GPB Capital Holdings Scandal | Business Wire | September 18, 2019 02:03 PM EDT
Peiffer Wolf and Meyer Wilson File Complaints on Behalf of 91-Year-Old Florida Widow and Retired Russian Emigre Couple in Oregon; Scores of Financial Advisors and Brokerages Face Heat on $160 Million in Commissions on Unsuitable Investments.
NEW YORK–(BUSINESS WIRE)–The beleaguered GPB Capital Holdings is dealing right now with scrutiny from the Securities Exchange Commission, state regulators, and the FBI. Today, the estimated 60 brokerages and financial planning firms nationwide that profited from “commission grabs” start to feel the heat with new arbitration cases filed by the often elderly victims who suffered losses in the “grossly unsuitable” GPB Capital investments.
Today, Peiffer Wolf Carr & Kane, APLC (Peiffer Wolf) and Meyer Wilson, Co., (Meyer Wilson) filed a FINRA arbitration case in Florida on behalf of 91-year-old widow Millicent Barasch, of Boca Raton. The Barasch arbitration case names the defunct brokerage firm Crystal Bay Securities, Inc., of Delray, FL, and registered representative Rafael Golan, who was barred from the industry in May 2019.
In Oregon, Peiffer Wolf and Meyer Wilson also filed today an arbitration case on behalf of Grigory and Alexandra Kogan, a retired Russian emigre couple living in Portland. The Kogan arbitration complaint names Madison Avenue Securities LLC, Bankers Life Securities, Inc., and unsuitable investment advice supplied by Jeffrey Raymond Dixson (with Madison) and Daniel Patrick Corey (with Bankers Life). Corey was the subject of a 2000 misdemeanor conviction for theft of property in the third degree.
At stake in the two cases: Nearly $1.5 million in retirement savings and trust proceeds. Mrs. Barasch and the Kogans appear to share much in common with other GPB investment victims. They are retirees who worked hard for their life savings but are unsophisticated investors. In addition, they have medical and other conditions that further restrict their ability to protect their interests. Combined with the ultra-risky nature of GPB Capital Holdings, the victims were not a good fit in any way for these unsuitable investments.
Jeffrey Barasch, son of the retired widow living in Boca Raton, said: “I do not understand how our investment ‘regulatory’ system let a brokerage firm and a broker like the ones that victimized my mother stay in business. Both the firm and the broker should have been shut down years ago. The fact that they were allowed to keep on victimizing people like a 91-year-old widow is a real crime. They took nearly a million dollars from her, and then they tried to close up shop and scatter like cockroaches.”
Alexandra Kogan said: “My husband and I came to America with a belief in its promise and the opportunities available to everyone who works hard and plays by the rules. We lived a good life for many years until illness made it impossible for us to keep working. It was at that point that these vultures descended on us and tried to pick our bones clean.”
Joseph Peiffer, managing partner, Peiffer Wolf, said: “GPB Capital has its own problems, but there’s an equally big problem out there in the investment world. You have brokers and brokerage firms stooping to new lows with products like GPB. Like cheese to a rat, GPB’s commissions drew out the greediest brokers. The issues with GPB Capital extend well beyond its offices in New York, reaching out into scores of brokerage firm offices all across America. This is the first in an avalanche of arbitration cases that we are going to file in this matter, and they’re going to be filed on behalf of the same elderly investors who are the usual ‘marks’ in these unsuitable investments.”
Courtney Werning, attorney, Meyer Wilson, said: “The regulatory issues GPB face make clear that the products peddled by this company were inherently flawed and subject to serious risks that should have prevented brokers and brokerage firms from selling it to anyone, let alone elderly, unsophisticated investors like Mrs. Barasch and the Kogans. Had any one of these firms done what it was required to do, these people would not have been victims. The sale of GPB to these investors would have, and should have, been outright prohibited.”
GPB Capital Holdings has attracted considerable attention in recent months, including the allegations of a business partner that the organization is run as a “Ponzi-like scheme” and, most recently, the opening of an FBI investigation into the company. Over the course of the past year, multiple lawsuits have been filed and multiple regulatory proceedings have been initiated, alleging that GPB Capital Holdings has engaged in wrongdoing.
GPB Capital has recently been telling clients that it would deliver audited financial statements for its funds by the middle of September, but now says it will blow past that deadline and won’t complete the audits until the end of this year. Now, it appears that investors are at risk of losing some or all of their GPB investments.
The 91-year-old Mrs. Barasch was in ill health during the time that she was dealing with Crystal Bay Securities.
The Kogans are immigrants who came to the United States from Russia in 1979. English is not their first language, making it particularly difficult for them to understand the complex products they were advised to purchase. Grigory is 70 years old and Alexandra is 69 years old. Grigory has suffered from three strokes, leaving him paralyzed on his right side. He had continued working as an electrical engineer until he was terminated from his employment for this disability early in 2019. Since the Kogans are elderly and residents of Oregon, that state’s elder abuse laws are cited in the arbitration filing.
Peiffer Wolf Carr & Kane, APLC is a national law firm with offices in New York, New Orleans, Cleveland, San Francisco, Los Angeles, Austin, and Missouri. https://brokerwatch.com/
Meyer Wilson, Co., is a national law firm with offices in Ohio, California, and Michigan. www.investorclaims.com
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