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U.S. SECURITIES AND EXCHANGE COMMISSION

Litigation Release No. 23718 / January 12, 2017

Securities and Exchange Commission v. Daniel Thibeault, et al., Civil Action No. 15-cv-10050-NMG (D. Mass.)

SEC Obtains Final Judgments Against Entities Involved in Massachusetts Investment Adviser's $15 Million Fund Fraud

On December 23, 2016, the Honorable Nathaniel M. Gorton of the United States District Court for the District of Massachusetts entered final judgments by default against Graduate Leverage, LLC, GL Capital Partners, LLC, GL Investment Services, LLC, Taft Financial Services, LLC, and GL Advisor Solutions, Inc.

These entities were controlled and manipulated by Daniel Thibeault, the individual defendant in this SEC enforcement action filed in January 2015, who misappropriated money from an investment fund that he was managing. The entities have all stopped their former business operations. The final judgments against these companies impose permanent injunctions against future violations of certain antifraud provisions of the federal securities laws and order all but one of them to pay disgorgement and interest, jointly and severally, of approximately $17.1 million.

In its complaint, filed on January 9, 2015, the SEC alleged that Thibeault, GL Capital Partners, LLC, and the other entity defendants, engaged in securities fraud and fraud by an investment adviser. Specifically, the SEC alleged 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 $15 million of the money that belonged to this fund. 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 alleged that beginning in 2013 or earlier, Thibeault and the 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. This scheme was designed to conceal the fact that Thibeault and the other defendants had misappropriated millions of dollars from the GL Beyond Income Fund.

The final judgments against Graduate Leverage, LLC, GL Capital Partners, LLC, GL Investment Services, LLC and Taft Financial Services, LLC permanently enjoin each of them from violating Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, and Section 17(a) of the Securities Act of 1933. In addition, the final judgments against GL Capital Partners, LLC and GL Investment Services, LLC permanently enjoin each of them from violating Sections 206(1) and 206(2) of the Investment Advisers Act of 1940. The final judgments against Graduate Leverage, LLC, GL Capital Partners, LLC, and Taft Financial Services, LLC order each of them to pay, jointly and severally with each other, $17,194,065 in disgorgement and prejudgment interest. The final judgment against GL Advisor Solutions, Inc. orders it to pay $8,929,793 in disgorgement and prejudgment interest. In addition, the final judgments against Graduate Leverage, LLC, GL Capital Partners, LLC, Taft Financial Services, LLC and GL Advisor Solutions, Inc. provide for the payment of the entities' frozen assets to the Securities and Exchange Commission for ultimate distribution to the harmed investors of the GL Beyond Income Fund.

For further information, see Litigation Release Nos. 23654 (Sept. 26, 2016) [Final Judgment Against Thibeault]; 23573 (June 20, 2016) [Criminal Sentencing]; 23488 (Mar. 11, 2016) [Criminal Plea]; 23207 (Feb. 26, 2015) [Criminal Indictment]; 23178 (Jan. 22, 2015) [Entry of Asset Freeze]; 23171 (Jan. 9, 2015) [Civil Complaint].

 

http://www.sec.gov/litigation/litreleases/2017/lr23718.htm


Modified: 01/12/2017