Beneficient, GWG boss spent $59 million on home improvements during time of alleged fraud scheme

Bradley Heppner, the founder and CEO of Beneficient Company Group and chair of GWG Holdings Inc., and his lavish spending were on display in his fraud trial Wednesday in federal court in lower Manhattan.

For years, Heppner spent with a free hand on home improvements for his residence in an affluent Dallas neighborhood, eventually laying out $59 million on the eight bedroom, 12 bathroom, 22,000 foot Tudor-styled mansion, according to testimony Wednesday at his fraud trial in federal court in Manhattan.

Around the same time, Heppner was spending close to $1 million each week personal expenses and building the house, using company money transferred to his personal trust accounts, according to testimony from a Beneficient employee.

According to a federal indictment from last October, Heppner received more than $150 million in payments through funneling money from GWG Holdings to a shell company, Highland, he controlled at the Dallas-based Beneficient. 

He faces five charges: securities fraud, wire fraud, conspiracy to commit securities fraud and wire fraud, false statements to auditors, and falsification of records.

Heppner, 59, appeared calm Wednesday in court, wearing a gray sports coat, black trousers, white shirt and green tie.

Refurbishments on the home in the Turtle Park neighborhood began in March 2018 and lasted four and a half years, according to Thomas Ford, Heppner’s builder. The original budget for the mansion’s improvements was close to $34 million, Ford said, so the project was about $25 million over budget.

Heppner, who owned other properties, also was in charge and closely involved in the project, showing up at the building site each day, Ford said.

At one point the contractor called characterized the project, which employed an architect, two interior designers and an audio engineer, among others, as a “design as we went along” endeavor.

Federal prosecutors attempted to question witnesses at the trial to the specifics of Heppner’s spending, for example on the amount of marble used in a bathroom at the site. But Judge Jed Rakoff ruled against admitting such details as evidence.

Beneficient was a financial services company that sought to buy illiquid alternative investments like private equity limited partnerships and then sell them for a profit.

Heppner controlled Beneficient; it and GWG became intertwined and related when GWG in 2018 purchased a stake in Beneficient.

With the two companies linked, Heppner became chairman of both in 2019.

About 40 broker-dealers and their financial advisors sold close to $1.6 billion in GWG L bonds, so called because they were backed by life settlements, before the firm declared bankruptcy in 2022, leaving investors in the lurch.

Heppner was focused on rebuilding his mansion at the same time he was engaging in his alleged fraud, according to his federal indictment.

Between 2018 and 2021, he made “false and misleading statements to a special committee of GWG’s board to induce them to authorize investments by GWG in Beneficient, in part to pay off the debt Beneficient purportedly owed to” a shell company Heppner controlled, Highland Capital Limited Partnership, according to the indictment.

“When the special committee inquired about who controlled [Highland Capital], Hepper represented that [it] was independent, disclaimed influence over it, and denied that he would personally receive the payments on the purported debt,” according to the indictment.

Those representations were false and misleading, federal prosecutors claim.

Highland Capital was controlled by Heppner, according to the government. When GWG authorized payments to satisfy what it believed were arm’s length debts owed to a third-party lender, those funds flowed through multiple corporate entities and ultimately to Heppner’s personal accounts.