Investors were told that the 8% monthly distributions would be fully covered by the profits of the companies in the portfolio, despite the fact that the directors knew about its shortcomings. But in reality, investors were at least partially paid for with funds from new investors.
Defendants allegedly falsified financial statements and created retroactive performance guarantees to show income that did not exist.
GPB claims that it acted in good faith while managing investors’ funds.
“GPB denies these allegations and intends to vigorously defend itself in court where, for the first time, the company will be able to present significant evidence in its favor,” the company said in a statement to CNN Business.
New York State also filed a lawsuit against GPB on Thursday.
“We will not let fat cats on Wall Street get away with breaking the rules, as they throw away their New Yorker wallets in the meantime,” James said in a statement.
The complaint also accused the defendants of embezzling funds. Investor funds were spent on subsidizing private jets, luxury travel and millions of dollars directed to personal and family bank accounts, says New York AG. The lawsuit claims that Gentile even bought a Ferrari with funds for investors.
Together with the New York Eastern District Office and the SEC, many states from Alabama to New Jersey have filed their own lawsuits against GPB Capital.