David Rosenberg reaches $30 million settlement with Primary Automotive Group

Massachusetts-centered Primary Automotive Team, owned by GPB Capital Holdings, reached a $30 million settlement with David Rosenberg, the company’s a person-time CEO.  

Rosenberg lives in Marblehead but oversaw dealerships in the course of New England, including two on Cape Cod. He was fired after blowing the whistle on GPB’s financial mismanagement, and in the approach, uncovering what could be a $1.8 billion Ponzi scheme.  

Rosenberg and his father, Ira, have deep roots and a storied heritage in the automotive marketplace in New England. Ira Rosenberg purchased his initially dealership in 1975, fashioned Ira Motor Group, bought it and then began Prime Motor Group with his son, David. The father-son duo grew the business to 20 dealerships in New England.  

In 2017, the Rosenbergs marketed a majority desire in Key Motor Group to GPB Holdings, an alternate fairness agency, for $235 million. But Rosenberg managed an possibility to sell his remaining fascination, which he tried using to acquire in 2019.   

The settlement very last 7 days cleared the way for GPB Capital Holdings to market Key Automotive Team, a person of the alternative investment firms’ companies. The Group includes 30 dealerships in the imid-Atlantic and New England region. 

Capture up on this tale:Auto dealerships, an financial commitment agency and an alleged $1.8 billion Ponzi scheme

Rosenberg experienced filed a civil lawsuit in Norfolk Outstanding Court docket in July 2019 claiming GPB had engaged in securities fraud, and that he was fired in retaliation for blowing the whistle on the alleged money irregularities. He tried to sell his shares in the corporation but submitted suit alleging he wasn’t thoroughly compensated for the sale. 

The $30 million settlement was great news for Rosenberg, however he couldn’t talk about the particulars of the settlement mainly because of a nondisclosure agreement.

“I’m pretty joyful about the settlement and I’m grateful that that is powering me now,” he mentioned in an job interview Monday.  

New homeowners:Copeland, Scarpellinni obtain Hyannis Chevy, Subaru dealerships

Rosenberg is now increasing a further car small business: He has 6 dealerships less than the DSR Motor Group umbrella. They include Canobie Lake Toyota and Canobie Lake Honda in Salem, New Hampshire Tri-Town Subaru and Tri-City Dodge, Jeep, Ram in Somersworth, New Hampshire: White River Subaru in White River Junction, Vermont: and Jack Chevrolet in Saco, Maine.  

“My father would say, ‘Congratulations. I’m satisfied for you. It is time to shift on,’” Rosenberg mentioned.  

In April, Todd Copeland and Bryan Scarpellinni obtained the Copeland Chevrolet and Copeland Subaru dealerships —  formerly Prime Chevrolet and Primary Subaru dealerships — on Ridgewood Avenue in Hyannis.

The dealerships had been owned by GPB Capital Holdings but when two top GPB  executives were indicted for fraud previously this calendar year, the Key Automotive Team dealerships went up for sale.

Contact Denise Coffey at [email protected] Comply with her on Twitter: @DeniseCoffeyCCT.

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Ousted Primary Automotive CEO settles lawsuit for $30 million, clearing way for dealership sale

Ousted Key Automotive Group CEO David Rosenberg has settled a extensive and contentious lawsuit in opposition to his previous employer, clearing the way for an $880 million sale of its 27 car dealerships in the Northeast, which include six in Maine.

Houston-primarily based Team 1 Automotive closed on its order of the dealerships on Wednesday, the exact day Primary Automotive signed a settlement agreement with Rosenberg for $30 million, according to media reports and a Group 1 Automotive information release.

Rosenberg’s father, the late Ira Rosenberg, founded the Prime Motor Group dealership chain in Maine, which later on became part of Prime Automotive in 2017. David Rosenberg was named main government of the expanded business, which is centered in Massachusetts.

But Rosenberg before long complained about money misdeeds he mentioned he uncovered and exercised an choice that allowed him to promote the remainder of his shares to the business. Prime Automotive then fired Rosenberg, and when it unsuccessful to entirely compensate him for his shares, he submitted go well with in Massachusetts.

Key Automotive has been swirling in controversy for several years, capped in February when executives linked with its parent corporation, New York-dependent investment decision agency GPB Cash Holdings, had been arrested and charged with fraud. David Gentile, the founder, operator and chief executive of GPB Funds Holdings Jeffry Schneider, the owner and CEO of Ascendant Cash and Jeffrey Lash, a previous taking care of spouse of GPB Capital, all have been arrested and charged.

According to the charging files, GPB Cash had instructed buyers that they would receive month-to-month distributions totaling 8 percent of their investment decision on a yearly basis, from the income of the dealerships. But in its place, prosecutors allege, some or most of the revenue in fact came from money that new investors had been depositing.

A scheme in which cash from more recent traders are utilised to pay back more mature traders is known as a Ponzi plan and is unlawful. It is named soon after Charles Ponzi, a con artist functioning in the United States and Canada in the 1920s who was caught perpetrating this sort of a scheme.

In all, about 17,000 people today invested just about $1.8 billion in GPB Capital, and cash from operations started falling quick of the sum desired to pay out the every month distributions in 2015. According to prosecutors, GPB Cash started utilizing new investors’ money to make up the shortfall at that issue, very similar to a Ponzi scheme, in which new investments enrich longer-phrase traders and the fund professionals.

Key Automotive also confronted strain from some automobile suppliers who reportedly signaled that they supposed to close their franchise agreements with some of company’s dealerships in Saco and in other places simply because they considered their contracts have been breached when David Rosenberg was fired.

Toyota and Volkswagen, in distinct, threatened to pull their franchise agreements unless the dealerships were marketed or Rosenberg reinstated.

That force delivered the impetus for the business to place

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