David Gentile, Founder and former CEO of GPB Capital Holdings, has been sentenced to seven years in federal prison following his conviction for orchestrating a Ponzi-like fraud scheme that imperilled nearly $1.6bn in investor capital, according to a report by Bloomberg.
The sentence was handed down by US District Judge Rachel P Kovner in Brooklyn, New York, following an eight-week trial that also resulted in a six-year prison term for co-defendant Jeffry Schneider, Principal of Ascendant Capital.
Prosecutors had originally sought significantly longer sentences – 15 years for Gentile and 13 years for Schneider – citing the scale and deliberate nature of the fraud.
GPB Capital, established by Gentile in 2013, positioned itself as an alternative investment firm focused on private equity investments across sectors including automotive retail, waste management, and healthcare. Between 2013 and 2018, GPB and affiliated entities raised approximately $1.6bn from over 15,000 investors, many of whom were retail clients drawn by the promise of 8% annualised returns.
According to federal prosecutors, the firm operated under a façade of private equity performance while in fact using new investor capital to fund distributions – activity prosecutors said mirrored a classic Ponzi structure. Marketing materials misrepresented the source of returns, overstated revenue figures, and concealed the lack of sufficient operational income to support promised payouts.
While Gentile and Schneider maintained that GPB and Ascendant operated as independent entities, prosecutors presented evidence that the two functioned as a single, tightly integrated operation. The court heard that over $98m was diverted from investment accounts to cover shortfalls in distributions, with Gentile and Schneider personally receiving over $15m and $12m, respectively, during the scheme’s duration.
A key witness in the government’s case was Jeffrey Lash, a former GPB Executive who pleaded guilty to related charges and testified that both Gentile and Schneider were aware that distributions were being funded with investor capital, not operating profits.
Despite defence arguments that no direct losses had been realised and that investor capital remained largely intact, the court received numerous victim impact statements. Many investors – several elderly and retired – described life-altering financial losses, with one letter detailing a $450,000 loss.
Defence counsel argued for leniency, citing the defendants’ philanthropic acts and character references, but the court ultimately sided with prosecutors in delivering substantial custodial sentences.
The case is US v Gentile, 21-cr-54, US District Court, Eastern District of New York (Brooklyn).
