GWG’s Heppner hires Puff Daddy’s attorneys as criminal sentencing looms

Convicted felon Bradley Heppner, former chairman of GWG Holdings and Beneficient, this week saw his criminal sentencing delayed indefinitely and hired all star defense attorneys Alexandra Shapiro and Jonathan Bach for his defense, according to court documents.

Shapiro has represented and defended pop star and clothing designer Sean “Diddy” Combs, also known as Puff Daddy, and cryptocurrency company founder Sam Bankman-Fried in their criminal trials.

Heppner pleaded not guilty to fraud charges but in May was found guilty by a Manhattan jury of four charges: securities fraud, wire fraud, conspiracy to commit securities fraud and wire fraud, and false statements to auditors.

He was scheduled to be sentenced Wednesday in federal court.

U.S. District Judge Jed Rakoff last week approved Heppner’s removal of his former attorney, Benjamin O’Neil and a team of other lawyers from Quinn Emanuel Urquhart & Sullivan representing him. The former GWG chairman reportedly plans an appeal.

Heppner’s sentencing on Wednesday “was adjourned without a new date,” according to a spokesperson for the Southern District of New York.

“When sentencing is supposed to happen, switching attorneys can appear like a delay tactic that is not usually looked upon favorably by a judge,” said Adam Gana, a plaintiff’s attorney who has sued broker-dealers on behalf of clients who bought GWG bonds.

“Court records filed in New York City indicate Heppner’s attorneys at the firm of Quinn Emanuel Urquhart and Sullivan in Washington, D.C., were no longer able to serve Heppner’s interests because of a ‘complete breakdown in communications’ before the sentencing date,” according to an article by the Kansas Reflector, an online local news organization in Kansas, Heppner’s home state.

Heppner faces a maximum sentence of 20 years in prison on each of the counts of securities fraud, wire fraud, and false statements to auditors, and a maximum of five years in prison on the conspiracy count. 

The federal government’s charges against Heppner stemmed from a scheme to fraudulently extract more than $150 million from GWG, which collapsed into bankruptcy in 2022 and left thousands of Mom and Pop investors who bought more than $1 billion of GWG bonds from financial advisors holding the bag.

GWG’s bonds, which were illiquid and did not trade, are now worthless.

According to a federal indictment from a year ago, Heppner, 60, 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 is a financial services company that sought to buy illiquid alternative investments like private limited partnerships and then sell them for a profit. The company last month announced a plan to cut ties, including financial obligations, with Heppner.

Heppner founded and 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.

During the trial, testimony revealed that 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.

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