NEW YORK (Reuters) – The head of a New York money manager that raised $1.8 billion from investors was criminally charged on Thursday with running a Ponzi-like fraud to cover up poor performance, and diverting investors’ money to boost their pay and fund luxury expenses.
Authorities said GPB Capital Holdings LLC and its principal David Gentile promised investors consistent 8% annual returns plus occasional “special” distributions.
They said GPB in fact suffered big losses, used new money to repay existing investors, and diverted funds for the personal use of its executives, including a Ferrari for Gentile.
Two other individuals also face criminal charges, and the U.S. Securities and Exchange Commission and several state regulators filed related civil charges.
GPB did not immediately respond to requests for comment. Lawyers for the defendants could not immediately be located.
(Reporting by Jonathan Stempel in New York)
