SEC Charges Framingham Man in $16 Million Fraud Scheme

The United States Securities and Exchange Commission Friday, Jan. 10 filed charges against a Framingham man and several investment advisers alleging misappropriation of at least $16 million belonging to an investment fund managed by some of the defendants.

Charged were

• Daniel Thibeault, 40, of Framingham
• Graduate Leverage, LLC, an asset management and financial advisory firm based in Waltham, of which Thibeault is the principal owner, president and Chief Executive Officer;
• GL Capital Partners, LLC, an investment adviser based in Waltham, that is controlled by Thibeault;
• GL Investment Services, LLC, an investment adviser based in Waltham, that is indirectly owned by Thibeault; and
• Taft Financial Services, LLC, which is based in Texas and is believed to be controlled by Thibeault.

The SEC’s complaint alleges that GL Capital Partners, LLC and its principal, Thibeault, were the investment advisers to a fund called the GL Beyond Income Fund, and that they misappropriated at least $16 million of the money that belonged to this fund.

According to theSEC complaint, the GL Beyond Income Fund’s assets consisted primarily of individual variable rate consumer loans.

According to the complaint, Thibeault and other defendants solicited investments in the GL Beyond Income Fund by representing that investors’ money would be pooled and used to make or purchase consumer loans. These consumer loans would then constitute assets of the GL Beyond Income Fund, and would provide a return to the investors when interest and principal payments were made on the loans.

The SEC alleges that from at least 2013 to the present, Thibeault and other defendants engaged in a scheme to create fictitious loans to divert investor money from the GL Beyond Income Fund, and to report these fake loans as assets of the GL Beyond Income Fund, thereby concealing the fact that Thibeault and the other defendants had misappropriated millions of dollars from the GL Beyond Income Fund.

According to the SEC’s complaint, the scheme involved the fabrication of paperwork purporting to reflect numerous six-figure consumer loans using the names and personal information of individuals who were unaware that loans were being originated in their names.

The complaint further alleges that money from the GL Beyond Income Fund was disbursed to fund these fictitious loans, but the borrowed money did not go to the purported borrowers whose names appeared on the documentation. Instead, it went to Thibeault and other defendants.

The SEC alleges that Thibeault and other defendants misappropriated the money from these fake loans and used it for personal expenses and to run businesses other than the GL Beyond Income Fund, as well as to perpetuate the scheme by making “interest payments” on fake loans.

In Sept. 2014, the funds had about $40 million.

In Dec. 2014, Thibeault was charged with one count of securities fraud. That charge accused the Framingham man of falsifying loans. The charging statute provides for a sentence of no greater than 20 years in prison, three years of supervised release, and a fine of $5 million. Actual sentences for federal crimes are typically less than the maximum penalties.

The SEC alleges that the defendants violated sections of the U. S. Securities Exchange Acts.

The SEC seeks permanent injunctions, disgorgement of ill-gotten gains plus prejudgment interest, and civil penalties against each of these defendants.

The SEC also charged two other parties as relief defendants based on their receipt of investor funds: GL Advisor Solutions, Inc., a corporation based in the Philippines that is controlled by Graduate Leverage, LLC and Thibeault; and Shawnet Thibeault, who is Daniel Thibeault’s wife.

The SEC seeks disgorgement plus prejudgment interest from these relief defendants.

In addition, the SEC has asked the court to consider certain preliminary relief against the parties, including, variously, temporary restraining orders, preliminary injunctions, asset freezes, an accounting of investor funds and all assets in their possession, a prohibition from soliciting or accepting additional investments, and other preliminary relief.