From hero to zero: How David Gentile kept his $1.7 billion running for so long

Rick Steves

Madoff days aren’t over. There’s always the next one. GPB Capital’s $1.7 billion Ponzi scheme is a reminder that no asset class, regulated or not, is free from harm from predators within the trading industry.

How Brooklyn-born David Gentile rose to the top and was able to run a $1.7 billion Ponzi scheme for four years we still don’t know in complete detail, but connections with the Church of Scientology and Russian organized crime help us understand how he could sustain such high credibility among his Wall Street peers and with the media despite the growing number of whistleblowers and law firms pointing to the contrary.

Where there is smoke there is fire. Now that the Securities Exchange Commission finally charged David Gentile with running a Ponzi scheme, law firm Peiffer Wolf Carr Kane & Conway, issued a revealing statement that serves to remind what everyone chose to forget for too long:

“My law firm has been sounding the alarm on this for 18 months. GPB Capital is a classic Ponzi scheme involving nearly $2 billion in funds from thousands of Main Street investors who got roped in by thirsty hustlers. It is disappointing that the financial world essentially gave GPB Capital a pass. After Madoff, there is just no excuse”, said managing partner Joseph Peiffer.

“As recently as last fall, we went public again and said that ‘GPB Capital has to be stopped.’ The toll inflicted by the unbridled and unrestrained greed of the principals and financial professionals behind this Ponzi scheme already have destroyed lives, retirement plans, and it will take years for the full extent of the damage done here to be sorted out. For any investors still on the sidelines, these new criminal charges should remove any doubt about their GPB investments bouncing back.”

Pfeiffer Wolf also warned in July 2020 that the GPB Capital Ponzi scheme was getting up to $7 million in Paycheck Protection Program (PPP) funds in what they called “may be one of the most flagrant abuses of taxpayer dollars of this century.”

According to the law firm, most of the 17,000 investors are retirees concentrated in Texas, Florida, and Arizona, and it estimates that the scam got hold of up to $2 billion. The SEC, however, is charging the David Gentile and associates with a $1.7 billion fraud.

Peiffer Wolf and the law firm Meyer Wilson have been claiming GPB Capital to be a Ponzi scheme since September 2019 but the scam kept running regardless of the damages to investors. David Gentile and Jeffry Schneider used investor money to pay portions of the annualized 8% distribution payments and manipulated financial statements to cover their tracks, just like any traditional Ponzi scheme. The scheme lasted more than four years because GPB Capital threatened with retaliation to anyone who blew the whistle on them.

Jane Norberg, Chief of the SEC’s Office of the Whistleblower, commented: “Whistleblower protections are a cornerstone of the SEC’s whistleblower program. The charges filed today reinforce the Commission’s commitment to protecting whistleblowers from retaliation and attempts to stifle the free flow of information to the Commission about possible securities law violations.”

It’s hard to conceive how easy it seems to build an image of success, enter the right circles, and feed that idea to the media for so long. Not only David Gentile stole nearly two billion dollars from investors but he defrauded the people who believed in him. A Forbes interview with Gentile in mid-2018  was published with the title “Unicorn Mentor, David Gentile, Drops Gems For Gen Z Innovators”. And what a gem!

 

Read this next

Uncategorized

Moscow Exchange reports $350 billion in November FX volumes

FX trading volumes continued its upward momentum at Moscow Exchange (MOEX) during November, buoyed by a steady rise in volatility coupled with a multi-year effort to bring new business to the platform.

Retail FX

Interactive Brokers’ volumes continue growth trajectory in November

Interactive Brokers LLC (NASDAQ:IBKR) has announced higher trading volumes in November, dwarfing the metrics for October and the same period last year by 20 percent.

Retail FX

Exness trading volume hits record highs for second consecutive ‎month

FX broker Exness’ trading volumes have breached new highs in November, building on the record-breaking turnover streak from the beginning of the fourth quarter. That has been aided by the economic impact from the Covid-19 developments and inflation concerns that apparently sent investors hunting for FX instruments to limit their risk exposure.

Institutional FX

Hedge-fund legend Steven Cohen invests in Dmitri Galinov’s 24 Exchange

24 Exchange, the OTC platform backed by Fastmatch founder Dmitri Galinov, has completed a fresh fundraising round of $14.25 million at an undisclosed valuation. The recent capital injection was led by Point72 Ventures, the venture capital firm of the hedge fund titan Steven Cohen.

Digital Assets

Can Coinbase make or break XRP? – (Congress, XRP rating, JP Morgan)

According to Coinbase’s Council, XRP has the highest rating among 28 cryptos – meaning it is the closest you can get to a security: 4 out of 5.

Digital Assets

Polygon (MATIC) delves deeper into blockchain gaming by partnering with GameOn

Polygon, the Layer 2 scaling solution for Ethereum, has announced a partnership with GameOn Entertainment to build new and different types of NFT games on the network as it seeks to expand into the blockchain gaming and NFT space in a major way.

Retail FX

David Beckham to promote GemForex across Asia

GemForex makes efforts to lead in trading conditions, execution times, safety of client funds and data security, according to the FX and CFD broker holding a Mauritius Financial License.

Retail FX

InstaForex extends sponsorship deal with Borussia Dortmund after German Cup win

InstaForex provides access to trading of forex, CFDs, stocks, futures, options, and cryptocurrencies as the FX industry goes multi asset to address the needs of an increasingly demanding client base. 

Digital Assets

Treasury Secretary Yellen still cant decide on digital dollar

Treasury Secretary of the US, Janet Yellen, has said that she still is not sure whether the US should go ahead and have the digital dollar and follow the example of other major countries including China and India in introducing the same.

<