(Reuters) – The founder of a New York money bank that authorities say ran a $ 1.8 billion fraud similar to a Ponzi scheme that flew thousands of investors did not plead guilty to fraud and conspiracy charges on Tuesday.
David Gentile, who until last week was CEO of GPB Capital Holdings LLC, brought his accusation through his lawyer to a five-count indictment at a hearing in Brooklyn federal court.
Bail was set at $ 500,000, secured by Mr. Gentiles home in Manhasset, New York. The married father of four children is not allowed to communicate with GPB investors about criminal cases.
Seven US states and the Securities and Exchange Commission have initiated related civil proceedings.
Mr. Gentile and other defendants, including two individuals, were accused of defrauding more than 1
Investors in GPB funds are allegedly misled into believing that they made profitable private equity investments, when in fact new investors' money was used to provide the 8% annual return promised to previous investors.
Authorities said the individual defendants also diverted investors' money to subsidize luxury for themselves, including a $ 355,000 Ferrari FF for Mr. Gentile.
Ownership of Ferrari was never transferred. to Mr. Gentile, and investors had a loss of $ 183,000 when GPB sold the car after two years, according to New York Attorney Letitia James.
Her office is seeking more than $ 700 million in repayment.
GPB is corresponding. in civil proceedings, but is not a defendant in criminal cases. It has denied allegations it faces, and last week Mr Gentile said he was stepping down as CEO "until the current issues have been resolved."