PHOENIX — The Arizona Corporation Commission (ACC) has revoked the investment adviser license of a Scottsdale man, Luke M. Johnson, following allegations of securities fraud related to his involvement with GPB Capital, a New York-based investment firm accused of running a Ponzi scheme. Johnson’s affiliated company, Legend Capital Group, Inc., was also implicated in the case.
As part of the ruling, the ACC ordered Johnson and Legend Capital to pay $229,241 in restitution to defrauded investors and levied a $20,000 administration penalty.
According to regulators, many of the individuals who were misled by Johnson’s fraudulent activities were Arizona residents.
How Did Johnson Commit Securities Fraud?
Johnson allegedly advised his clients that limited partnership interests in GPB Capital were solid, safe, or low-risk investments, despite knowing they were highly speculative and carried significant risk. The ACC also found that Johnson continued to solicit new investors after becoming aware that GPB Capital was under investigation for operating a Ponzi scheme.
The case against Johnson is part of a larger legal battle involving GPB Capital. In August 2024, a federal jury in Brooklyn convicted GPB Capital’s owner and CEO, David Gentile, on multiple charges, including conspiracy to commit securities fraud and wire fraud. Gentile faces up to 20 years in prison.
For GPB Capital investors seeking restitution, the U.S. Securities and Exchange Commission (SEC) is working to appoint a receiver to oversee the distribution of assets. More information about the process can be found on the GPB Capital website at www.gpb-cap.com.
This case serves as a reminder for investors to thoroughly vet financial advisers and the products they recommend, especially when presented with high-return, low-risk opportunities.
