Articles Tagged with Private Placements

**Update:  June 17, 2022**  The SEC and GPB’s court-appointed monitor have submitted court filings recommending that GPB Capital Holdings LLC be placed in receivership to prevent GPB founder and owner David Gentile from reasserting control over the firm that has been accused of running a Ponzi-like scheme by regulators.   Joseph Gardemal, the GPB court-appointed monitor, said in a court filing that a receiver would reduce the financial drain from a management arrangement set up by Mr. Gentile before he resigned in early 2021 after being charged with fraud.   Mr. Gardmal said that, without a receivership, said investors might wait many more years for any return of their invested capital. According to the to court filings, GPB management has been unable to formulate a distribution proposal, he said.

GPB Capital investors are encouraged to contact securities arbitration law firm Iorio Altamirano LLP to review their legal rights and options. 

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**Update:  June 16, 2022** On June 15, 2022,  the United States Securities and Exchange Commission filed a lawsuit against Western International Securities, Inc., and several of its brokers, in California Central District Court in connection with approximately $13.3 million in L bonds sold to retail customers.  The firm is accused of failing to perform due diligence regarding the inherent risks associated with L Bonds. The brokers included in the suit are Steven Graham, Andy Gitipityapon, Thomas Swan, Nancy Cole, and Patrick Egan. 

The complaint alleges that although the prospectus for the June 2020 offering stated that L Bonds were only suitable for customers with “substantial financial resources,” Western International did not set any criteria or thresholds for its customers to invest in L Bonds. Western International Securities also did not restrict the sale of L Bonds to customers with certain risk profiles or investment objectives.

The complaint also alleges that the named brokers misunderstood important issues regarding GWG Holdings, Inc. and the GWG L Bonds, including that GWG significantly changed its business model beginning in 2018 and that GWG L Bonds were not directly collateralized by life insurance policies. As a result, the brokers recommended GWG L Bonds to retail customers without a reasonable basis to believe that the investments were in the customers’ best interest.

After months of working with legal and financial advisors to try and restructure outside of court, on April 20, 2022, GWG Holdings, Inc. filed for Chapter 11 bankruptcy protection in the United States Bankruptcy Court for the Southern District of Texas. The bankruptcy filing is a significant and troublesome development for GWG L Bond investors who invested substantial portions of their life savings into GWG L Bonds. According to GWG’s latest filing with the SEC, GWG has more than $1.6 billion in aggregate principal outstanding to GWG L Bond investors. A Chapter 11 bankruptcy will allow GWG Holdings to propose a reorganization plan.

Investment News has reported that one anonymous GWG L bond investor estimates that the GWG L Bonds may now be worth 20 to 30 cents on the dollar.  Despite the unwelcomed news, GWG L bond investors are not without recourse. Many retail investors, including those represented by securities arbitration law firm Iorio Altamirano LLP, are filing securities arbitration claims against brokerage firms that sold these speculative, high-risk, and illiquid financial products.  These actions are separate and in addition to the bankruptcy proceedings.

GWG Holdings’ bankruptcy filing revealed for the first time that the ongoing investigation by the United States States Securities and Exchange Commission (SEC) includes an examination of sales practices of the GWG L Bonds by the Selling Group, including  Emerson Equity LLC and its network of regional broker-dealers.  According to the recent bankruptcy filing, the SEC issued subpoenas and document requests to individual brokerage firms beginning in late-2021.

On April 14, 2022, GPB Automotive Portfolio, LP filed its Form 10-K Annual Report with the United States Securities and Exchange Commission. The filing has raised new concerns for GPB investors as GPB Automotive disclosed that it had commenced a plan to liquidate the Partnerships’ remaining assets and wind up the business, which is not expected to be complete until December 31, 2024.

In addition, GPB Capital continues to disclose that it, along with its former principals and representatives, are subject to numerous material litigation, which may take substantial time (several years) to resolve, and an unknown amount of outflow of cash from the Partnership to cover judgments, and legal costs.

Frustrating limited partnership investors, GPB is advancing funds to its principals and representatives, including David Gentile, for legal costs that they may incur to defend themselves in such disputes.  Mr. Gentile has been criminally charged with securities fraud for allegedly running a Ponzi-like scheme.

The Financial Industry Regulatory Authority (“FINRA”) has sanctioned Geneos Wealth Management, Inc. (“Geneos Wealth Management”) for failing to reasonably supervise brokers’ recommendations of the LJM Preservation & Growth Fund.  Geneos Wealth Management was also sanctioned for negligently omitting to tell investors in an offering related to GPB Capital Holdings, LLC that the issuer failed to timely make required filings with the SEC, including audited financial statements.  On March 18, 2022, FINRA and Geneos Wealth Management entered into a Letter of Acceptance, Waiver, and Consent (“AWC”) whereby Geneos Wealth Management accepted the following sanctions:

  • a censure;
  • a $150,000 fine;

**Update:  April 20, 2022** GWG Holdings, Inc. has filed for Chapter 11 bankruptcy protection in the United States Bankruptcy Court for the Southern District of Texas.  As a result of the bankruptcy filing, all accrued principal and interest payment obligations owed to GWG L Bond investors have been halted as the case proceeds through bankruptcy court.  Chapter 11 Bankruptcy cases can take anywhere from 17 months to five years for larger and more complex cases. GWG L Bond investors are encouraged to immediately contact law firm Iorio Altamirano LLP for a free and confidential consultation and to review their legal rights.

**Update:  April 4, 2022** According to the Wall Street Journal, GWG Holdings, Inc. is preparing to file for Chapter 11 bankruptcy in the coming days.

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**Update:  April 20, 2022** GWG Holdings, Inc. has filed for Chapter 11 bankruptcy protection in the United States Bankruptcy Court for the Southern District of Texas.  As a result of the bankruptcy filing, all accrued principal and interest payment obligations owed to GWG L Bond investors have been halted as the case proceeds through bankruptcy court.  Chapter 11 Bankruptcy cases can take anywhere from 17 months to five years for larger and more complex cases. GWG L Bond investors are encouraged to immediately contact law firm Iorio Altamirano LLP for a free and confidential consultation and to review their legal rights.

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GWG L Bond Investor Update: GWG Holdings, Inc. Officially Defaults on Its Obligations to L Bond Investors – February 14, 2022

New York securities arbitration law firm Iorio Altamirano LLP is investigating the sales practices of broker Mark Williams connected with his recommendation of L Bonds issued by GWG Holdings, Inc. to senior and elderly customers. From November 2015 until March 2021, Mr. Williams was registered as a broker with Centaurus Financial, Inc. in Carmel, CA.

Iorio Altamirano LLP has been contacted by numerous senior and elderly retail investors who were recommended and sold GWG’s L Bonds by Mr. Williams. GWG’s L Bonds are speculative, high-risk, and illiquid securities that were sold as private placement offerings.  Brokerage firms received a commission of up to 5% of the principal amount sold.

On January 15, 2022, GWG Holdings Inc. missed interest and principal payments to L bond investors. The company is also reportedly seeking rescue financing in an effort to avoid bankruptcy after facing a series of accounting issues, financial stress, and an SEC investigation. In addition, GWG’s independent auditor resigned at the end of 2021, and the company has disclosed that its 2021 financials are not likely to be completed on time. These are just a few recent developments that have GWG L Bond investors concerned.

New York securities arbitration law firm Iorio Altamirano LLP is investigating potential securities arbitration claims against Emerson Equity LLC and its network of broker-dealers for their sale of L Bonds issued by GWG Holdings, Inc. (Nasdaq: GWGH).

On January 15, 2022, GWG Holdings Inc., a company known for selling life-insurance bonds, missed interest and principal payments to L bond investors. The company is also reportedly seeking rescue financing in an effort to avoid bankruptcy after facing a series of accounting issues, financial stress, and an SEC investigation.

GWG’s L Bonds are speculative, high-risk, and illiquid securities that were sold as private placement offerings.

David Gentile, the disgraced founder and former CEO of GPB Capital Holdings LLC, has sued GPB Capital. Mr. Gentile seeks to make GPB Capital, which an independent court-appointed monitor is now overseeing, cover the legal costs for his defense against criminal and civil securities fraud.

In February 2021, Mr. Gentile was criminally charged with securities fraud, wire fraud, and conspiracy in federal court. The criminal complaint alleged that Mr. Gentile, among others, engaged in a scheme to defraud investors by misrepresenting the source of funds used to make monthly distributions to investors and the amount of revenue generated by two of GPB’s investment funds, GPB Holdings, LP, and GPB Automotive Portfolio, LP.

Separately, the SEC has charged Mr. Gentile, GPB Capital, and related entities with running a Ponzi-like scheme that raised roughly $1.8 billion from securities issued by GPB Capital. The SEC believes that as many as 17,000 retail investors nationwide have been defrauded.

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