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

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

Industry News

Admiral Markets doubled net trading income in 2020

The Forex-and CFD-focused company, which was founded 20 years ago, now aims to onboard 10 million clients by 2030.

Industry News

SEC wages war against ‘meme stocks’, suspends 22 securities

These 22 securities were being promoted on social media with the only purpose of inflating the price. The typical pump and dump scheme now being perpetrated on social media on a mass scale.

Opinion

Missing the Point over GameStop

Yesterday we saw further volatile trading in GameStop shares. Whether this is the start of another rally or just day traders ‘shaking the tree’, time will tell. But what is clear is that this new trading type won’t just go away. 

Industry News

Bitpay to pay up: $507,375 for 2,102 violations of sanctions programs

OFAC determined that BitPay failed to exercise due caution and did not voluntarily disclose the 2,102 sanctions violations. BitPay agreed to pay $507,375 to settle with the Treasury Department.

Industry News

Whistleblower Awards: SEC Crosses $750 million in awards since 2012

While “crime never pays” is far from being absolute truth, “no one likes a tattletale” has completely lost its meaning in the United States.

Industry News

Aghaz launches values-based trading in the US, starting with Islamic Finance

Aghaz is targeting U.S.-based Muslim consumers, but will soon offer custom-values products for anyone wishing to invest based on their personal values like climate change or equal rights.

Industry News

Ron Kalifa fights for fintech sector in the wake of Brexit

In 2020, investment into UK fintech stood at $4.1 billion in 2020, which is more than the next 4 European countries combined.

Inside View

How is Michael Bolton supposed to live without… PFOF?

Mullet-clad, leather jacket toting 1980s soft rock crooner Michael Bolton sings about the heartbreak Payment For Order Flow (PFOF) can cause FX liquidity takers

Inside View

Goldman Sachs CEO David Solomon is right!

Working from home should absolutely not be the way forward, and companies closing their office space to make working from home a permanent feature are making a big mistake.