A Manhasset man was sentenced Friday, May 9, to seven years in prison for a multi-year, $1.6 billion fraud scheme that conned more than 10,000 investors, according to the tederal court in the Eastern District of New York.
“The sentences imposed today are well deserved and should serve as a warning to would-be fraudsters that seeking to get rich by taking advantage of investors gets you only a one-way ticket to jail,” said U.S. Attorney Joseph Nocella, Jr. “My Office is committed to protecting the investing public and the integrity of the financial markets.”
David Gentile, 58, a Manhasset resident and the founder, owner and former chief executive officer of GPB Capital Holdings, was found guilty in August after an eight-week trial in federal court in Brooklyn.
He was convicted alongside Texas resident Jeffry Schneider, 56, the owner and CEO of Ascendant Capital LLC, for their joint scam. Schneider was sentenced to six years in prison.
The pair were convicted of all charges brought against them. This included conspiracy to commit securities fraud, conspiracy to commit wire fraud and securities fraud. Gentile was convicted on two additional counts of wire fraud.
Gentile and Schneider defrauded the 10,000 victims by misrepresenting fund sources to make monthly distribution payments, according to the U.S. Attorney’s Office. The two also misrepresented revenue amounts from GPB’s three investment funds.
GPB, a New York-based investment adviser registered with the SEC, was founded by Gentile in 2013. GPB partnered with Ascendant Capital, a marketing firm founded by Schneider, for dealing with investors.
The U.S. Attorney’s Office said the two worked closely together in this scheme, which lasted from August 2015 through December 2018.
But shortfalls occurred, prosecutors said, which led to Gentile and Schenider using back-dated documents and paying investor distributions out of investor capital to cover the gap.
Investor capital paid for a “significant portion” of distributions made to investors, the U.S. Attorney’s Office said.
Federal prosecutors said both knew that the funds were insufficient but OK’d the fraudulent distribution payments.
“For years, David Gentile and Jeffry Schneider wove a web of lies to steal more than $1 billion rom investors through empty promises of guaranteed profits and unlawfully rerouting funds to provide an illusion of success,” said FBI Assistant Director in Charge Christopher G. Raia. “The defendants abused their high-ranking positions within their company to exploit the trust of their investors and directly manipulate payments to perpetuate this scheme. May today’s sentencing deter anyone who seeks to greedily profit off their clients through deceitful practices.”
GPB Operating Partner Jeffrey Lash, who was also involved in the scheme, pleaded guilty to wire fraud in 2023 and will be sentenced at a later date.
