Beneficient, GWG chair used phony, backdated documents in scheme to defraud millions, founder’s cousin testifies

A childhood friend and distant cousin of Beneficient’s founder, Bradley Heppner, told jurors on Wednesday in Manhattan during Heppner’s fraud trial that, while working for Heppner, he forwarded emails and signed off on a series of documents for a business under Heppner’s control that were false and dated months before he started working for his cousin in February 2019, all to aid Heppner. 

“I didn’t have an understanding what it was,” said Keith Martens, 62, when a federal prosecutor asked about signing an agreement in 2019 to accept the role of trustee of the Highland trust, a business central to the Department of Justice’s claims that Heppner committed securities and wire fraud related to a scheme to steal $150 million.

After working in healthcare sales, Martens testified that Heppner approached him in early 2019 to begin working for him and Highland in order to “sign and execute documents.”

Martens previously had no experience in the financial services industry.

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. 

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, 59, appeared calm throughout the trial in federal court in lower Manhattan yesterday, wearing a blue jacket, tan trousers and light blue shirt and tie. He previously pleaded not guilty to the Department of Justice’s charges.

Martens, who has a non-prosecution agreement deal with federal prosecutors, also testified that he didn’t read entire documents or review documents and emails he signed or approved in his role as manager of various Highland businesses and was given no explanation as to what they meant.

“I trusted they were coming from Brad,” said Martens, who grew up with Heppner in Kansas and is a third cousin to a first cousin of Heppner’s by marriage.

Some of the documents, dated 2017 and 2018, used an email for Martens from a Google Mail – gmail.com – account, but Martens told the jury he didn’t have a gmail.com address until January 2019.

After almost two hours of Martens’ testimony, U.S. District Judge Jed S. Rakoff pressed the witness and asked him why it was acceptable to sign false documents. “Ultimately, I wanted to help Brad with his business,” Martens replied.

Heppner paid Martens $137,000 for his work at Highland; prosecutors showed the jury pay records that reportedly showed Martens working there in 2017, almost two years before he actually did.

Jeffrey Hinkle, referred to by prosecutors as Heppner’s right-hand man and the former treasurer of Beneficient, is scheduled Thursday to testify. Hinkle also has a non-prosecution agreement with the federal government.

Last year’s indictment charged that Heppner repeatedly claimed Highland was independent even though he controlled it and it was acting for his benefit.

Heppner allegedly received more than $150 million in payments from GWG that were purportedly to be used to pay debts incurred by Highland. Heppner used these funds for a variety of expenses, according to the indictment, including $40 million on renovations on a ranch in Texas.

Heppner controlled Beneficient Company Group, an alternative investment firm; 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 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.

Meanwhile, counsel for Heppner on Tuesday told jurors that he did not defraud GWG out of more than $100 million, saying a group of former company insiders are using Heppner as a scapegoat, according to a report in Law360.

“While Heppner is accused of lying to directors, auditors and others in order to cover up the purported fraud, defense counsel Benjamin O’Neil told jurors, Heppner is being set up by former insiders at Beneficient and GWG - led by former board member Sheldon Stein – as a convenient fall guy for the collapse of GWG,” according to the report.

“We all know that when a company goes bankrupt…  everyone is looking for who they can blame,” said O’Neil, according to Law360. “And Bradley Heppner? He’s an easy mark.”