Initial Decision Release No. 1347

Administrative Proceeding

File Nos. 3-17818 and 3-17819

UNITED STATES OF AMERICA

Before the

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

In the Matter of

GL Capital Partners, LLC, and

GL Investment Services, LLC

Initial Decision on Default

February 5, 2019

Appearances: Marc J. Jones and Kathleen B. Shields

for the Division of Enforcement, Securities and Exchange 

Commission

Before: Brenda P. Murray, Chief Administrative Law Judge

Background

The Securities and Exchange Commission issued orders instituting 

proceedings (OIP) pursuant to Section 203(e) of the Investment Advisers Act 

of 1940 against Respondents on January 30, 2017; the proceedings were 

consolidated on February 17, 2017. GL Capital Partners, LLC, Admin. Proc. 

Rulings Release No. 4609, 2017 SEC LEXIS 496 (ALJ). Following the 

Supreme Court’s decision in Lucia v. SEC, 138 S. Ct. 2044 (2018), the matter 

was reassigned to me to provide Respondents with the opportunity for a new 

hearing. Pending Admin. Proc., Admin. Proc. Rulings Release No. 5955, 2018 

SEC LEXIS 2264, at *2, *4 (ALJ Sept. 12, 2018); see Pending Admin. Proc., 

Securities Act of 1933 Release No. 10536, 2018 SEC LEXIS 2058, at *2-3 

(Aug. 22, 2018). 

I directed the parties to submit proposals for the conduct of further 

proceedings and to consider the items referenced in 17 C.F.R. § 201.221(c). 

GL Capital Partners, LLC, Admin. Proc. Rulings Release No. 6036, 2018 SEC 

LEXIS 2494 (ALJ Sept. 20, 2018). Respondents did not submit proposals. 

The Division of Enforcement responded with a notice on October 5, 2018, in 

which it represented that it tried but was unable to contact Respondents, and 

that the website of the Corporations Division of the Secretary of the 
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Commonwealth of Massachusetts, where Respondents are limited liability 

companies, shows Respondents as having been involuntarily dissolved. 

Respondents were each served with the OIP on March 4, 2017, and 

neither has filed an answer. GL Capital Partners, LLC, Admin. Proc. Rulings 

Release No. 6340, 2018 SEC LEXIS 3248 (ALJ Nov. 16, 2018). Respondents 

have not responded to an order that they show cause by November 26, 2018, 

why their registrations as investment advisers should not be revoked by 

default due to their failures to file answers or otherwise defend this 

proceeding. Id.

Respondents are in default because they each failed to answer the 

allegations, submit proposals for the conduct of further proceedings, or 

otherwise defend the proceeding. 17 C.F.R. §§ 155(a), 220(f). I deem the 

allegations in the OIP to be true. 17 C.F.R. §§ 155(a). In reaching a decision 

I have relied on a record that consists of the information in the OIP and 

filings in the federal court cases against Respondents.1 17 C.F.R. § 201.323.

Findings of Fact

GL Capital is an investment adviser registered with the Commission. 

GL Capital OIP at 1. At the time of the OIP, GL Capital’s indirect majority 

owner was Daniel Thibeault who, as GL Capital’s managing director, 

controlled GL Capital and directed its day-to-day activities. Id. From 

January 2012 until December 17, 2014, GL Capital was the sole investment 

adviser of the GL Beyond Income Fund (GL Fund), a closed-end interval fund 

that focused its investments primarily in consumer debt to young 

professionals.2 Id. 

GL Investment Services (GLIS) is also an investment adviser registered 

with the Commission. GLIS OIP at 1. According to its website, GLIS is “an 

 

1 Factual findings cannot be based simply on a default judgment without 

any additional evidence. Gary L. McDuff, Securities Exchange Act of 1934 

Release No. 74803, 2015 SEC LEXIS 1657, *8-12 (Apr. 23, 2015). It is 

possible to rely on the facts in the criminal complaint to which the person 

controlling Respondents, Daniel Thibeault, pled guilty. Id.

2 “An interval fund is a type of investment company that periodically 

offers to repurchase its shares from shareholders. That is, the fund 

periodically offers to buy back a stated portion of its shares from 

shareholders. Shareholders are not required to accept these offers and sell 

their shares back to the fund.” Fast Answers, Interval Funds, 

https://www.sec.gov/fast-answers/answersmfinterhtm.html.
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independent advisory firm that provides customized wealth management and 

investment management services to clients throughout the United States.” 

Id. Thibeault was GLIS’s indirect majority owner; he owned and controlled a 

number of related investment businesses including GLIS, and he directed 

GLIS’s day-to-day activities. Id. GLIS’s Form ADV dated September 22, 

2014, showed approximately 2,000 clients and $130 million under 

management. Form ADV at Item 5.F, H, https://adviserinfo.sec.gov/IAPD/

content/ViewForm/crd_iapd_stream_pdf.aspx?ORG_PK=152158.

Thibeault graduated from the Harvard Business School in 2004. United 

States v. Thibeault, No. 15-cr-10031 (D. Mass.) (criminal case), ECF No. 1-2 

at 1. He created the GL Fund in March 2012 and was its portfolio manager 

or co-manager until he was terminated in December 2014. SEC v. Thibeault, 

No. 1:15-cv-10050 (D. Mass.) (civil case), ECF No. 30 at 3; Criminal case, ECF 

No. 1-2. 

On January 9, 2015, the Commission initiated a civil action against 

Respondents, Thibeault, and two other companies Thibeault controlled, along 

with two relief defendants. The civil complaint alleged that from early 2013 

through 2014, Thibeault and the investment businesses he controlled 

defrauded investors in the GL Fund by misappropriating at least $15 million 

in Fund investments, using those assets to make about forty fictitious loans 

to third party borrowers, and then falsely reported those fictitious loans as 

assets of the Fund. Thibeault used the proceeds of the fictitious loans to 

operate his businesses, including GLIS, and pay his personal expenses. GLIS 

breached its fiduciary duty to its clients when Thibeault, the head of its 

investment committee, abused the discretionary investment authority its 

clients had given it by investing its clients assets in the GL Fund, from which 

Thibeault was misappropriating assets. GLIS failed to take reasonable care 

with its clients’ money and facilitated the misappropriation of that money by 

directing it to the GL Fund, from which it was appropriated for Thibeault’s 

and GLIS’s purposes. In addition, the complaint alleged that GLIS 

fraudulently overstated its assets under management in its September 2014

Form ADV, and that in an attempt to conceal the fraud at the GL Fund, 

Thibeault, acting for himself and for GLIS, made multiple misrepresentations 

to the Commission’s staff. See GLIS OIP at 2. 

On December 22, 2016, the district court entered final judgments on 

default, which permanently enjoined Respondents from future violations of 

Section 17(a) of the Securities Act of 1933, Section 10(b) of the Securities 

Exchange Act of 1934 and Rule 10b-5 thereunder, and Sections 206(1) and 

206(2) of the Investment Advisers Act of 1940. Civil case, ECF Nos. 195-96. 
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GL Capital was ordered to pay over $16 million in disgorgement representing 

profits gained. Civil case, ECF No. 195.3

On March 3, 2016, Thibeault pled guilty in the parallel criminal case to 

one count of securities fraud in violation of 15 U.S.C. §§ 78j(b) and 78ff(a) 

and 17 C.F.R. § 240.10b-5 and one count of obstruction of justice in violation 

of 18 U.S.C. § 1512(c). Criminal case, ECF No. 99. The criminal case was 

based on the same allegations as the civil case. Civil case, ECF No. 32 at 13. 

On June 20, 2016, the court sentenced Thibeault to 108 months of 

incarceration, three years of supervised release and ordered restitution in the 

amount of $15,300,403. Criminal case, ECF No. 132.

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Conclusions of Law

This consolidated administrative proceeding was begun pursuant to 

Section 203(e) of the Investment Advisers Act of 1940, which empowers the 

Commission to take action against any investment adviser that has been 

enjoined by court order from engaging in any conduct or practice in 

connection with the work of an investment adviser if it is in the public 

interest. Advisers Act Section 203(e)(4), 15 U.S.C. § 80b-3(e)(4). The 

undisputed evidence is that the district court in Massachusetts has enjoined 

both Respondents from violations of the federal securities statutes. 

Public Interest

The criteria generally used to determine whether the measures allowed 

by Section 203(e)—censure, limitations on the activities, functions or 

operations of, suspension for up to a year, or revocation of the investment 

adviser registration—are the egregiousness of the respondents’ conduct, 

whether it was isolated or recurrent, the degree of scienter, the assurances 

against future violations and recognition of wrongdoing. Steadman v. SEC, 

603 F.2d 1126, 1140 (5th Cir. 1979), aff’d on other grounds, 450 U.S. 91 

(1981).

 

3 Thibeault consented to a final judgment in the civil action on September 

23, 2016. Civil case, ECF Nos. 133-1, 173. The court ordered disgorgement of 

$15,300,403, representing profits for illegal conduct, but deemed that order 

satisfied by an order of restitution against Thibeault in the criminal case. 

The court did not order a civil penalty against Thibeault in light of his 

sentence of imprisonment. 

4 Thibeault settled with the Commission and received an associational 

bar. Daniel Thibeault, Advisers Act Release No. 4419 (June 10, 2016).
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Egregious and recurrent conduct demonstrating scienter

There is no doubt but that Respondents conduct was egregious. 

Thibeault acknowledged that he committed securities fraud in connection 

with the same conduct underlying the civil case against Respondents and 

obstructed justice knowingly, intentionally, and willfully. Criminal case, 

ECF No. 99. Securities fraud and obstruction of justice necessarily require 

scienter. Thibeault’s illegal conduct through Respondents and other entities 

began in approximately February 2013 and continued into 2014. Id. at 2. 

Thus, Respondents’ conduct was recurrent. The fact that GL Capital was 

ordered to disgorge over $16 million shows the considerable damage to 

investors. Respondents’ status as investment advisers that owed a fiduciary 

duty to clients exacerbates the situation and mandates that the Commission 

act to the fullest extent possible to protect the public. See SEC v. Capital 

Gains Research Bureau, Inc., 375 U.S. 180, 186 (1963). 

Assurances against future violations and recognition of wrongdoing

Respondents chose not to participate in this administrative proceeding so 

there are no assurances against future violations or recognition of 

wrongdoing. 

Review of the record shows that Respondents’ conduct orchestrated by 

Thibeault merits registration revocation, the most severe sanction, to protect 

the investing public. 

Sanction

Pursuant to Section 203(e) of the Investment Advisers Act of 1940, I 

REVOKE the investment adviser registrations of GL Capital Partners, LLC 

and GL Investment Services, LLC.

A party may file a petition for review of this initial decision within 

twenty-one days after service of the initial decision. 17 C.F.R. § 201.360(b). 

A party may also file a motion to correct a manifest error of fact within ten 

days of the initial decision, pursuant to Rule of Practice 111. 17 C.F.R. 

§ 201.111. If a motion to correct a manifest error of fact is filed by a party, 

then a party shall have twenty-one days to file a petition for review from the 

date of the order resolving such motion to correct a manifest error of fact. 

This initial decision will not become final until the Commission enters an 

order of finality. The Commission will enter an order of finality unless a 

party files a petition for review or motion to correct a manifest error of fact or 

the Commission determines on its own initiative to review the initial decision 

as to a party. If any of these events occur, the initial decision shall not 

become final as to that party. 
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A respondent has the right to file a motion to set aside a default within a 

reasonable time, stating the reasons for the failure to appear or defend and

specifying the nature of the proposed defense. 17 C.F.R. § 201.155(b). The 

Commission can set aside a default at any time for good cause. Id. 

_______________________________

Brenda P. Murray

Chief Administrative Law Judge