Trump lets private equity exec out of prison early
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Illustration: Annelise Capossela/Axios
President Trump last week commuted the seven-year prison sentence of private equity investor David Gentile, who served only 12 days behind bars.
The big picture: Trump isn't pardoning Gentile for his crimes, which included wire fraud and conspiracy to commit securities fraud.
- Instead he's arguing that Gentile isn't deserving of prison time or major fines, with White House Press Secretary Karoline Leavitt claiming that Gentile's trial was a "weaponization of justice" by former President Biden.
Catch up quick: Gentile was CEO of GPB Capital, a private equity firm that primarily acquired auto dealerships and waste-hauling businesses.
- It raised around $1.8 billion for a series of funds between 2013 and 2018. Most, if not all, of that money came from individual investors.
- The pitch was that GPB would seek to provide 8% annual distributions via cash-flows from the underlying businesses, plus via any portfolio company sales.
- But it didn't work. The cash-flows proved insufficient, and GPB eventually began paying out distributions from new investor capital. Prosecutors called it a Ponzi scheme, and also alleged that GPB had fudged performance data when soliciting investors.
Timeline: GPB was raided by the FBI in early 2019, during President Trump's first term. Gentile and two associates were indicted in 2021, with both DOJ and the SEC filing suit.
- One of those associates became a witness for the prosecution while the other remains in prison without a commutation (at least so far).
- Gentile was represented by Matthew Menchel, a onetime DOJ prosecutor in Florida who helped negotiate the notorious plea deal with Jeffrey Epstein.
- The jury took less than five hours to convict, while the judge gave just less than half of the 15-year sentence recommended by prosecutors.
- GPB entered receivership in 2023, with some investors claiming they lost their life savings.
The intrigue: Leavitt argued that GPB had warned investors in 2015 that their capital could be used to pay distributions, which is one year earlier than the DOJ and SEC claim one of the private placement memorandum was amended to include that possibility.
- A White House official shared with Axios a trial exhibit number that is said to include that 2015 disclosure, but we've been unable to locate that exhibit on the docket. The official didn't follow up with more information.
- Attorney Matthew Menchel didn't respond to a request for comment.
The bottom line: The White House hasn't offered an explanation for why Biden would have "weaponized" DOJ aganst Gentile — again, GPB was raided during Trump 1.0 — nor why there wasn't a similar commutation for his co-defendant.
- Go deeper: Trump wields pardons as purest form of power
