Our sources have told us, and the Wall Street Journal confirms, that GPB Capital Holdings has taken the decision to sell all of its remaining Prime Automotive dealerships. Given the strength of the automotive market, now is a great time to sell.
While Scientologist and GPB Capital’s sole owner David Gentile has had no active role in GPB Capital after stepping down as CEO, his approval would have been necessary.
The Wall Street Journal:
GPB Capital Holdings LLC, whose founders face criminal fraud charges related to the firm’s private-equity operations, is shopping a major piece of its automotive dealership portfolio, people familiar with the matter said.
The New York firm is trying to sell what remains of the Massachusetts-based Prime Automotive Group, which largely consists of dealerships in New England. GPB acquired a majority interest in Prime in 2017, when the group included more than 20 stores, for more than $235 million. The firm made a separate deal for related real estate, a legal filing states.
The move involving one of the firm’s biggest investments comes after GPB’s GPB Automotive Portfolio LP said in a May regulatory filing that there was substantial doubt that the business would survive. While a 10-month extension of a pivotal M&T Bank Corp. lending agreement in late June eased those doubts, coming up with cash remains a focus for GPB Automotive, filings indicate.
The irony here is ferocious. Just as the Prime Automotive dealerships are sold off, David Gentile, Jeffry Schneider, and Jeff Lash — the GPB executives who bought the dealerships and bundled them into GPB’s Automotive Fund — will be starting their criminal trials in US Federal Court.
Update: Our sources tell us that the main contender to purchase Prime Auto appears to be Lithia Motors Inc.
Lithia Motors (LAD) just closed on Rock Honda out here in Los Angeles. Rock Honda is a massive dealership that dominates Honda sales in SoCal. Lithia’s stock rose on news of the Rock Honda acquisition. From the linked Investors Observers article:
Shares of LAD increased 0.97% to $339.14 as of Tuesday at 12:27pm… Lithia’s acquisition of its most recent Honda dealership continues the company’s fast-paced growth trajectory and expands the reach of its omni-channel network. The $170 million in annualized revenues that Rock Honda is expected to generate will bring Lithia’s total expected annualized revenue to over $4.9 billion. This keeps Lithia on track to meet their 5-year plan of achieving $50 billion in revenue by 2025.”
Once court-appointed monitor Joe Gardemal took over GPB Capital Holdings, the decision to sell Prime Automotive made obvious financial sense to preserve some value for GPB investors.
Highline Management Inc., the operating arm of GPB Capital formed in January 2020, will be instrumental in the sale of Prime. GPB Capital explained the function of Highline as follows:
Highline Management, Inc. (“Highline”) was formed in January 2020 to assume the day to day duties and responsibilities of GPB with respect to the management of the business affairs, operations and financial reporting of the various limited partnerships sponsored by GPB as well as the Portfolio Companies.
We see the sale of Prime Automotive as the beginning of the end for GPB Capital Holdings. Our prediction is that the rest of the assets will be sold off and the corporations which compose GPB Capital will be wound down.
From our perspective, GPB Capital’s only other valuable assets are in its healthcare software and biotech portfolios. This part of GPB was helmed for many years by GPB exec Evan Myrianthopoulos. Our sources tell us Myrianthopoulos is no longer with GPB Capital. His LinkedIn page confirms this.
With the departure of Evan Myrianthopoulos, none of the early GPB Capital executives. The C Suite at GPB Capital has always been a revolving door with very high turnover.
Correction: We had written that Jovan Sijan was still onboard as a GPB Capital exec. One our readers stated that the Form 10 indicates he was paid a severance in June 2021. A check of his LinkedIn page verifies this. With the departure of Sivan, none of the early GPB Capital executives remain in place. It appears that Highline Management purged the old guard.
Aside from the auto dealerships, healthcare software, and biotech, GPB Capital’s other acquisitions made during its peak years still make no rational sense to us. For example, GPB Capital got into cold storage. This simply means GPB Capital financed the construction of giant freezer warehouses on the docks of New Jersey where the catch from the fishing boats is frozen. How does freezing fish make sense as a market to invest in for a company that promoted itself as being one of the largest owners of auto dealerships in America?
GPB Capital invested in waste management and later reported losses of 80% in that market. Likewise, the companies purchased from Gentile’s fellow Scientologists — at what appear to be inflated prices — seem to have very little value and look more like favors than actual investments. We have the same view of the tech debt GPB Capital purchased. The truth will emerge when, and if, GPB Capital sells these holdings. Our prediction is that GPB will lose money on these investments that did not relate to its core markets.
The lawsuit the Commonwealth of Massachusetts filed against GPB Capital noted:
As time went on and GPB Capital raised more money, it was unable to deploy its capital efficiently.
GPB Capital couldn’t spend its $1.8 billion fast enough. To this point, we previously reported on how Scientologist David Gentile, the sole owner of GPB Capital Holdings, offered his fellow Scientologist Larry Feldman anywhere between $70-$105 million in financing to begin construction on Feldman’s Riverwalk Development. These figures were mentioned in a July 2018 article in Business Observer article. As Tracey McManus of the Tampa Bay Times reported in March 2020, Feldman exited the Riverwalk project. Feldman’s exit was inexplicable given that Feldman had invested many years and tens of millions of dollars into the project.
Is it possible that David Miscavige ordered long-time Scientologist Larry Feldman to “take one for the team” so that the $105 million maximum available in liquid cash from GPB Capital could be diverted to allow Scientology to buy up as much property as possible in Downtown Clearwater? The Church of Scientology denies but we give zero credibility to a Scientology denial of anything. The facts will eventually emerge on where all the cash came from.
The strange story of the Israeli straw buyer Itzhak Zano documented by McManus is a story that is not finished. Based upon the work of McManus, we published our own article here on our blog: 2017 – Scientologist-Controlled LLC’s Purchase $103 Million in Downtown Clearwater Real Estate in Cash: Where Did the Money Come From?
We take the same position now as we did in our previous article:
A leaked FBI Intelligence Bulletin mentioned “more than $100 million in wire transfers” that came from a Russia-based company and flowed into the coffers of a NYC private equity firm:
We asked if this New York-based private equity firm could be GPB Capital Holdings whose sole owner is Scientologist David Gentile. In support of our question, we cited the ties of both David Gentile and GPB Capital to the purported Russian mobster Michael Cherney via his daughters Rina and Diana Chernaya. Gentile also has ties to Cherney’s US business agent Robert Kessler. Indeed, Chernaya and Kessler money were behind GPB Capital’s first major VW car dealership.
In our previous article on the FBI Intelligence Bulletin we were careful to state that no conclusions could be made absent solid evidence. We will therefore continue to watch for any developments.
We asked if this New York-based private equity firm could be GPB Capital Holdings whose sole owner is Scientologist David Gentile. In support of our question, we cited the ties of both David Gentile and GPB Capital to the purported
We have documented curious ties between Scientologists and the UAE. Reuters reported on June 21, 2021:
DUBAI, June 30 (Reuters) – More than 500,000 firms in the United Arab Emirates (UAE) must disclose their ultimate owners from Wednesday or face penalties, as the Middle East financial hub tries to avoid inclusion on a dirty money watchlist…
We are watching this story to see the names of Scientologists with hidden financial ties in Dubai emerges. We have a very short list of likely Scientology OT’s. Our theory is that some dirty money has flowed from Dubai and found its way into US ventures owned, or nominally controlled by, Scientologists. We have traced money going into the Church of Scientology from Islamabad; Medellin; Cyprus; Israel; Russia; Taiwan; Buenos Aires; Venezuela; Mexico; and many other places.
We will not be surprised if money from Dubai appears in GPB Capital’s offshore accounts. We have identified money flowing into GPB Capital money from the Cayman Islands: Brazil; Ireland; and Russia via Florida.
In 2019, the healthcare and biotech assets of GPB Capital were transferred to GPB Capital’s spin-off Austin Lake Technologies. GPB VP Mike Frost took over as CEO of Austin Lake Technologies. GPB Capital’s recent Form 10-A of July 21, 2021 says of Mike Frost:
Mr. Frost joined Highline in September 2020 from Austin Lake Technologies, where he was the founder and Chief Executive Officer from August 2019 until joining Highline. Austin Lake Technologies, spun out of GPB, was launched in 2019 and was responsible for overseeing the tech-enabled services and healthcare technology companies owned by two of GPB’s managed Partnerships. Mr. Frost joined GPB in early 2015 until the spin out of Austin Lake in August 2019.
This is our GPB Capital update and review for the present. We await further developments.
As part of our document collection on GPB Capital we post the Alabama lawsuit below. Alabama sued GPB Capital on behalf of its residents who were harmed by investing in the company. Alabama did a great job of detailing how GPB Capital was created from the beginning as a way for Gentile, Schneider, and Lash to collect excessive fees at every turn from unwitting investors. Gentile, Schneider, and Lash are poster boys for the old Wall Street maxim: Pigs get fat; hogs get slaughtered.
GPB_Capital_Complaint_Alabama