Fighting to stay out of prison, the two GPB Capital Holdings executives who were found guilty of fraud in August are arguing that their criminal convictions should be tossed out.
David Gentile, founder and CEO of GPB Capital, and Jeffry Schneider, broker-deal chief, were found guilty on all fraud counts they faced on August 1 by a 12-person jury after a seven-week trial in federal court in downtown Brooklyn.
At the end of last week, both filed motions for acquittal with U.S. District Court Judge Rachel Kovner, the trial judge in the case. Gentile also filed a motion to dismiss and a motion for a new trial.
In 2021, the Justice Department, along with the Securities and Exchange Commission, charged Gentile, Schneider and another senior executive, Jeffrey Lash with a number of fraud charges, including creating a Ponzi-like scheme and securities fraud, wire fraud and conspiracy.
Lash pleaded guilty last year and testified in July against his former partners, hoping for a lenient sentence.
Court watchers said that such motions are routine and not unusual after a trial conviction. Defendants often ask the judge to either set aside the verdict and acquit or grant a new trial.
“It’s a bit ironic that individuals can use the money taken from investors to pay for lawyers to keep them out of jail,” said Sander Ressler, managing director of Essential Edge Compliance Outsourcing Services.
The jury found Gentile guilty of all five counts he faced: conspiracy to commit securities fraud, conspiracy to commit wire fraud, securities fraud, and two counts of wire fraud.
Schneider was found guilty of three counts of fraud he faced: conspiracy to commit securities fraud, conspiracy to commit wire fraud, and securities fraud.
Founded in 2013, GPB Capital saw incredible growth selling its high risk private placements through dozens of independent broker-dealers and five years later had raised $1.8 billion from wealthy clients looking for yield in a decade ago when interest rates were next to zero.
GPB limited partnerships acquired auto dealerships and trash hauling businesses.
The firm had more than a half-dozen funds and targeted a steady 8% annual return to investors. Led by Gentile and broker-dealer chief Schneider, GPB first started ringing alarm bells six years ago, when it came to light that the company and its largest funds had failed to make timely required filings, including audited financial statements, with the SEC.
In February 2019, the FBI raided GPB offices in Manhattan.
Gentile and Schneider are scheduled to be sentenced October 24.
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