Ponzi indictment raises questions of GPB Capital’s ties to downtown Clearwater

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Tracey McManus, Tampa Bay Times
·4 min read
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When GPB Capital CEO David Gentile was indicted last month for allegedly running a $1.8 billion Ponzi-like scheme, his roots in downtown Clearwater were already apparent.

At the time of his Feb. 4 arrest, Gentile’s New York-based GPB Capital had an office in One Clearwater Tower, two stories above where the city rents space for City Hall. In 2016 he bought a $1.7 million condo in downtown’s Water’s Edge, a short walk from the Church of Scientology’s international headquarters where Gentile is a parishioner and donor.

During a meeting Thursday, City Council member Mark Bunker discussed Gentile’s arrest and wondered whether he has deeper connections to the recent spate of obscure entities that have bought downtown real estate with cash.

Between 2017 and 2019, limited liability companies controlled by members of Scientology bought about 100 downtown properties for $103 million, paying almost entirely in cash, a Tampa Bay Times investigation found. Where the cash originated is not clear from public records.

“I’d be interested to see how much of that money, perhaps, don’t know this for sure, but perhaps, maybe some filtered into businesses downtown,” Bunker said during the Council meeting about Gentile’s alleged Ponzi scheme. “So it’s an intriguing situation that we’ve got going on here.”

In a one-sentence statement to the Times on Friday, a GPB spokesperson Linden Zakula said: “GPB Capital did not make — and has no involvement in — any of those purchases.”

Founded in 2013, GPB promised 8 percent returns from investments made in automotive retail, waste management and healthcare sectors. But “a significant portion of GPB’s distributions were paid directly from investor funds,” William F. Sweeney Jr., the assistant director in charge of the FBI’s New York office, said in a statement about the arrest.

By December 2018, monthly payments stopped altogether and investors have been unable to liquidate their money, according to the indictment filed on Jan. 29 in the U.S. Eastern District of New York.

Gentile’s associates, Jeffery Lash and Jeffry Schneider, were also arrested Feb. 4 and charged with wire fraud, securities fraud and conspiracy. The Securities and Exchange Commission also filed a complaint this month, alleging GPB defrauded 17,000 investors.

The firm has been the subject of multiple class action lawsuits and regulatory complaints since as early as 2018.

GPB became an equity financing partner in the proposed Riverwalk Place Tower in Tampa in 2017, according to Business Observer. At the time, Riverwalk Place was pitched to become a $350 million, 50-story condo near the Hillsborough River.

On the morning of March 10, 2020, the Tampa Bay Times emailed Feldman Equities, the developer of Riverwalk Place, asking whether the firm had any concerns about GPB’s role in the project given investigations by the FBI and SEC into Gentile.

Three hours after the Times’ inquiry, Feldman Equities CEO Larry Feldman, who is also a Scientology parishioner, announced his company was pulling out of the Riverwalk project for “honest business disagreements.” It left Two Roads Development as the sole developer.

On Friday, Two Roads Development confirmed in a statement to the Times that GPB Capital remains a partner, along with “multiple investors” who have fully funded the project that is still in design. The statement said GPB is not involved in operations.

Two Roads released updated designs last summer for a 37-story luxury hotel and condo, a significantly smaller building from Riverwalk Place’s original concept.

One regulatory complaint filed last year alluded to more of GPB’s overlap with Scientology. A Massachusetts Security Division’s administrative complaint from May alleged self dealing and fraud and cites an internal email where a GPB executive tells Gentile to classify “Hubbard College as compensation,” referring to a school in Los Angeles that uses the principles of Scientology founder L. Ron Hubbard.

Bunker, the city council member, has already suggested the federal government should investigate the unprecedented amount of cash real estate purchases made in downtown Clearwater by companies tied to Scientology.

At a Council meeting in May, Bunker proposed the city ask the FBI to investigate alleged racketeering related to transactions.

“I don’t know why we couldn’t reach to the FBI and say ‘Look at what is happening here, look at these red flags,” Bunker said at the time.

None of his four colleagues on the council supported the proposal.