Brad Heppner, the founder of Dallas-based financial services startup Beneficient, was arrested by federal authorities on Tuesday on multiple fraud charges, federal prosecutors announced this week.
The charges relate to an alleged scheme that was orchestrated by Heppner as part of a plan to extract for himself more than $150 million from another financial company, according to the U.S. Attorney’s Office of the Southern District of New York.
Heppner was arrested in Dallas, and the case will be heard at a federal court in Manhattan.
Prosecutors say Heppner used a shell company called Highland Consolidated Limited Partnership (HCLP) to perpetrate the fraud on GWG Holdings, a Dallas-based firm that later filed for bankruptcy, by exploiting the close ties between GWG and Beneficient. Heppner, along with leading Beneficient, served as chairman of GWG and also controlled HCLP.
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According to prosecutors, Heppner created a $141 million debt that Beneficient purportedly owed to HCLP. He then allegedly convinced GWG’s board to make investments in Beneficient, in part to pay off the debt, while ultimately siphoning money for himself.
“As alleged, Heppner abused his role as a public company executive to loot the company and to funnel money into his own pockets,” U.S. Attorney Jay Clayton said in a statement.
“When executives like Heppner lie and cheat to enrich themselves at the expense of everyday investors, they corrupt the integrity of our public markets.”
Heppner is facing charges of securities and wire fraud, false statements to auditors and falsification of records, among others. Together the charges carry a maximum penalty of decades in prison.
Heppner’s legal team could not immediately be reached by The Dallas Morning News, although a lawyer for Heppner declined to comment on the charges to The Wall Street Journal, the newspaper reported.
Beneficient, which is based in downtown Dallas, issued a statement on Wednesday that sought to distance the financial company from its former chairman and CEO.
“As previously disclosed, Beneficient parted ways with Mr. Heppner earlier this year promptly after the company learned of clear and credible evidence of his fraud on the company and others,” the statement said.
Beneficient “will continue to vigorously pursue its own potential claims” against Heppner and is cooperating with the government’s investigation, the statement added. “The company believes these recent developments mark an important step toward ultimately closing this chapter.”
‘Hundreds of millions of dollars’
The alleged financial scheme dates back several years. After GWG took a stake in struggling Beneficient in 2018, Heppner assumed control of GWG the following year by acquiring the interests of its founding shareholders, according to the indictment.
Prosecutors allege that Heppner then installed himself as GWG’s board chairman and appointed his associates as GWG’s new board members and CEO, an arrangement that ultimately facilitated a multiyear fraud under which Heppner manipulated GWG into paying down large amounts of debt that appeared on Beneficient’s books.
In May of 2019 — soon after Heppner took control of GWG — Heppner caused one $65 million transfer from GWG to Beneficient, according to prosecutors, and over roughly the next two years convinced GWG to approve a total of approximately $300 million in transfers between the companies.
“Of the hundreds of millions of dollars that GWG transferred to Beneficient, Beneficient paid more than $150 million to HCLP,” the shell company, the indictment says.
“Those funds did not remain with HCLP. They flowed through HCLP to several entities and trusts under the control of Bradley Heppner.”
Along with his purchase of a 1,500-acre ranch in East Texas, Heppner used the money from the scheme to pay for more than $50 million in work on the ranch and another mansion, more than $10 million on personal credit card expenses and private air travel and more than $500,000 on jewelry, according to the filing.
Heppner, whose previous roles included stints at Bain and Co. and Goldman Sachs, founded Beneficient as an alternative assets investment company that would serve a particular niche: providing wealthy Americans with quick cash, The News reported in 2018.
“People die and their estate needs money,” he said at the time. “People get divorced and need to split assets.”
The company went public in 2023, five months after GWG declared bankruptcy and defaulted on more than $2 billion in debt following a Securities and Exchange Commission investigation. The company’s investors suffered over $1 billion in losses.
