Daniel Thibeault, the ex-CEO of GL Capital Partners, has entered a guilty plea to criminal charges accusing him of bilking fund investors of $15M. According to the Securities and Exchange Commission, Thiebeault used funds that were in the GL Beyond Income Fund to make fake consumer loans.
Meanwhile, investors were led to believe that their money was going toward buying or making real consumer loans. They hoped to make a return from the interest. Instead, the fake loans were reported as GL Beyond Income Fund assets to hide the money that Thibeault was misappropriating.
Thibeault is accused of taking out the fake loans through Taft Financial Services, which was an intermediary that he controlled. The purpose of the fake loans was to divert money from the GL Beyond Income Fund.
It was in January 2015 that the SEC sued Thibeault for securities fraud. The complaint, which also names investment adviser GL Investment Services, made allegations similar to the criminal ones that were filed by the Federal Bureau of Investigation against him. The FBI arrested Thibeault in December 2014, accusing him of diverting about $12.6M from the fund.
The scam started in 2013 after GL started to lose money. Documents for the loans withdrawn through Taft were either missing or had mistakes, including the incorrect birthdates of borrowers. Money was supposedly to go to individual borrowers but instead went to a GL-controlled bank account. In fact, said the FBI, the individuals never asked for or get any of the fake loans that Thibeault executed.
Fund Manager Pleads Guilty To $15 Million Fraud, Financial Adviser, March 14, 2015
Read the SEC Complaint (PDF)