%1

The founder of a New York money manager who authorities said ran a $1.8 billion fraud resembling a Ponzi scheme that fleeced thousands of investors pleaded not guilty to fraud and conspiracy charges yesterday, Reuters reported. David Gentile, who until last week was chief executive of GPB Capital Holdings LLC, entered his plea through his lawyer to a five-count indictment at a hearing in Brooklyn federal court. Bail was set at $500,000, secured by Gentile’s home in Manhasset, New York. The married father of four is forbidden from communicating with GPB investors about the criminal case. Seven U.S. states and the Securities and Exchange Commission have opened related civil proceedings. Gentile and other defendants, including two individuals, were accused of defrauding more than 17,000 retail investors over several years. Investors in GPB funds were allegedly misled into believing they were making profitable private equity investments, when in fact new investor money was used to provide the 8% annual returns promised to earlier investors. Authorities said the individual defendants also diverted investor money to subsidize luxuries for themselves, including a $355,000 Ferrari FF for Gentile. 

The founder of a New York money manager and two associates were criminally charged on Thursday with running a $1.8 billion Ponzi-like fraud where thousands of victims were falsely promised steady returns on their investments, Reuters reported. David Gentile, the chief executive of GPB Capital Holdings LLC, was accused of cheating more than 17,000 retail investors taken in by promises of consistent 8% annual returns even as the firm was hemorrhaging losses. Authorities said Manhattan-based GPB told investors their payments would be funded by revenue from the firm’s holdings, including a group of car dealerships, when in fact a “significant” portion came from money from newer investors.

A Calabasas-based real estate developer has been indicted in a bankruptcy fraud case that also alleges he laundered funds through shell companies in order to hide them from his creditors, according to a press release from the U.S. Attorney's Office for the Central District of California. Mark Handel was charged in a nine-count indictment unsealed on Friday with one count of making a false statement in a bankruptcy case, two counts of concealing assets belonging to a bankruptcy estate, one count of falsely testifying under oath at a bankruptcy proceeding, and five counts of money laundering. Handel’s arraignment is scheduled for February 16 in United States District Court in downtown Los Angeles. According to the indictment, Handel worked as a developer of commercial and residential real estate for more than 30 years. In April 2015, Handel filed a chapter 11 protection and subsequently made a series of false statements to avoid debts exceeding $10 million that he owed to creditors, including California Bank and Trust (CBT), the indictment alleges. The indictment further alleges that Handel formed multiple corporations and limited liability companies to conceal his income and his involvement in real estate development projects. Handel purposely failed to put his name on the corporations and entities in order to conceal and disguise his business activities and to deceive his creditors, the indictment alleges. Handel allegedly used his wife — who had no real estate business experience — and others as nominee partners, managers and owners of the LLCs that he in fact controlled.

Del Kimball, a prominent figure in Kansas City’s payday lending scene, waived a federal indictment on Tuesday afternoon and pleaded guilty to a bankruptcy fraud charge, the Kansas City Star reported. Kimball, 53, appeared before U.S. District Court Judge Beth Phillips, who accepted Kimball’s guilty plea. He’s set for sentencing on June 2; he will remain out on personal recognizance bond until then, so long as he does not travel outside of the Kansas City area and surrenders his passport. He faces no more than five years in prison and up to a $250,000 fine. The charges against Kimball stem from his personal bankruptcy case from 2015. Kimball, as well as a downtown Kansas City payday loan company he co-owned called LTS Management, were forced into involuntary bankruptcy by creditors claiming to be owed millions of dollars from investments into payday lending. In 2017, a bankruptcy trustee accused Kimball of concealing assets, bank accounts and income from his bankruptcy disclosures. Debtors in bankruptcy are supposed to reveal all aspects of their financial condition. Those omissions, according to the trustee, included his sale of a warehouse for nearly $1 million, the sale of three cars for more than $120,000, eight wristwatches worth more than $29,000 and a painting by Rolling Stones guitarist Ronnie Wood.

A bankrupt internet retailer is the first borrower under the Paycheck Protection Program to settle civil Justice Department fraud allegations after the company falsely claimed it wasn’t bankrupt on a $350,000 loan application, the Wall Street Journal reported. SlideBelts Inc., an e-commerce company selling apparel and wearable technology, and its chief executive Brigham Taylor agreed to pay $100,000 in damages and penalties to resolve civil fraud allegations, according to the U.S. attorney’s office in Sacramento, Calif. SlideBelts returned the $350,000 loan proceeds in July after multiple requests by the Small Business Administration, which administers the PPP. Under SBA rules, companies under bankruptcy protection aren’t eligible to access the PPP, an enormously popular program of forgivable, government-guaranteed loans designed to keep checks flowing to Americans during the COVID-19 pandemic. “The defendants made false statements to multiple banks in order to obtain a [PPP] loan that should have been disbursed to an honest small business suffering financially from the economic effects of the COVID-19 pandemic,” U.S. attorney McGregor W. Scott said Tuesday. The Justice Department and the SBA will “aggressively pursue those who exploit federal programs intended to help those in need during this national emergency,” he said. As part of the settlement, SlideBelts and Mr. Taylor, who is also the company’s chief financial officer, admitted to making false statements to the three different banks where they submitted PPP applications, prosecutors said.

Toronto-Dominion Bank will defend itself in a trial starting in a Canadian court on Monday in which liquidators of the collapsed Antigua bank of former Texas financier Robert Allen Stanford are seeking $5.5 billion in damages, Reuters reported. The joint liquidators of Stanford International Bank (SIB) allege “negligence and knowing assistance” by TD, Canada’s second-biggest lender, in allowing SIB to maintain correspondent accounts, according to a statement filed with the Ontario Superior Court of Justice in 2019. Correspondent banking is the business of providing services to offshore financial institutions. The joint liquidators are Grant Thornton in the British Virgin Islands and the Cayman Islands. The trial is scheduled to last three months, a spokesman for one of the plaintiffs’ lawyers said. Stanford is serving a 110-year prison term after being convicted in 2012 of running a $7.2 billion Ponzi scheme. TD estimated reasonably possible losses from legal and regulatory actions including the Stanford litigation of between zero and C$951 million ($750 million) as of Oct. 31. Provisions related to legal action will be taken when a loss becomes probable and an amount can be reliably estimated, it said in its 2020 annual report.

A bankruptcy trustee recovered and distributed $12 million to thousands of creditors who were victims of a $332 million investment fraud, the South Florida Business Journal reported. Cassel Salpeter and Co. chairman and co-founder James S. Cassel, who was appointed director of 1 Global Capital's estate in bankruptcy court, said that about 3,750 creditors that invested in the company received a payment. To date, Cassel has recovered $124 million on behalf of 1 Global Capital victims, after distributing an initial $112 million payment to investors in 2019. Cassel said that the liquidating trust will continue to pursue actions to generate additional returns to creditors. Hallandale Beach-based 1 Global Capital, which provided loans to small businesses, filed for chapter 11 bankruptcy in 2018. Soon after the bankruptcy filing, the U.S. Securities and Exchange Commission filed civil fraud charges against the company and former CEO Carl Ruderman, claiming they fraudulently raised $332 million from investors. According to the SEC lawsuit, 1 Global Capital overstated the value of investors’ accounts and their rate of returns and misappropriated at least $32 million to personally benefit Ruderman. Ruderman agreed to disgorge $32 million in ill-gotten gains and pay a $15 million civil penalty to settle the charges. Many of the scheme's victims were elderly individuals who invested between $50,000 and $100,000, Cassel said.