Accused alternatives fund manager Daniel Thibeault is fighting back against the Securities and Exchange Commission's request to freeze his assets.
Following criminal and civil complaints filed in recent months in federal court in Massachusetts by the
Federal Bureau of Investigation and the
SEC, Mr. Thibeault made his first counter arguments last week in federal court in Massachusetts in a document that provides some additional details about the case from Mr. Thibeault's perspective.
The SEC and the FBI both accused Mr. Thibeault of devising a scheme to siphon between $12 and $16 million in assets from a roughly $40 million fund he was managing, the GL Beyond Income Fund, through fictitious loans.
Mr. Thibeault, however, said that the SEC “has drawn extraordinary inferences from scant facts, reaching conclusions unsupported by the evidence it provided,” according to a motion filed in opposition to the SEC's request for a temporary restraining order.
“The SEC's request for sweeping and draconian preliminary relief is the latest in a series of overly aggressive and unreasonable actions that the SEC has taken in this matter,” Mr. Thibeault stated in his response.
Mr. Thibeault also said in the court filing that the SEC's civil case and the FBI's criminal proceedings began when he self-reported issues to the SEC on Nov. 26, 2014. At the time, Mr. Thibeault told the SEC that certain employees of the fund's advisor, GL Capital, had resigned and that those employees had alleged that some loans in the fund were improperly made and fictitious.
Mr. Thibeault argued that the SEC's evidence in the case was “insufficient” in proving his alleged role in the purported scheme, although the response did not address the quality of the loans. For example, Mr. Thibeault said he did not have control over an intermediary company, Taft Financial Services, through which the fictitious loans were allegedly made.
He also said that the evidence does not show that he had “'created' the loans or the original loan documentation.” During a hearing, however, attorneys for the SEC argued that the self-report was not the source of their investigation.
The case, however, is still in the preliminary stages and the response was mainly seeking to avoid the asset freeze, which Mr. Thibeault said would have “dire and unwarranted” consequences for his wife, who was also named as a defendant in the SEC's complaint, and his six-year-old son.
In an interview, Mr. Thibeault maintained that there was more to the story that could vindicate him. He said that there were more “nefarious” details about what really happened than what had been revealed thus far in court documents.
He declined, however, to elaborate.
An attorney for Mr. Thibeault, Ian Roffman, did not respond to requests for comment.
Responding to Mr. Thibeault's court motion, however, the SEC provided additional testimony from agents and evidence to corroborate the initial complaint.
“Based on the evidence obtained to date, the commission has shown substantial likelihood that [Mr.] Thibeault has, through the other defendants, orchestrated a scheme in which at least $16 million of investors' money has been misappropriated,” the agency said. “Without the requested relief from this court, [Mr.] Thibeault and the other defendants will continue to violate securities laws.”
Mr. Thibeault has been
removed from his position on the fund's board and the fund has suspended normal operations in light of pending litigation. He has also agreed not to originate any more loans while he remains out on bail. The next hearing in the FBI case has been delayed until February.
A separate civil complaint was also filed on Dec. 30 by the fund's board seeking to recover allegedly diverted funds. The temporary restraining order was still pending as of Wednesday.
