Former private equity executive David Gentile from Manhasset sentenced to 7 years for $1.6 billion investor scam

A former private equity executive from Manhasset and one of his co-conspirators have been sentenced in federal court for scamming more than 10,000 investors who poured $1.6 billion into their firm, authorities said.

David Gentile, 58, of Manhasset, was sentenced to 7 years behind bars Friday after he was convicted on multiple fraud charges for inflating the revenues of investment funds and misrepresenting the sources of the distributions paid out to investors, according to a news release from Joseph Nocella Jr., interim U.S. attorney for the Eastern District of New York.

Gentile founded GPB Capital in 2013 as the general partner of multiple investment funds that collected money to invest in a portfolio of private equity investments, Newsday previously reported. His company worked with Ascendant Capital, founded by Jeffry Schneider, 56, of Austin, Texas, to market GPB Capital funds to investors. Schneider was sentenced to 6 years in prison for various fraud charges Friday.

"The defendants built GPB Capital on a foundation of lies," Nocella said in a statement Friday. "They raised approximately $1.6 billion from individual investors based on false promises of generating investment returns from the profits of portfolio companies, all while using investor capital to pay distributions and create a false appearance of success. The sentences imposed today are well deserved and should serve as a warning to would-be fraudsters that seeking to get rich by taking advantage of investors gets you only a one-way ticket to jail."

Matthew Menchel, a defense attorney representing Gentile, declined to comment when reached by telephone Friday evening. Glenn C. Colton, a defense attorney representing Schneider, could not be immediately reached Friday evening.

Gentile and Schneider marketed GPB funds as income earning investments that would pay distributions to investors "from cash flow generated by portfolio companies owned by the GPB funds, in addition to a return on their investment at the end of the fund," according to the U.S. attorney.

In 2015 and 2016, Gentile and Schneider used "fraudulent, backdated ‘performance guarantees’ to artificially inflate the income" of their holdings, according to the release. Between August 2015 and December 2018, Gentile and Schneider also lied to their investors about the source of their monthly distributions, according to the release. Instead of paying distributions solely with money made through the companies under GPB Capital’s portfolio, Gentile and Schneider used around $100 million in investors’ funds to cover distributions.

On Aug. 1, Gentile and Schneider were both convicted of conspiracy to commit securities fraud, conspiracy to commit wire fraud and securities fraud, Newsday reported at the time. Gentile was additionally convicted on two counts of wire fraud.

On Friday, U.S. District Judge Rachel P. Kovner sentenced Gentile and Schneider at U.S. District Court in Brooklyn, according to the U.S. attorney’s release. Another defendant in the fraud scheme, Jeffrey Lash, pleaded guilty to wire fraud in 2023 and will be sentenced at a future date.