In February 2021, we told you that Scientologist David Gentile was charged by the New York Attorney General’s office for operating what it called a $1.8 billion Ponzi scheme, paying older investors with money from newer investors of a company called GPB Capital Holdings.
Since then Gentile’s criminal case has gone slowly and we’ve had few updates for you. But some very interesting things have been going on in a parallel case involving GPB Capital and the SEC, which is suing the firm.
Jeffrey Augustine, who first made us aware of the trouble surrounding GPB Capital before Gentile was even charged, has kept an eye on the SEC case, and tells us there are some real eye-opening developments going on which he’s been detailing at his blog.
First of all, after Gentile was charged, he resigned as CEO of GPB Capital, and in an agreement with the SEC he turned over control of it to an outside court-appointed monitor named Joseph Gardemal.
Augustine tells us that Gardemal then sold the automotive portfolio of the company for $880 million, along with some other assets, and GPB Capital suddenly had about $1 billion in liquid assets it didn’t have before Gentile’s arrest.
So then, according to documents filed by the SEC, Gentile tried to get his hands back on the company by attempting to appoint three new hand-picked directors named Matt Judkin, Rick Brown, and Michael Fasano, so that he would then have control.
What the SEC didn’t mention, but that Jeffrey noticed, was that Judkin himself is a longtime Scientologist.
“Joseph Gardemal, the appointed Monitor, responded to Gentile’s attempt to take over the company by filing papers with the court to immediately convert GPB’s monitorship into a receivership,” Jeffrey says. “Gardemal basically called for a ‘game over’ in which the $1 billion would be distributed to shareholders, the firm’s remaining debts paid off, and GPB Capital Holdings dissolved. The stage is now set for a court battle in the US Eastern District Court of New York. The opposing parties are the SEC and Joseph Gardemal on the one side and on the other side David Gentile and his cronies Matt Judkin, Rick Brown, and Michael Fasano.”
And there’s another development that also has the SEC seeing red.
On July 21, David Gentile’s criminal defense attorney, Daniel J. Horwitz, filed a request with the court to allow Judkin, Brown, and Fasano to be represented in the civil case by an attorney named Steven L. Hayes.
The SEC is opposing this. Why? Here’s what the SEC says…
Gentile’s Manager Nominees [Judkin, Brown, and Fasano] are attempting to do what Gentile himself has admitted he cannot do: take control of [GPB Capital Holdings]… Although the Commission would not ordinarily oppose a motion to appear pro hac vice, Mr. Hayes’ filing is at bottom an unsupported motion by the Gentile Manager Nominees to intervene in this civil enforcement action to request that the Court order some unspecified mediation, to respond to any objections to their request for mediation, and to be involved in any such mediation. However, it is clear that the Gentile Manager Nominees have no absolute right to intervene in this action and the Court should not permit them to intervene.
The SEC doesn’t want the interference from Gentile’s hand-picked directors, and so it is taking the unusual step of opposing an out-of-town attorney coming in to represent them, which would usually be a formality.
But here’s what the SEC doesn’t point out, and that Jeffrey does: Steven L. Hayes is a name that longtime Scientology watchers should recognize.
The Scientologist lawyer has appeared in Scientology’s Freedom magazine, but he’s best known for being the lawyer who, in 1996, bought up the assets of the Cult Awareness Network after it was bankrupted in a lawsuit filed by a plaintiff who had been recruited by Scientology and represented by Scientologist attorney Kendrick Moxon.
The way that CAN was sued, bankrupted, and ultimately bought and operated by Scientology is a legendary one in this field. To see the very attorney who was part of that operation showing up to represent David Gentile’s handpicked board nominees in a fight with the SEC suggests only one thing to Jeffrey Augustine: David Miscavige smells that mountain of $1 billion in GPB’s liquid assets, and wants some say in what happens to it.
“Hayes has no legal experience within the area of private equities, securities law, or white collar criminal defense. That Hayes has no experience in the big league US Federal Eastern District Court of New York reinforces my estimation that the 75-year-old Hayes is being sent to babysit Judkin and Gentile at the orders of Miscavige,” Jeffrey says.
The SEC filed its opposition to Hayes being admitted to the court just this week. So we’ll be very interested to see how the court responds.
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Why is GPB in what amounts to receivership? Because the company was just a Ponzi scheme. Ponzi, when you can keep selling something, again and again. They should have got into Non Fungable Tokens, it is easier to sell pixels than it is to sell auto loan portfolios.
Why does a guy who was kicked out of the management get to hire more 'directors' and run his 'take the money and run' scheme?
Whack that mole SEC, whack it hard. Nice catch Jeff Augustine, nice catch. You can play center field on my team any day. " Capo de Tutti"....giggle.....
"Mr. Hayes’ filing is at bottom an unsupported motion by the Gentile Manager Nominees to intervene in this civil enforcement action to request that the Court order some unspecified mediation,"
Could it be a religious ritual, aka an "arbitration" run by the criminal organisation known as the "church" of $cientology?