NEW YORK (Reuters) - The founder of a New York money manager who authorities said ran a $1.8 billion fraud resembling a Ponzi scheme that fleeced thousands of investors pleaded not guilty to fraud and conspiracy charges on Tuesday. David Gentile, who until last week was chief executive of GPB Capital Holdings LLC, entered his plea through his lawyer to a five-count indictment at a hearing in Brooklyn federal court. Bail was set at $500,000, secured by Gentile’s home in Manhasset, New York. The married father of four is forbidden from communicating with GPB investors about the criminal case. Seven U.S. states and the Securities and Exchange Commission have opened related civil proceedings. Gentile and other defendants, including two individuals, were accused of defrauding more than 17,000 retail investors over several years. Investors in GPB funds were allegedly misled into believing they were making profitable private equity investments, when in fact new investor money was used to provide the 8% annual returns promised to earlier investors. Authorities said the individual defendants also diverted investor money to subsidize luxuries for themselves, including a $355,000 Ferrari FF for Gentile. Title to the Ferrari was never transferred to Gentile, and investors bore a $183,000 loss when GPB sold the car after two years, according to New York Attorney General Letitia James. Her office is seeking more than $700 million of restitution. GPB is a defendant in civil proceedings, but is not a defendant in the criminal case. It has denied allegations it faces, and last week said Gentile was stepping down as chief executive “until current matters are resolved.”