The U.S. Securities and Exchange Commission (SEC) charged investment adviser GPB Capital Holdings as well as three executives and their related entities for running a Ponzi-like scheme that defrauded more than 17,000 retail investors of $1.7 billion.

The SEC charged GPB Capital’s owner and Chief Executive Officer David Gentile; Jeffry Schneider, the owner of GPB Capital’s placement agent Ascendant Capital; and GBP Capital’s former managing partner Jeffrey Lash of using investors’ own funds to pay distributions rather than placing them toward customers’ investments as well as violating whistleblower protection laws.

The complaint alleges that GPB Capital told investors that distribution payments were paid exclusively with funds generated by its portfolio companies when in reality it used investor money to pay portions of the annualized 8-percent distribution payments.

Additionally, the company also allegedly manipulated financial statements to present the false appearance that the funds’ income was closer to “generating sufficient income to cover the distribution of payments” than it was in reality.

“As alleged in our complaint, the defendants told investors that they would be paid distributions from profits of the portfolio companies when, in reality, many of the payments were being made from the investors’ own funds,” said Richard Best, director of the SEC’s New York Regional Office. “This action shows our continued pursuit of those who deceive investors and conceal their misconduct to reap profits for themselves.”

The state of New York also filed a lawsuit against GPB Capital over the scheme.

“Investors put more than $1.8 billion into GPB funds but were left without a single cent of profit,” New York Attorney General Letitia James said. “GPB and its operators fleeced New Yorkers and investors around the country while subsidizing their own lavish lifestyles.”

The SEC’s complaint also alleges that GPB Capital violated the SEC’s whistleblower provisions by including language in termination and separation agreements that impeded individuals from coming forward to the SEC and retaliating against a known whistleblower.

In a statement, GPB Capital denied the claims and said it acted in good faith when managing the funds of its investors.

“GPB denies these allegations and intends to vigorously defend itself in court where, for the first time, the firm will be able to present significant evidence in its favor,” the company said.