They say that loyalty is easy when it doesn’t cost you anything, but when the going gets tough, you find out the true meaning of the word.

Peppertree Capital Management, the Chagrin Falls-based private equity firm with some $4.8 billion of assets under management, is currently going through one such loyalty test with their support of an embattled and controversial Guatemalan executive named Jorge Gaitán, the former CEO of the telecom tower company Continental Towers, who is currently embroiled in legal trouble in El Salvador.

Under the leadership of Managing Director John Ranieri and Co-President Howard Mandel, Peppertree has excelled in rapidly expanding its portfolio of telecommunications infrastructure investments, including 140 active projects in 12 countries. But one investment by Ranieri and Mandel in Latin America has gone badly awry, with a sprawling legal dispute across numerous jurisdictions and negative headlines of allegedly unsavory conduct by the two Ohio investors.

According to an report published by Inside Towers, Peppertree is accused by majority shareholders of Continental Towers of allegedly using a third-party company to attempt a “squeeze-out merger,” forcing the sale of the company at a depreciated value to themselves. The report notes that the Continental Towers leadership under then-CEO Gaitán, “systematically blocked multiple growth opportunities, including a lucrative contract awarded by Spanish carrier Telefonica to build 200 towers in Guatemala and Nicaragua.”

Throughout the complicated legal dispute between Peppertree Capital and the majority shareholders, Jorge Gaitán as well as COO Carol Echeverria have emerged as key figures, as Ranieri and Mandel have been demanding that they be rehired and compensated after they were fired for alleged misconduct so that they can complete the sale of the company. Their legal efforts have been successful – a AAA arbitration panel has ordered that they be rehired to Continental Towers, while the award was recently upheld by a federal court in New York.

There is one problem however – on February 23, the Prosecutor’s Office of El Salvador filed charges and issued arrest warrants for Gaitán and Echeverria, along with five other individuals. So far, two associates of the pair are already in jail over the alleged fraud, which entailed the embezzlement of $1.2 million dollars in the form of faked checks to cover non-existent travel and other expenses.

John Ranieri of Peppertree Capital however appears to be continuing to stand by the two executives, vigorously defending their integrity before the criminal accusations throughout numerous publicly available legal filings. According to an affidavit filed February 27 before an arbitration panel in the British Virgin Islands, Ranieri insists that Gaitán is merely a victim of harassment and that any fraud or corruption accusations against him are not true.

According to Ranieri’s affidavit, the majority shareholders have “continued to perpetuate a ‘false narrative of misconduct and criminality by’ Company management, including Mr. Gaitan and Ms. Echeverria.”

However it seems that the prosecutors disagree. While the case brought by La Fiscalía General de la República (FGR) focuses on the alleged embezzlement of faked checks by Gaitan, Ranieri’s affidavit points to other potential cases being investigated against the executives.

Ranieri writes: “The Gaitan Letter explains the breakdown of a prior agreement between the Municipality and Collocation El Salvador, which led to a new contract in 2017. Prior to the execution of his contract in June 2017, Mr. Gaitan met with Mr. Roberto d’Aubuisson, the mayor of Santa Tecla, with my full knowledge in my capacity as representative of the Company’s B Shareholders and as a member of the Company’s Development Committee.”

Former Mayor d’Aubuisson also finds himself facing a corruption case accusing him of unlawful enrichment related to telecom towers during his time of mayor.

Ranieri’s acknowledgement of his involvement in the 2017 Gaitan meeting with d’Aubuisson could become a problem if the investigation results in further charges against the former officials involved.

In December 2023, Peppertree Capital Management announced it had raised $1.1bn for its latest digital infrastructure fund, Peppertree Capital Fund X.