GPB “not a Ponzi!” defense attorney claims

investmentnews.com:

After a lengthy but intense seven-week trial, the attorney for David Gentile, the former CEO of GPB Capital Holdings who is facing securities fraud and wire fraud charges, on Monday attacked the federal prosecutors bringing the charges against his client.

The attorney, Matthew Menchel, during the closing arguments in federal court in downtown Brooklyn claimed that prosecutors had been overzealous in their charges against Gentile and Jeff Schneider, the former broker-dealer chief in charge of distribution of the high-risk private placements to dozens of other firms.

GPB investors, who have not seen distributions, think dividends, from their limited partnerships since 2018, received real value from their investments, claimed Menchel, a former federal prosecutor who is now a lawyer with Kobre & Kim, in rebuttal to the closing argument of the federal prosecutor.

“This is not a Ponzi scheme,” Menchel said to the packed court room, filled with family and friends of the defendants. “This is not Bernie Madoff. That is not what happened here.”

Government witnesses, including former senior executives at GPB, which launched in 2013 and primarily invested in auto dealerships and trash hauling businesses, changed their stories and “pivoted” to fit prosecutors’ claims, while the three GPB private funds at the focus of the trial bought businesses that generated significant revenue, Menchel said.

Federal prosecutors alleged that Gentile and Schneider allegedly used phony, back-dated documents and paid distributions, or dividends, to GPB investors using their own money, rather than coming clean and admitting that the performance of GPB funds was not as steady as it appeared.

In his defense of Gentile, Menchel disagreed with the