Ousted Prime Automotive Group CEO David Rosenberg has settled a long and contentious lawsuit against his former employer, clearing the way for an $880 million sale of its 27 auto dealerships in the Northeast, including six in Maine.

Houston-based Group 1 Automotive closed on its purchase of the dealerships on Wednesday, the same day Prime Automotive signed a settlement agreement with Rosenberg for $30 million, according to media reports and a Group 1 Automotive news release.

Rosenberg’s father, the late Ira Rosenberg, founded the Prime Motor Group dealership chain in Maine, which later became part of Prime Automotive in 2017. David Rosenberg was named chief executive of the expanded company, which is based in Massachusetts.

But Rosenberg soon complained about financial misdeeds he said he uncovered and exercised an option that allowed him to sell the remainder of his shares to the company. Prime Automotive then fired Rosenberg, and when it failed to fully compensate him for his shares, he filed suit in Massachusetts.

Prime Automotive has been swirling in controversy for years, capped in February when executives associated with its parent company, New York-based investment firm GPB Capital Holdings, were arrested and charged with fraud. David Gentile, the founder, owner and chief executive of GPB Capital Holdings; Jeffry Schneider, the owner and CEO of Ascendant Capital; and Jeffrey Lash, a former managing partner of GPB Capital, all were arrested and charged.

According to the charging documents, GPB Capital had told investors that they would receive monthly distributions totaling 8 percent of their investment annually, from the profits of the dealerships. But instead, prosecutors allege, some or most of the money actually came from funds that new investors were depositing.


A scheme in which funds from newer investors are used to pay older investors is known as a Ponzi scheme and is illegal. It’s named after Charles Ponzi, a con artist operating in the United States and Canada in the 1920s who was caught perpetrating such a scheme.

In all, about 17,000 people invested nearly $1.8 billion in GPB Capital, and money from operations began falling short of the amount needed to pay the monthly distributions in 2015. According to prosecutors, GPB Capital began using new investors’ money to make up the shortfall at that point, similar to a Ponzi scheme, in which new investments enrich longer-term investors and the fund managers.

Prime Automotive also faced pressure from some car manufacturers who reportedly signaled that they intended to end their franchise agreements with some of company’s dealerships in Saco and elsewhere because they believed their contracts were breached when David Rosenberg was fired.

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

That pressure provided the impetus for the company to put its dealerships on the market this summer, and the deal with Group 1 Automotive was announced in September.

Automotive News reported that another Northeastern auto group had bid on some of the dealerships this summer but was turned down by Prime Automotive executives, who said the company wanted to sell all its dealerships in one transaction, a goal they met with the Group 1 Automotive deal.


The deal also included three collision centers, including one in Maine. Group 1 now owns 217 dealerships in the U.S., the United Kingdom and Brazil.

Group 1 Automotive has been on a buying spree, and the company said the purchase of the Prime Automotive dealerships brings its acquisitions in 2021 to 57 franchises and $2.4 billion in acquired annual revenue. It is also selling its operations in Brazil, a deal that is expected to close in the first half of 2022.

Prime Automotive grew out of Prime Motor Group, a small group of Maine dealerships that was launched by Ira Rosenberg in 2006. Rosenberg had previously built a string of dealerships in Massachusetts that he had sold in 1999, also to Group 1 Automotive. After a brief retirement, he started buying dealerships in Maine and was eventually joined by his son.

Ira Rosenberg retired again at age 80 and died two years later.

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