The small financial services empire of Daniel Thibeault, a well-known asset manager who was
arrested earlier this month on charges of securities fraud, continues to unravel as the board of trustees of his fund moved to distance itself from him.
In the latest development, the fund's board blocked him from accessing the fund's assets and severed ties with his investment advisory firm following accusations by the FBI last month that Mr. Thibeault had been creating fictitious loans to siphon money from the fund, known as GL Beyond Income Fund, or GLBFX.
“The trustees have determined that the valuation of the fund's assets may not be reliable,” the three trustees of the fund wrote in a letter to shareholders dated Dec. 18, a week after Mr. Thibeault's arrest.
Mr. Thibeault's arrest and subsequent actions by the board mark the unwinding of what had once at least appeared to be a promising career built around a company, Graduate Leverage, or GL, which he founded in 2003 while at Harvard Business School with the goal of helping provide loans to graduate students.
Mr. Thibeault, who also worked at Goldman Sachs, later diversified GL into an investment advice and asset management business and became an outgoing and prominent member of the alternatives investment industry. He was
frequently quoted in news outlets, including
InvesmentNews, where he contributed blogs, and his money management firm, GL Capital Partners, published
The Annual Report on Liquid Alternative Investments.
“He's real persuasive and a real charismatic guy,” said an investor in the fund who has spoken with other investors and is representing them on a twitter account @FreezeGL. He asked to remain anonymous because of privacy concerns.
“People around him seem to be influenced by him,” the investor added.
An online review of the firm published on the job review site Glassdoor.com from an anonymous former employee echoed the sentiment, saying GL's president was “bright, visionary.”
Initially reached Dec. 16 at an office number, Mr. Thibeault (pronounced tee-bow) said he was meeting with his team and was not available to comment. He did not return a message left at that same number or emails requesting comment for this story. Neither did his attorney, Ian Roffman of Nutter, McClennen & Fish.
It is hard to know how the actual value of the Beyond Income Fund will be determined. It had a portfolio of loans worth around $36 million at one point, but at least $12.6 million of those loans could be fictitious and were taken out through an intermediary Mr. Thibeault controlled, called Taft Financial Services, according to the FBI's complaint.
Another roughly $6.5 million, close to 17% of the portfolio, was invested in private placements through a company called LAOH2 Capital, which claimed to be providing loans to San Miguel Corp. and JG Summit Holdings Inc., two large conglomerates in the Philippines, according to SEC filings. The address listed for LAOH2 Capital
links to a law firm, Marcus Attorneys, in Brooklyn, N.Y.
Neither the two companies nor the law firm returned requests for comment on their relationship with Mr. Thibeault's Fund or LAOH2.
The Beyond Income Fund, however, was not the first fund of Mr. Thibeault's that encountered difficulty.
He had also been running the GL Macro Performance Fund, GLMPX, which invested in a number of different areas, from private placements and closed-end funds to Netflix call options since December 2012. It also had around 10% invested in the LAOH promissory notes as well, according to a December 2013 SEC filing.
GLMPX was liquidated in July, at which point it was down 47% from its original share price of $10 when it was launched. Most of the decline occurred in the final three months.
Following the liquidation, a letter was sent to shareholders promising to make them whole on their losses.
“Regarding your portfolio specifically, this will involve compensation for any losses attributed to your initial investment in the Macro Performance Fund (GLMPX) and a shift to a Separately Managed Account for administration of this strategy going forward,” the letter read.
Neither Mr. Thibeault nor lawyers responded to requests for confirmation of the letter and it is unclear if any money had been paid back.
Around the time GLMPX was liquidated, however, the Beyond Income Fund opened to the public, according to a news release dated July 15.
Still, the three independent trustees of the board, at least two of whom were at Harvard Business School at the same time as Mr. Thibeault and one of whom was a co-founder of Graduate Leverage, said they hope to preserve what value they can.
“The fund's board of trustees is exploring all possible options for preserving the value of the fund's shares and recovering assets,” the trustees, who were also investors, said.
An attorney representing the board, JoAnn Strasser, declined to provide additional comment, citing the ongoing investigations.
Mr. Thibeault does not show up as being registered with the Securities and Exchange Commission or in the Financial Industry Regulatory Authority Inc.'s Central Registration Depository database.
