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Feds Charge GPB Capital Executive with Obstruction of Justice

GPB | InvestmentNews | Bruce Kelly | October 23, 2019

 

According to InvestmentNews in its recent article about GPB, “GPB’s chief compliance officer stole information from SEC during its investigation: DOJ”

The Department of Justice Wednesday charged the chief compliance officer of GPB Capital Holdings, who is also a former Securities and Exchange Commission examiner, with obstruction of justice relating to an SEC investigation of GPB.

The GPB Capital executive, Michael Cohn, allegedly stole information from the SEC before he started working for GPB in October 2018.

When Cohn left the SEC to join GPB, he left with more than his own career ambitions,” FBI assistant director-in-charge William F. Sweeney said in a press release. “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.”

Mr. Cohn’s indictment is just the newest issue to bubble up around GPB. GPB 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, more 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 has engaged in wrongdoing.

Mr. Cohn, 59, previously worked as a securities compliance examiner and industry specialist in the SEC’s Enforcement Division, where he assisted on investigations into violations of securities laws, according to a statement from the Department of Justice.

About a year ago, he left the SEC to join GPB, an alternative asset management firm.

Prior to leaving the SEC, Mr. Cohn allegedly accessed information on SEC servers relating to an Enforcement Division investigation into GPB, the indictment alleges.

He was not authorized to access this material, which included confidential information, privileged attorney-client work product and contacts with law enforcement and other regulatory agencies, according to the indictment.

During discussions with GPB personnel about obtaining a job there, Mr. Cohn allegedly 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.

GPB recently told clients that it would deliver audited financial statements for its funds by the middle of September but did not do so and now won’t complete the audits until the end of this year. Since, already diminished valuations of GPB funds have plummeted by another 39%. Now, it appears that investors are at risk of losing some or all of their GPB investments.

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