Securities Fraud and Mismanagement

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guy in handcuffsAs published in on Dec. 16, 2014, a prominent alternative fund manager in Waltham, Mass., was arrested on securities fraud charges last week after the FBI accused him of a fraudulent scheme to divert some $12.6 million from a fund he was overseeing. Daniel Thibeault, chief executive of asset manager GL Capital Partners, was released after posting $700,000 in bail secured by the equity in his house. A court date is scheduled for Jan. 2. Since March 2012, Mr. Thibeault took out fictitious loans to gain access to money in a closed-end interval mutual fund, known as the Beyond Income Fund, according to the testimony of Federal Bureau of Investigation special agent Jennifer Hale Keenan in U.S. District Court for Massachusetts. Mr. Thibeault co-managed the fund, which invested in consumer debt. Around $36.6 million worth of loans had been issued from the fund, of which some $12.6 million was taken out through an intermediary that Mr. Thibeault had created purportedly for borrowing money in the name of friends and associates. The money from the loans made through the intermediary, Taft Financial Services, did not go to individual borrowers, however, but to a GL-controlled bank account, according to Ms. Keenan’s testimony. “[Mr.] Thibeault caused the fund to issue or acquire fictitious loans to individuals who never requested or did not, in fact, receive such loans, falsified or cause to be falsified the documentation related to those loans and used the fictitious loans to divert a portion of the fund’s assets into the operating accounts of GL,” Ms. Keenan said.