Private-equity firm GPB Capital Holdings, facing civil fraud allegations since early 2021, will be liquidated by a court-appointed receiver, signaling the end of a long wait for roughly 17,000 investors whose capital has been tied up since at least 2018, the Wall Street Journal reported. Chief Judge Margo Brodie of the U.S. District Court for the Eastern District of New York put GPB under the control of Joseph Gardemal of Alvarez & Marsal, the firm’s court-appointed monitor since February 2021. As its monitor, Gardemal could veto moves by firm managers but had limited power to do more, and for more than a year he has recommended receivership to expedite the return of investor capital. “We are all looking forward to the prompt return of our invested capital,” said Jay Frederick, an investor in Little Rock, Ark. In early 2021, the Securities and Exchange Commission brought fraud charges against GPB involving around $1.7 billion in investments in what New York’s attorney general described as a “Ponzi-like scheme” that used investor funds to cover promised 8% investment returns. The civil complaint followed criminal indictments against GPB’s founder, a senior executive and the firm’s principal marketer in January 2021.
