J. Swift
Well-known member
May 9, 2025: GPB Capital Holdings founder and owner David Gentile, 59, was today sentenced to seven years in the Brooklyn Federal Court by Judge Rachel Kovner.
Jeffry Schneider, 56, his convicted co-conspirator, was sentenced to six years.
This is an outrageously low sentence in which Judge Kovner said she disregarded the sentencing guidelines. The Government asked for 15 years. The sentencing guidelines were calculated at 1020 months in the Presentencing Report (PSR).
In testimony, Jeff Lash said he once heard David Gentile joke that he, Gentile, could afford to spend a few years in jail. This looks like what happened here. The sentence makes no sense and gives rise to questions about why Judge Kovner meted out such a light sentence given the thousands of victims, many of whom were seniors.
Judge Kovner noted in her summary that GPB Capital did not begin with the purpose of fraud. However, when the funds underperformed and ran losses, Gentile and Schneider began to engage in fraud in order to keep investor money coming in.
Unlike a Ponzi scheme, in which no assets are purchased and all of the money is stolen by the Ponzi schemer, GPB Capital was a Ponzi-like scheme in which assets were purchased. However, when the funds did not make money, investor money was used to pay investors. The Ponzi-like aspect, therefore, was that investors were being paid back their own money without being informed of this. David Gentile and Jeffry Schneider fraudulently represented the money as profits from the funds and this was a crime.
Of the $1.8 billion raised by GPB Capital, $1.1 billion was recovered when GPB Capital sold off its assets under the guidance of Monitor Joseph Gardemal and GPB CEO Rob Chmiel.
David Gentile’s attorney claimed he needed a dental implant procedure and asked for a November surrender date due to the time it takes for bone grafts to set. Schneider’s surrender date had not been set when the court closed down the dial in line.
The matter of criminal forfeiture and restitution comes up next for Gentile and Schneider.
David Gentile’s forfeiture in the presentencing report had been set at $97 million, a figure to which his legal team objected:
Judge Kovner issued forfeiture orders for both Gentile and Schneider on May 8, 2025. In that order, no amount was specified and Judge Kovner indicated she would issue an amended order with a dollar amount. It is likely that forfeiture and restitution will financially destroy Gentile and Schneider. Given their status-seeking and greed, this will perhaps be harsher on them than their prison sentence in a minimum security camp.
Despite spending a staggering >$75 million of investor monies and many years to fight criminal charges, both men were convicted by a jury in just four hours; this following an eight-week trial. The two have spent another >$75 million in investor money fighting eight years of class action complaints, including those from the Attorneys General of seven states for securities fraud.
GPB Capital’s broker-dealers have been fined millions of dollars by FINRA for lying to investors to induce them to invest in GPB Capital. The broker-dealers were paid as much 10% percent in commissions to preferentially sell GPB Capital over other possible investments.
We dialed in to listen to today’s proceeding. Our notes:
11:24 Eastern Time: Judge Kovner opens the proceeding.
David Gentile and Jeffry Schneider are both in the courtroom at the counsel table with their respective counsel.
Judge Kovner begins with Presentencing Reports (PSR’s).
Gentile and Schneider and their respective counsel indicate they have reviewed the PSR’s. Financial loss calculations are central to the PSR’s as the dollar loss goes to length of sentencing.
Judge Kovner states that Gentile and Schneider knowingly misrepresented facts to GPB investors to continue raising money from investors. Judge Kovner sees no basis for a set-aside for losses sought by the defendants. The government notes that the co-defendants lead investors to think 8% returns were being generated.
Defendant counsel argues that GPB Capital’s broker-dealers, and hence investors, were told GPB funds were operating at a loss. Defendant counsel attacks the credibility and testimony of Jeff Lash and Bill Jacoby.
Defense counsel argues for a bifurcation: The funds raised before the fraud began should not be calculated in the loss calculation. Defense argues that none of the Government’s loss formulas should apply and asks if there were any actual victims or losses.
Defense argues that all fees were disclosed (Our research and reporting over the years shows this is false; there were numerous self-dealing schemes involving undisclosed fees).
Defense asks for an adjournment in sentencing to allow time to calculate actual losses, this as opposed to the eight loss theories presented by the Government. The Government replies that we are not here today to reargue closing arguments. (In our view, every motion filed by defendants since conviction is an attempt at relitigation and setting up for an appeal).
The Judge notes that the 2015 performance guarantees (in which Jeff Lash transferred his personal funds to GPB Capital which booked these funds as revenue and therefore falsified the books by showing a false and misleading gain in financial performance), were fraudulent and showed intent to defraud investors. Specifically, investors were lead to believe that they were earning an 8% return on their money. The question is one of intended loss or gain, e.g. how much money did defendants intend the investors to gain or lose.
A review of money flows is discussed: Monies sent to Schneider’s Ascendent Capital LLC and monies to GPB Capital. These details are crucial as they go to a 20 point enhancement in the sentencing guidelines which greatly increases the years the defendants will serve in prison.
Judge Kovner states she came up with an 18 point enhancement in her calculations. She notes that a two-point difference is not material to her sentence.
The arguments here focus on what the actual loss is to investors and therefore sentencing enhancements. Defense argues that the Government did not carry its burden to prove an 18 or 20 point enhancement. The court rejects this categorical argument. The court notes that is has eliminated disputed amounts.
12:34 PM – Break for lunch
2:15 PM – Court resumes. Arguments over the language and characterizations used in the PSR.
The Judge states that defense objections are wordsmithing. Government argues GPB Capital and Ascendant Capital were essentially run as a partnership, i.e. Jeffry Schneider approved all GPB Capital marketing materials in his capacity as CEO of Ascendant.
The language of the PSR has downstream implications for the class action lawsuits and the eight complaints filed by the seven states Attorneys General. The defense is attacking the PSR and in order to reduce the sentencing points.
Defense argues the losses are subject to opinion. The Judge points out that evidence at trial showed that there was not enough income from the funds to cover distributions. The Judge is emphatic that this part of the PSR is an accurate description of the testimony and evidence presented at trial.
Defense has now attacked Mr. Petron’s testimony and loss calculations several times. Mr. Petron was a loss expert who testified for the prosecution at trial. The Judge rejects this objection. The Judge is now quickly dismissing defense objections. The defense is asking the Judge to make edits to the PSR. This is an attempt to get things on the record for an appeal.
After making small changes to the PSR, the court accepts the PSR.
The victim impact statements put a painful human face on the proceedings after the dry and technical PSR arguments.
High commissions caused GPB Capital’s broker-dealers to make misrepresentations to investors. Distributions to investors were then ended by GPB.
One investor-victim invested $380,000 which has profoundly affected his retirement. Specifically, this investor, a senior citizen, cannot retire and must continue to work after being defrauded by Gentile and Schneider’s criminal actions. The investor asks for Gentile and Schneider to be sentenced to the maximum extent of the law.
Another victim invested $1.4 million in Fund 2 in 2016 from a Church fund. She and her colleagues conducted due diligence before investing and she relied upon GPB Capital’s representations. She testified that David Gentile assured her at a meeting that everything was fine and he even gave her a hug at the end of the meeting, this after lying to her face. She says this has been a ten-year nightmare that affected her, her Church, and the Church’s care facility that GPB Capital distributions were supposed to fund. Even if she receives back her original investment, it will not make up for the psychological, emotional, and financial damages caused by David Gentile lying to her for 10 years.
The next victim to speak is 70 years old and single. She invested $100,0000 and this has deeply affected her ability to live. She has suffered a great financial and emotional toll on her. She will have to go back to work at 70 after losing $100,000 to GPB Capital.
The next victim said she and her husband sold their Long Island home and invested the proceeds in GPB Automotive to help fund their retirement. Distributions stopped. She and her husband learned that Gentile and Scheider spent money on luxury cars, including a Ferrari, and private jet, and other luxuries using stolen investor money. Her husband said that their $100,000 investment was made in 2015 after being convinced that the automotive business was profitable and GPB was a good investment. Then all the distributions stopped in 2018 and their $100,000 has been locked up ever since.
The Prosecution summarized the greed-driven GPB Capital fraud that targeted everyday retail investors. “This was a calculated fraud… there is no one to blame but these two men.” The Prosecution asks for the maximum sentence given the enormous toll Gentile and Schneider’s fraud has had on the thousands of victims. The fraud went on for years and was willful and deliberate. Schneider and Gentile have shown no remorse.
Prosecution argues, in a Scientology-like manner, that the small print in the contracts signed by investors allowed Gentile and Schneider to legally do what they did to investors. This is an outrage when investors were, as noted, the broker-dealers were paid as much 10% percent in commissions to preferentially sell GPB Capital over other possible investments.
This Judge responded to this prosecution argument for sentencing mitigation by noting that Schneider and Gentile acted in a fraudulent way to put money back into the funds by “performance guarantees” and “return of management fees.”
David Gentile’s lawyer attempts to paint David Gentile as a good family man. Gentile’s lawyer then attacks the victims and argues that Gentile never tried to block the receiver and the distribution of monies to investors when GPB Capital went into receivership.
This is blatantly false given the evidence: David Gentile has fought at every step to impede the actions of the Monitor, and now Receiver, Joseph Gardemal in his efforts to sell GPB’s assets and then distribute the remaining $1.1 billion back to investors.
David Gentile makes a generalized, weak, and vague statement in which he regrets what has happened. He claims he had good intentions. However, he shows no remorse for the staggering human suffering he has caused nor his incredible greed in taking both disclosed and undisclosed fees from investors. As we have documented, investors immediately lost almost 20% in fees and commissions when they invested in GPB Capital Holdings.
Jeffry Schneider’s attorney attempts to humanize Jeffry Schneider whom, he says, we all know as Jeff. He is generous and cares for others. “Jeff” received 50+ letters of support after his criminal conviction. Jeff does simple things. He walks his dog each morning with his daughter and stops every few feet to pick up things for her treasure box. He hugs homeless people. Jeff helps strangers. He cares about people.
Jeff’s lawyer continues: Jeff is now on trial for his life. Jeff’s innate goodness argues against a harsh sentence and calls for a very lenient sentence, specifically a probationary sentence. This trial has already been punishment enough for Jeff. The court should disregard the sentencing guidelines and give Jeff the most minimum sentence.
Jeffry Schneider speaks. He is saddened by the victims letters. He hopes they get their money back. He too invested his retirement savings into GPB Capital Holdings. He is sorry for what he put his family and friends through. He asks for leniency in his sentencing. He has a lot of good things to offer to society.
Before imposing sentence, Judge Kovner notes that she must sentence according to the seriousness of the offenses. She then summarized GPB Capital: The firm did not begin with the purpose of fraud. However, when their funds underperformed and ran losses, Gentile and Schneider began to engage in fraud in order to keep investor money coming in. GPB Capital’s marketing materials misstated facts.
She notes that David Gentile fabricated a documented in which he paid a performance guarantee, but it was actually money being moved around by Jeff Lash and David Gentile. This was a fraud.
The investors were not wealthy people who could afford to lose money; they were everyday people whom the actions of Gentile and Schneider seriously harmed by making misrepresentations.
Judge Kovner says serious crimes were committed by Gentile and Schneider.
Judge Kovner sentenced to David Gentile to seven years.
Jeffry Schneider recieved six years.
Three years of supervised release.
Restitution and forfeiture amounts to be determined in the future.
