Jay Clayton, U.S. Attorney for the Southern District of New York | Department of Justice
Bradley Heppner, the former chairman of GWG Holdings, Inc., was found guilty by a jury on May 7 following a three-week trial before U.S. District Judge Jed S. Rakoff, according to United States Attorney for the Southern District of New York Jay Clayton. Heppner was convicted of securities fraud, wire fraud, conspiracy to commit securities and wire fraud, and making false statements to auditors related to a scheme that extracted more than $150 million from GWG.
The case is significant because it involves fraudulent activity at a publicly traded company whose bonds were sold primarily to retail investors and retirees. Prosecutors said Heppner's actions undermined trust in financial markets and harmed investors.
"A unanimous jury has found former public company CEO and Chairman Bradley Heppner guilty of fraudulently extracting $150 million," said Jay Clayton. "Heppner used shell companies to hide his scheme. When his house of cards began to collapse, he did not come clean. Instead, he doubled down by falsifying emails and backdating documents to lie to the auditors, directors, and the SEC. Our world-leading capital markets are built on trust and transparency. The honesty and candor of C-Suite executives is essential, and this action should send a message: C-Suite executives who breach the public trust will be pursued by the SDNY’s Securities and Commodities Fraud Task Force and our dedicated partners at FBI, vigorously. That is what investors and the American people want and deserve.”
During the trial it was established that between 2018 and 2021 Heppner used his control over GWG Holdings—a Nasdaq-listed financial services firm—to divert funds through a shell company called Highland Consolidated Limited Partnership (HCLP). He fabricated a $141 million debt owed by Beneficient (a subsidiary he founded) to HCLP in order to justify transferring millions from GWG under false pretenses; those funds ultimately ended up in his personal accounts for expenses such as home renovations, private jet travel, and jewelry purchases.
To cover up these actions when questioned by board members or regulators—including after receiving an SEC subpoena—Heppner made misleading statements about HCLP's independence from him personally; he also created backdated documents intended to deceive auditors about this relationship.
Heppner faces sentencing on October 7 before Judge Rakoff with maximum penalties including up to 20 years in prison for each count of securities fraud, wire fraud, or making false statements; conspiracy carries up to five years per congressional guidelines though actual sentencing will be determined by the judge.
Clayton praised both the Federal Bureau of Investigation for its work on this case as well as assistance provided by the U.S. Securities & Exchange Commission.
