Investors who purchased GPB funds in 2016 through a broker-dealer need to act now to preserve their legal rights. Failure to file an arbitration claim may prevent recovery of investment losses. Time is running out. GPB investors should act in 2022.
Key Takeaways:
David Gentile, the disgraced founder and former CEO of GPB Capital Holdings LLC, has sued GPB Capital. Mr. Gentile seeks to make GPB Capital, which an independent court-appointed monitor is now overseeing, cover the legal costs for his defense against criminal and civil securities fraud.
In February 2021, Mr. Gentile was criminally charged with securities fraud, wire fraud, and conspiracy in federal court. The criminal complaint alleged that Mr. Gentile, among others, engaged in a scheme to defraud investors by misrepresenting the source of funds used to make monthly distributions to investors and the amount of revenue generated by two of GPB’s investment funds, GPB Holdings, LP, and GPB Automotive Portfolio, LP.
Separately, the SEC has charged Mr. Gentile, GPB Capital, and related entities with running a Ponzi-like scheme that raised roughly $1.8 billion from securities issued by GPB Capital. The SEC believes that as many as 17,000 retail investors nationwide have been defrauded.
Over the past calendar year, GPB Capital investors have won over $2.4 million in monetary awards in 10 out of 11 (nearly 91%) arbitration claims that have proceeded to a final hearing. According to public records, many other claims filed against broker-dealers who sold the private placements offered by GPB Capital have been settled for monetary compensation.
The judgments and awards come after years of filing lawsuits and arbitration claims by GPB Capital investors.
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Energy 11, L.P. is an illiquid, non-traded limited partnership sold as private placement security exclusively by broker-dealer David Lerner Associates, Inc. The limited partnership invests in the oil, gas, and energy sector, which has been extremely volatile the past several years. Energy 11 was not suitable for most conservative or retired investors.
On November 5, 2011, the Chairman and Chief Executive Officer of Energy 11 GP, LLC, the general partner of Energy 11, L.P. (“Energy 11”), sent a letter to investors of Energy 11 notifying them that partial distributions would resume after a nearly two-year hiatus. The amount of the distribution will be 50% of the regular monthly distribution.
In March 2020, Energy 11 suspended monthly distributions to its limited partners as the partnership took on massive debt. Unbeknownst to many investors, the distributions were merely a return of the limited partner’s original capital investment, not a dividend. Energy 11 currently owes 21 months of unpaid distributions to its limited partners, totaling approximately $42 million.
Between July 2013 and June 2018, limited partners invested $675 million into GPB Automotive Portfolio, LP, which was sold as a private placement offering by broker-dealers and registered investment advisory firms across the country. Financial advisors, who received large commissions for selling limited partnership units of GPB Automotive, lured investors into this high-risk and illiquid security by emphasizing a high rate of return and monthly distributions. Unfortunately for investors, distributions have not been paid since December 2018.
With the recent announcement that GPB Automotive Portfolio, LP agreed to sell Prime Automotive for $880 million, limited partners have been wondering what that means for them.
Below, we delve into GPB Automotive LP’s latest quarterly filing with the SEC to look for answers.
The Financial Industry Regulatory Authority (“FINRA”) has suspended stockbroker Leonard Marzocco from the securities industry. Mr. Marzocco consented to the suspension after FINRA alleged that between June 2019 and December 2019, while associated with Woodstock Financial Group, Inc. (“Woodstock Financial Group”), Mr. Marzocco excessively and unsuitable traded a customer’s account, in violation of FINRA Rules 2111 and 2010. As part of the agreement, Mr. Marzocco also agreed to pay $27,078 in restitution and a fine of $5,000.
Mr. Marzocco was registered as a broker with Woodstock Financial Group, Inc. in Nesconset, New York, from June 2019 to December 2019. Prior to joining Woodstock Financial Group, Mr. Marzocco was a registered stockbroker with First Standard Financial Company LLC in Miller Place, New York, from June 2017 to June 2019.
This is the second time Mr. Marzocco has been suspended for excessive trading. In July 2020, Mr. Marzocco contended to an 11-month suspension after FINRA alleged that he engaged in quantitatively unsuitable trading in a customer’s account. The findings stated that Marzocco’s trading of the accounts resulted in high turnover rates and cost-to-equity ratios, as well as significant losses. The customers suffered collective losses of $196,331 and paid $81,523 in commissions and fees. Marzocco also recommended a significant number of trades using margin in the customer accounts. In particular, Marzocco recommended using margin to a customer, even though he was aware that the customer’s financial circumstances made it unsuitable for him.
The Financial Industry Regulatory Authority (“FINRA”) has barred a former Cambridge Investment Research, Inc. stockbroker from the securities industry for refusing to cooperate with a FINRA investigation into whether he, among other things, exercised discretion without written authorization in a customer’s account. The investigation was launched after Cambridge Investment Research, Inc. terminated the broker in January 2020, alleging that he placed discretionary trades without authority.
The broker was associated with Cambridge Investment Research, Inc. in Moorestown, New Jersey, from September 2019 to February 2020. He was previously registered with SagePoint Financial, Inc. in Moorestown, NJ, from January 2010 until August 2019.
Customers of Cambridge Investment Research, Inc., or SagePoint Financial, Inc. who have suffered financial losses, or suspect that the firms did not have their best interest in mind when recommending investments or making account transactions, can contact New York securities arbitration law firm Iorio Altamirano LLP for a free and confidential consultation and review of their legal rights.
The Financial Industry Regulatory Authority (“FINRA”) has suspended stockbroker Michael May from the securities industry. Mr. May consented to the suspension after FINRA alleged that between June 2017 and May 2018, while associated with Joseph Stone Capital L.L.C. (“Joseph Stone Capital”), Mr. May excessively and unsuitable traded a customer’s account, in violation of FINRA Rules 2111 and 2010. As part of the agreement, Mr. May also agreed to pay $10,349 in restitution and a fine of $5,000.
Mr. May was registered as a broker with Joseph Stone Capital L.L.C. from July 2015 to June 2020 and again from March 2021 to October 2021. He is currently registered with VCS Venture Securities in New York, NY.
Iorio Altamirano LLP is investigating potential legal claims on behalf of customers of Michael May and Joseph Stone Capital related to investment recommendations and account activity made by Mr. May.
According to Mr. Yurovsky’s public disclosure report, stockbroker Lenny Yurovsky received a Wells Notice from the Financial Industry Regulatory Authority (“FINRA”) on or about September 29, 2021, which made a preliminary determination to recommend that disciplinary action be brought against Mr. Yurovsky. In the Wells Notice, FINRA alleged willful violation of Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, and FINRA Rules 2020 and 2010 for churning customer accounts. In addition, FINRA alleged that Mr. Yurovsky excessively traded customers’ accounts, made trades on margin without customer authorization, and made unsuitable recommendations to trade on margin.
Mr. Yurovsky has been registered as a broker with Joseph Stone Capital L.L.C. in Mineola, New York, since April 2016.
Iorio Altamirano LLP is investigating potential legal claims on behalf of customers of Lenny Yurovsky and Joseph Stone Capital related to investment recommendations and account activity made by Mr. Yurovsky.
**Update: July 6, 2022** On June 24, 2022, former UBS broker Patrick R. Murray was suspended by the Financial Industry Regulatory Authority (FINRA). Mr. Murray, who is not currently associated with a brokerage firm, consented to the suspension after FINRA alleged that from March 2018 to January 2019, Murray violated FINRA Rules 3270 and 2010 by engaging in an outside business activity without providing prior written notice to his firm. As part of the agreement, Mr. Murray also agreed to pay a fine of $5,000.
Specifically, FINRA alleged that in March 2018, Mr. Murray and two other individuals established a company called Integrity Salt, LLC to buy and sell rock salt. Mr. Murray made capital contributions to Integrity Salt, LLC and made at least one vendor payment on behalf o the company by wiring more than a million dollars from his personal account directly to the vendor. Mr. Murray also earned approximately $78,704 in compensation from his activities related to Integrity Salt, LLC.
Iorio Altamirano LLP is investigating other potential claims related to Mr. Murray’s conduct and encourages anyone with information about Mr. Murray’s conduct or practices to contact our law firm. All conversations are confidential and privileged.
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