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Financial Advisor Joseph Roop (Dempsey Lord Smith, LLC.) Customer Complaints

Josep Roop (CRD # 2774470) is a Financial Advisor at Dempsey Lord Smith, LLC. In Belmont, NC. Joseph Roop has been in the securities industry since 1996 and previously worked at six different brokerage firms including Kalos Capital and Kalos Management (2009-2019), Wachovia Securities, LLC (2008-2009), and Bank of America Investment Servcies, Inc. (2204-2008). Joseph Roop is accused of selling GPB private placements.

As previously reported on this blog, the Wolper Law Firm, P.A. is currently representing investors across the country in the recovery of their investment losses in GPB Capital Holdings due to the inappropriate investment advice of their Financial Advisors and brokerage firms. Due to the volume of mounting litigation, it is imperative that investors act now or they may find themselves without a source of recovery. Many of the brokerage firms that sold GPB have finite resources and insurance coverage and when those funds are gone so too is the opportunity for recovery.
According to publicly available records released by the Financial Industry Regulatory Authority (FINRA) since March 2008, Joseph Roop has been the subject of eight customer complaints alleging sales practice misconduct. The complaints allege the following:

• January 2020—”Mr. Roop failed to conduct reasonable due diligence and recommended an investment strategy comprised of speculative and unsuitable securities pursuant to material misrepresentations and omissions offered by Cottonwood and GPB Capital Holdings, LLC.” The matter settled for $17,500.
• July 2019—”Client alleges unsuitable investments in alternative securities (REITS, etc.) during the time period 11/2012 to 05/2017.” Alleged damages are $450,000. The matter remains pending.
• October 2018—”Clients allege unsuitable investments and sale of securities by a rep that was not properly registered in the State of Alabama. Approximate time period of all investments was January 2011 – July 2014.” The matter settled for $90,000.
• January 2014—”CUSTOMERS ALLEGE MISREPRESENTATION AND OMISSION OF MATERIAL FACTS AND EXCESSING TRADING FROM DECEMBER 2004 TO MAY 2008. DAMAGES ARE NOT SPECIFIED.” The matter settled for $25,000.
• August 2010—”CLIENTS OPENED ACCOUNT IN 2002 WITH ROOP AND DURING THE COURSE OF THEIR FIVE YEAR RELATIONSHIP, ROOP WAS AT THREE FIRMS (LEGG MASON, BANC OF AMERICA SECURITIES, AND WACHOVIA). CLIENT ALLEGES NEGLIGENT MISREPRESENTATION, FRAUDULENT MISREPRESENTATION, FRAUD IN THE INDUCEMENT, UNSUITABILITY, BREACH OF CONTRACT, AND BREACH OF FIDUCIARY DUTY. ROOP DENIES ALL ALLEGATIONS.” The matter settled for $135,000.
• October 2009—”CLIENT CLAIMS UNSUITABLE EQUITY PRODUCTS DURING THE PERIOD 01/2005 TO 07/2008. DAMAGES UNSPECIFIED.” The matter settled for $38,000.
• February 2009—”CLIENT ALLEGED UNSUITABLE OPTIONS TRADES PLACED IN HIS ACCOUNT. DAMANGES UNSPECIFIED BUT BELIEVED TO EXCEED $5000 (07/18/2008 – 01/20/2009).” The matter settled for $85,000.
• January 2008—”MARKET CRASH IN 2008 CAUSED LARGE LOSSES TO CLIENT’S PORTFOLIO. CUSTOMER CLAIMED SHE WAS UNAWARE OF RISK.” The matter settled for $56,000.
For a copy of Joseph Roop’s CRD, click https://brokercheck.finra.org/individual/summary/2774470#disclosuresSection

GPB Capital Holdings is a New York based alternative asset management firm. GPB Has reportedly raised $1.5 billion from investors across the country through private placement investments in a number of individual limited partnerships, including:
-GPB Automotive Portfolio, LP
-GPB Cold Storage, LP
-GPB Eurobond Finance PLC
-GPB Holdings II, LP
-GPB Holdings, III, LP
-GPB Holdings Qualified, LP
-GPB Holdings, LP
-GPB NYC Development
-GPB Scientific, LLC
-GPB Waste Management, LP formerly: GPB Waste Management Fund, LP.

Over the last several months, the GPB family of funds have precipitously declined, leaving investors with large losses. Some of the GPB funds have reported declines of 40%-70%.
Several disturbing revelations have recently surfaced. In a lawsuit filed by a former GPB operating partner, it was alleged that GPB was operating a ponzi scheme. Specifically, in July 2017, GPB Capital Holdings, LLC (“GPB”) initiated a litigation against Patrick Dibre, a former operating partner, in New York State Supreme Court, Nassau County, Index No. 606417/2017 (the, “Dibre Case”). On March 19, 2018, Mr. Dibre filed counterclaims against GPB in the Dibre Case. Mr. Dibre’s allegations, which include allegations against GPB Capital Holdings, LLC’s controllers, David Gentile (“Gentile”) and Jeffrey Schneider (“Schneider”), alege the following:

Contrary to GPB’s stated purpose in bringing the instant action against Dibre, the true purpose of this action by GPB is to divert attention away from the fact that the losses occasioned by GPB were in fact caused by a very complicated and manipulative Ponzi scheme.

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Gentile also engaged his father’s accounting firm to perform monthly services that were either never performed or which were overbilled in the approximate amount of $100,000 per month. The performance of those alleged services by a related party was not disclosed to investors at that time.

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Gentile and Schneider also expensed significant personal expenses such as luxury cars, vacations, and private jets to GPB or dealerships. One of those expenses totaled $550,000 for use of an airplane for the month of August 2017.

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Gentile and Schneider recorded the purchase price of the dealerships that they purchased from Dibre at several million dollars more than the combined actual purchase price, closing expenses, and working capital investment. They then directed those additional monies back to themselves, or entities in which they held in interest, as acquisition fees.

In addition, in July 2019, David Rosenberg, a chief executive of Prime Automotive Group, filed another lawsuit against GPB in Massachusetts Superior Court, alleging a “massive securities fraud” in which it used money from investors to prop up the performance of auto dealerships it owns, as well as to finance payments to other investors.

Separate and apart from the lawsuits, there are pending governmental and regulatory investigations:
• In September 2018, the Massachusetts Secretary of the Commonwealth announced that it was launching an investigation into the 63 securities broker-dealer firms that sold partnerships controlled by GPB.
• In December 2018 it was reported that the Securities and Exchange Commission as well as the Financial Industry Regulatory Authority, or FINRA, launched investigations into GPB.
• On February 28, 2019, the FBI made an “unannounced visit” to GPB’s office in New York. Following the visit, a spokesperson for GPB announced that the firm was cooperating with the investigation.
More recently, in October 2019, a class action lawsuit was filed in the United States District Court for the Western District of Texas (the “Texas Action”). In the Texas Action, the class plaintiffs allege the following:
• “While deceiving investors into believing they were earning 8% annual return, Defendants attempted to mask the inevitable failure of the partnership by telling the Class that they would receive on a regular and continuous basis payments “fully covered from funds from operations” and from “healthy cash flows” in an amount of 8% annualized. Indeed, as late as 2019, Defendants continued to represent that distributions were being based upon “performance results.” This was all a lie. GPB played a game with the limited partners. Almost all (i.e., more than 95%) of the distributions made to limited partners from GPB and its affiliates were simply returns of the limited partners’ own capital. There was no 8% operational income, only losses.”

• The complaint further alleges that GPB failed to register some of the larger funds in violation of the Securities and Exchange Act of 1934.
On May 27, 2020, William Galvin, the Commissioner of the State of Massachusetts Securities Division, filed an enforcement action against GPB Capital Holdings, LLC. A copy of the Complaint can be accessed by clicking https://www.sec.state.ma.us/sct/current/sctgpb/2020-5-27-MSD-GPB-Complaint-E-2018-0100.pdf.

The Complaint is a scathing commentary on the business practices of GPB, which have been well documented by the Wolper Law Firm, P.A. over the last year. According to the Massachusetts Complaint, GPB made material misrepresentations to investors by promising them 8% investment returns paid solely from operational capital and revenue. These representations were reinforced in private placement memoranda and marketing materials. However, as GPB continued to aquire new investors, it failed to deploy the capital into new business ventures. Instead of suspending investor dividends until such time as the capital could be deployed in order to generate revenue for the various GPB funds, GPB continued to pay dividends to investors. Because the revenue of the GPB funds was less than their distribution requirements, the dividends were paid with investor capital. Consequently, without a rapid appreciation of profits and revenue, GPB was completely reliant on new investor capital to meet its dividend requirements.

All along, GPB continued to represent in marketing materials and financial reports that it was paying dividends from operational capital and revenue. In 2018, GPB casually changed language within a revised private placement memorandum to reflect that it may elect to use investor contributions to pay dividends without disclosing that it had been doing it all along.
As set forth in the Massachusetts Complaint, between 50% and 100% of investor distributions were paid by GPB’s three largest funds by using investor contributions. These statistics reinforce the conclusion that GPB is nothing more than a ponzi scheme.

The time for investors to recoup their losses is closing. Many of the brokerage firms that sold GPB to investors are small operations with minimal revenues and may become insolvent, rendering them unable to pay an arbitration award.

The Wolper Law Firm, P.A. represents investors nationwide in securities litigation and arbitration on a contingency fee basis. Matt Wolper, the Managing Principal of the Wolper Law Firm, P.A., is a trial lawyer who has handled hundreds of securities cases during his career involving a wide range of products, strategies and securities. Prior to representing investors, he was a partner with a national law firm, where he represented some of the largest banks and brokerage firms in the world in securities matters. We can be reached at 800.931.8452 or by email at mwolper@wolperlawfirm.com.

Attorney Matthew Wolper

Attorney Matthew WolperMatt Wolper is a trial lawyer who focuses exclusively on securities litigation and arbitration. Mr. Wolper has handled hundreds of securities matters nationwide before the Financial Industry Regulatory Authority (FINRA), American Arbitration Association (“AAA”), JAMS, and in state and federal court. Mr. Wolper has handled and tried cases involving complex financial products and strategies ranging from traditional stocks and bonds to options, margin and other securities-based lending products, closed/open-end mutual funds, structured products, hedge funds, and penny stocks. [Attorney Bio]