News:Harvard-Trained Mutual Fund Manager Convicted of Securities Fraud and Obstruction of Justice | USAO-MA | Department of Justice

Read Time3 Minute, 9 Second
Department of Justice
U.S. Attorney’s Office
District of Massachusetts

Thursday, March 3, 2016

Harvard-Trained Mutual Fund Manager Convicted of Securities Fraud and Obstruction of Justice

BOSTON – A Harvard-trained mutual fund manager was convicted today in connection with a scheme to use a mutual fund’s money to issue fictitious loans.

Daniel Thibeault, 41, of Framingham, pleaded guilty to one count of securities fraud and one count of obstruction of justice.  U.S. District Court Judge Leo T. Sorokin scheduled sentencing for June 16, 2016.

Thibeault was the owner of Graduate Leverage, LLC, an asset management and financial advisory firm he founded while a student at Harvard Business School, from which he graduated in 2004.  Thibeault was also the co-portfolio manager of the GL Beyond Income Fund, a mutual fund launched in March 2012 that, according to its marketing materials and securities filings, purported to invest in loans to individuals who were “less susceptible to economic downturns, such as medical doctors, dentists, veterinarians, attorneys and business owners.”

Beginning no later than February 2013, Thibeault caused the Fund to issue several dozen loans, with values of hundreds of thousands of dollars, in the names of individuals who were his personal friends or acquaintances.  In fact, those individuals had never applied to borrow money from Graduate Leverage, were unaware that the loans had been issued in their names, and did not receive any money.  Instead, the money was diverted from the Fund into a Graduate Leverage operating account and used, at Thibeault’s direction, to pay the operating expenses of Graduate Leverage and its affiliated entities, Thibeault’s personal expenses, and interest on loans Thibeault had previously caused the Fund to issue.  Some of the money was also transferred to Thibeault’s personal bank account.  This use of investor money was contrary to GL’s representations to the Fund’s actual and prospective investors, and was not disclosed to them.  By the time of Thibeault’s arrest in December 2014, more than $15 million – or more than 40 percent of the total assets purportedly held by the Beyond Income Fund – had been diverted as a result of Thibeault’s scheme.

Shortly before Thibeault’s arrest, the Securities and Exchange Commission opened a formal investigation into possible fraud at the Fund, and commenced an unannounced examination at GL’s offices in Waltham.  As part of the examination, the SEC interviewed Thibeault.  At today’s proceeding, Thibeault admitted that numerous statements he made to the SEC during the interview were false and intended to obstruct the SEC’s examination.

The charge of securities fraud provides for a sentence of no greater than 30 years in prison, five years of supervised release and a fine of $5 million.  The charge of obstruction of justice provides for a sentence of no greater than 20 years in prison, three years of supervised release and a fine of 250,000 or twice the gross gain or loss, whichever is greater.  Actual sentences for federal crimes are typically less than the maximum penalties.  Sentences are imposed by a federal district court judge based upon the U.S. Sentencing Guidelines and other statutory factors.

United States Attorney Carmen M. Ortiz and Harold H. Shaw, Special Agent in Charge of the Federal Bureau of Investigation, Boston Field Division, made the announcement today.    The United States Attorney’s Office received valuable assistance from the Securities & Exchange Commission in the course of investigating this case.  The case is being prosecuted by Assistant U.S. Attorneys Stephen E. Frank and Brian A. Perez -Daple of Ortiz’s Economic Crimes Unit.

Financial Fraud
Securities Regulation (SEC)
Updated March 4, 2016
Source: FBI
Robert Williams
Editor in Chief

About Post Author

Robert Williams

This site uses Akismet to reduce spam. Learn how your comment data is processed.

%d bloggers like this: