SEC v. David Gentile; Jeffry Schneider; GPB Capital Holdings, LLC; Ascendant Alternative Strategies; Ascendant Capital; and Jeffrey Lash, No. LR-25909, Eastern District of New York (Dec. 12, 2023) — Press Release

U.S. SECURITIES AND EXCHANGE COMMISSION Litigation Release No. 25909 / December 12, 2023 Securities and Exchange Commission v. GPB Capital Holdings, LLC et al., Civil Action No. 21-cv-583 (E.D.N.Y. filed February 4, 2021). Court Grants SEC Request for Receiver Over GPB Capital Holdings On December 7, 2023, the U.S. District Court for the Eastern District of New York granted the SEC’s request to convert the ongoing monitorship over GPB Capital Holdings, LLC (“GPB Capital”) and multiple affiliated entities into a receivership. According to the SEC’s complaint, David Gentile, the owner and CEO of GPB Capital, and Jeffry Schneider, the owner of GPB Capital’s placement agent Ascendant Capital, lied to investors about the source of money used to make an annualized distribution payment to investors. Investors were allegedly told that the distribution payments were paid exclusively with monies generated by GPB Capital’s portfolio companies, but GPB Capital actually used investor money to pay portions of the annualized distribution payments. To perpetuate the deception, GPB Capital allegedly manipulated the financial statements to give the false appearance that the funds’ income was closer to generating sufficient income to cover the distribution payments than it actually was. GPB Capital also allegedly violated the whistleblower provisions of the securities laws by including language in termination and separation agreements that impeded individuals from coming forward to the SEC, and by retaliating against a known whistleblower. The SEC’s complaint, filed in federal court for the Eastern District of New York, charged Gentile, Schneider, GPB Capital, Ascendant Alternative Strategies, and Ascendant Capital with violating the antifraud provisions of the Securities Act of 1933 and the Securities Exchange Act of 1934 (“Exchange Act”), and Jeffrey Lash with aiding and abetting certain of those violations. The complaint also charged GPB Capital and Gentile with violating the antifraud provisions of the Investment Advisers Act of 1940 (“Advisers Act”) and charged GPB Capital with violating the registration and whistleblower provisions of the Exchange Act and the Advisers Act’s custody and compliance rules. The complaint sought disgorgement of ill-gotten gains plus prejudgment interest and penalties. On February 12, 2021, the Court appointed a monitor, Joseph T. Gardemal III, to oversee GPB Capital. On June 13, 2022, the SEC moved to convert the monitorship into a receivership because of GPB’s alleged breach of the monitor order. On June 7, 2023, the Court entered a partial judgment against Lash by consent in which he agreed to be permanently enjoined from violations of the charged provisions. On December 7, 2023, the Court granted the SEC’s motion, and on December 8, 2023, the Court appointed Mr. Gardemal as receiver over GPB Capital and numerous affiliated entities. Pursuant to the terms of the order, within 45 days, the receiver shall provide the Court an accounting of receivership assets and propose a plan to distribute assets to investors. The SEC’s litigation is being led by David Stoelting, Neal Jacobson, Kristin M. Pauley, Lindsay S. Moilanen, and Alistaire Bambach, and is being supervised by Sheldon L. Pollock.

U.S. SECURITIES AND EXCHANGE COMMISSION Litigation Release No. 25909 / December 12, 2023 Securities and Exchange Commission v. GPB Capital Holdings, LLC et al., Civil Action No. 21-cv-583 (E.D.N.Y. filed February 4, 2021). Court Grants SEC Request for Receiver Over GPB Capital Holdings On December 7, 2023, the U.S. District Court for the Eastern District of New York granted the SEC’s request to convert the ongoing monitorship over GPB Capital Holdings, LLC (“GPB Capital”) and multiple affiliated entities into a receivership. According to the SEC’s complaint, David Gentile, the owner and CEO of GPB Capital, and Jeffry Schneider, the owner of GPB Capital’s placement agent Ascendant Capital, lied to investors about the source of money used to make an annualized distribution payment to investors. Investors were allegedly told that the distribution payments were paid exclusively with monies generated by GPB Capital’s portfolio companies, but GPB Capital actually used investor money to pay portions of the annualized distribution payments. To perpetuate the deception, GPB Capital allegedly manipulated the financial statements to give the false appearance that the funds’ income was closer to generating sufficient income to cover the distribution payments than it actually was. GPB Capital also allegedly violated the whistleblower provisions of the securities laws by including language in termination and separation agreements that impeded individuals from coming forward to the SEC, and by retaliating against a known whistleblower. The SEC’s complaint, filed in federal court for the Eastern District of New York, charged Gentile, Schneider, GPB Capital, Ascendant Alternative Strategies, and Ascendant Capital with violating the antifraud provisions of the Securities Act of 1933 and the Securities Exchange Act of 1934 (“Exchange Act”), and Jeffrey Lash with aiding and abetting certain of those violations. The complaint also charged GPB Capital and Gentile with violating the antifraud provisions of the Investment Advisers Act of 1940 (“Advisers Act”) and charged GPB Capital with violating the registration and whistleblower provisions of the Exchange Act and the Advisers Act’s custody and compliance rules. The complaint sought disgorgement of ill-gotten gains plus prejudgment interest and penalties. On February 12, 2021, the Court appointed a monitor, Joseph T. Gardemal III, to oversee GPB Capital. On June 13, 2022, the SEC moved to convert the monitorship into a receivership because of GPB’s alleged breach of the monitor order. On June 7, 2023, the Court entered a partial judgment against Lash by consent in which he agreed to be permanently enjoined from violations of the charged provisions. On December 7, 2023, the Court granted the SEC’s motion, and on December 8, 2023, the Court appointed Mr. Gardemal as receiver over GPB Capital and numerous affiliated entities. Pursuant to the terms of the order, within 45 days, the receiver shall provide the Court an accounting of receivership assets and propose a plan to distribute assets to investors. The SEC’s litigation is being led by David Stoelting, Neal Jacobson, Kristin M. Pauley, Lindsay S. Moilanen, and Alistaire Bambach, and is being supervised by Sheldon L. Pollock.