
See Feshbach v. Dept of Treasury

Our research into Okyanos in the Panama Papers and press releases of the period revealed that Scientologist Ali Shawkat invested $14 million in Okyanos. Ali Shawkat’s father is Mudhar Shawkat who was a member of the Iraqi Parliament in the last decade and was, at one time, considered to become the next Prime Minister of Iraq. The Shawkat father-son team sold a telecom they owned in Iraq and moved $140 million out of the country when they immigrated to Canada. Shawkat also came to our attention when he appeared in Scientology’s IAS Impact magazine as a $5 million donor to the IAS.


Ali + Noor Shawkat receiving their IAS trophy for donating $5,000,000

It’s not surprising that rich Scientologists are investing in each other’s companies, but it’s something we like to keep an eye on.

Feshbach sold Okyanos in 2017 for an undisclosed sum. As reported here at Tony Ortega’s Underground Bunker, Feshbach owes the IRS $3.8 million in back taxes; his appeal to discharge this debt in bankruptcy was denied in 2018. And as we recently reported on the Scientology Money Project, Matt Feshbach has re-entered the stem cell business in Plano, Texas under the name of Ambrose Cell Therapy.

But getting back to Gentile and his New York investment company, GPB’s website says that the firm is “focusing on acquiring income-producing private companies.” GPB Capital has a collection of at least 63 broker-dealers who raise money from private investors. This money is then pooled and invested in companies that may not have access to mainstream sources of capital — companies that banks may be reluctant to loan money to because they’re start ups, or they have heavy debts, or they’re in bankruptcy protection and need capital to restructure. GPB’s acquisitions have focused on car dealerships, waste management firms, healthcare, biotech, and the purchase of debt. GPB’s website claims to have raised $1.5 billion in private capital and used that money to invest in the 160 companies in its portfolio.

Gentile’s broker-dealers make a commission of 7.9 percent on private capital raised for GPB. Others in the loop, for example those who refer investors to GPB’s brokers, make a percentage as well. The total commissions on money invested in GPB is about 12 percent. Thus, a private investment of $100,000 in GPB is reduced at the outset to $88,000. The world of private placement money is characterized by these high fees. Additionally, GPB pays itself fees incurred in advising and managing the companies it either purchases or takes an equity position in.

GPB raises money from private investors under what is called Regulation D (informally called “Reg D”) of the Securities and Exchange Commission (SEC). Reg D investments are considered high risk. From Investopedia:

Regulation D is a Securities and Exchange Commission (SEC) regulation governing private placement exemptions. Reg D allows usually smaller companies to raise capital through the sale of equity or debt securities without having to register their securities with the SEC. Reg D offerings are advantageous to any private company or entrepreneur because they allow an entity to obtain funding faster and to avoid the costs associated with a public offering. Within the regulation are directives that, based on which rules are applied, may allow offerings to be openly solicited to prospective investors in their network.

The SEC is more blunt in its characterization of Reg D investments, which are also known as “private placements” as the money moves between private investors and private companies such as GPB Capital:

Generally speaking, private placements are not subject to some of the laws and regulations that are designed to protect investors, such as the comprehensive disclosure requirements that apply to registered offerings. Private and public companies engage in private placements to raise funds from investors. Hedge funds and other private funds also engage in private placements.

As an individual investor, you may be offered an opportunity to invest in an unregistered offering. You may be told that you are being given an exclusive opportunity. The opportunity may come from a broker, acquaintance, friend or relative. You may have seen an advertisement regarding the opportunity. The securities involved may be, among other things, common or preferred stock, limited partnerships interests, a membership interest in a limited liability company, or an investment product such as a note or bond. Keep in mind that private placements can be very risky and any investment may be difficult, if not virtually impossible to sell.

GPB’s troubles with US regulators began last year when the firm missed an April 30 filing deadline with the SEC. The firm said it needed more time in order to restate its 2015 and 2016 financials for these funds:

GPB Automotive Portfolio: $622.1 million

GPB Holdings II: $645.8 million

A company that has to restate financials from previous years raises red flags. A firm with proper internal accounting and compliance controls is able to produce accurate financial statements to required SEC deadlines. However, Gentile seemed unfazed by this missed SEC deadline. Indeed, an article in Business Observer in July 2018 informed readers that GPB Capital would invest in a 53 story condo project in Tampa. Called Riverwalk, the project belongs to Feldman Equities, a firm owned by long-time Scientologist Larry Feldman. The Business Observer article quotes Feldman on GPB’s major commitment to the Riverwalk project:

Feldman says GPB Capital could provide all of the necessary equity to launch the project, which would amount to between $70 million and $105 million, based on traditional commercial real estate lending standards. It’s expected that Feldman, Two Roads, Tower Realty Partners and others may contribute equity to Riverwalk Place, as well.

The Riverwalk computer renderings are as good as Scientology Ideal Org renderings. This is no surprise as Gensler, Scientology’s go to designer for Ideal Orgs, is also the designer on Riverwalk:

On the heels of Feldman’s statement in July 2018 that GPB was making a huge investment in Riverwalk, Gentile announced in August 2018 that GPB Capital would temporarily stop raising money. As Bruce Kelly of Investment News reported:

A leading seller of high-risk, high-commission private placements, GPB Capital Holdings, with $1.8 billion in investor money, will take a break from raising new money to focus on straightening out the accounting and financial statements of its two large funds.

Kelly then cited a letter from Gentile to GPB investors:

“While growth has led to many successes, it has also come with challenges,” according to the letter, which was signed by GPB Capital CEO David Gentile. “There is much work to be done with respect to integrating the high volume of recent acquisitions into their respective platforms in order to execute on our performance objectives.”

As an update to this story, Business Observer just reported that Larry Feldman and his partners in the Riverwalk Place condo tower in downtown Tampa have secured $24.5 million in construction financing from Mosaic Real Estate Credit LLC. This is worth noting as Feldman was quoted as saying that GPB was good for $70-$105 million in Riverwalk Place. This does not appear to be the case.

In September 2018, The Massachusetts Securities Division began an investigation into GPB Capital Holdings’ network of 63 broker dealers in Massachusetts. Boston is a powerhouse financial center in the US and so the investigation raised serious concerns. GPB issued a statement through a spokesman:

“GPB Capital Holdings, LLC is aware that certain broker-dealers have received requests for information from the Commonwealth of Massachusetts. GPB Capital is not in a position to comment on that matter. As we have previously disclosed to investors, GPB Capital is in the process of completing the audits of the financial statements for certain of its funds and is currently not accepting new capital from investors until that process is complete,” said a spokesperson on behalf of GPB Capital.

How long can it take GPB Capital Holdings to do financial statements? Gentile is himself a CPA. The law firm of Gana Weinstein raised this point in September 2018 when it began reaching out online to GPB investors who may have suffered losses. Gana Weinstein’s comments also speak to the brokers being investigated:

Investors should be concerned at this point as it is highly unusual for funds of this size to cease raising funds unless there are serious concerns. Moreover, delays in reporting financials and the need to release new reports concerning financial statements made three years ago are highly troubling. This suggests potentially multiple years of false information or a size and nature that is currently unknown.

Brokerage firms have been all too willing to subject their clients to the risks of investing in GPB due to the hefty fees the company pays to firms. When GPB Capital’s automotive portfolio raised a total of $369.2 million from more than 3,800 investors it paid out $43.4 million, or 11.75 percent, in commissions. Seven percent of that amount goes directly to the recommending broker’s pocket. There are as many as 60 brokerage firms that sold these funds and among the largest of those firms are Royal Alliance Associates Inc., Sagepoint Financial Inc., FSC Securities Corp. and Woodbury Financial Services Inc.

Despite the sharks beginning to circle, the financial statements still were not forthcoming. Then the big news came in November 2018: GPB’s outside auditing firm resigned. As reported by Investor Lawyers, another law firm that is also reaching out online to GPB investors:

On November 9, 2018, GPB Capital Holdings, LLC (“GPB”) notified certain broker-dealers who had been selling investments in its various funds that GPB’s auditor, Crowe LLP, elected to resign. As reported, GPB’s CEO, David Gentile, stated that the resignation purportedly came about “[d]ue to perceived risks that Crowe determined fell outside of their internal risk tolerance parameters.” GPB has since engaged EisnerAmper LLP to provide it with audit services moving forward.

In December, Bruce Kelly of Investment News reported that FINRA and the SEC had opened new investigations:

In the wake of a state investigation into broker-dealers selling private placements by GPB Capital Holdings, the Financial Industry Regulatory Authority Inc. (FINRA) and the Securities and Exchange Commission have launched their own investigations, according to sources.

As GPB’s apparent problems develop, we’ll continue to keep an eye on it.

At this point, however, GPB sure looks like it has a lot in common with Scientology itself: excessive secrecy, a lack of financial transparency, and one-sided contracts in which GPB has all the power and the investors have virtually no power and no say in how their money is spent. Unlike Scientology, however, GPB Capital Holdings cannot claim religious status as a defense against governmental investigations.