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In Latest Development, GPB Capital Executive Charged with Obstruction of Justice

February 7, 2020 Blog

Our firm began investigating allegations that GPB Capital Holdings (“GPB Capital”) was engaged in fraudulent sales practices in 2018. In August 2019, we published an update noting that the Securities and Exchange Commission (SEC), the Financial Industry Regulatory Authority (FINRA) and the Federal Bureau of Investigation (FBI) were all looking into GPB Capital’s private placements, and we provided a timeline of the events that had transpired to date.

In the latest development, the U.S. Department of Justice (DOJ) has announced the indictment of GPB Capital’s Managing Director and Chief Compliance Officer, Michael S. Cohn, for obstruction of justice and other federal crimes.

DOJ: GPB Capital Executive Stole Privileged Information Before Leaving Job at SEC

According to the Press Release announcing the indictment, Cohn worked at the SEC prior to joining GPB Capital. When he left the SEC, he took with him government information relating to an ongoing investigation into GPB Capital’s alleged fraudulent practices. As reported by the DOJ, the FBI’s Assistant Director-in-Charge said of the allegations against Cohn:

“When Cohn left the SEC to join GPB, he left with more than his own career ambitions. The proprietary information he allegedly retrieved—from databases he wasn’t authorized to access—included compromising information about a GPB investigation and sensitive details related to the same.”

The DOJ’s Press Release further elaborates on the allegations as follows:

“[P]rior to leaving the SEC, Cohn accessed information on SEC servers relating to an Enforcement Division investigation into GPB. Cohn was not authorized to access this highly sensitive material, which included confidential information, privileged attorney-client work product and contacts with law enforcement and other regulatory agencies. During discussions with GPB personnel about obtaining a job there, Cohn advised them that he had inside information about the SEC’s investigation, and on several occasions he disclosed information to members of GPB’s senior management about that investigation.”

In addition to obstruction of justice, Cohn also faces charges of unauthorized computer access and unauthorized disclosure of confidential information. If convicted, he could face up to 26 years of federal imprisonment.

Allegations Related to GPB Capital Investment Fraud Keep Piling Up

According to the SEC, FINRA and other federal authorities, GPB Capital and the brokerage firms involved in selling its private placements to individual investors are facing a host of potential allegations. For individual investors who purchased GPB Capital investments, federal enforcement action and criminal charges against GBP Capital’s executives may provide some satisfaction, but they will not provide financial relief. In order to recover their fraudulent investment losses, individuals who invested in GPB Capital private placements must seek civil remedies through FINRA arbitration or securities fraud litigation in federal district court.

Speak with an Investment Fraud Lawyer about Recovering Your GPB Capital Losses

If you invested in GPB Capital private placements, you may be a victim of investment fraud, and you should speak with a lawyer about your legal rights as soon as possible. To schedule a free and confidential consultation at Zamansky LLC, call 212-742-1414 or inquire online today.