- The former TPG executive Bill McGlashan was charged as part of the wide-ranging college-admissions scandal last month. Following his indictment, the private equity firm said fired him. He said he quit.
- Now, TPG has stripped McGlashan of his fund stakes, which are likely worth millions.
- An internal memo seen by Business Insider described a firm-wide investigation that revealed two other employees who had been in contact with the college admissions consultant at the center of the scandal, both for legitimate college counseling.
- Visit Business Insider's homepage for more stories.
Bill McGlashan was stripped of his job and his passport after being indicted in the wide-ranging college admissions scandal last month.
Now, the former TPG executive has lost his fund stakes, which are likely worth millions, after an internal investigation, which was detailed in a memo seen by Business Insider.
Per Axios, McGlashan lost his stakes in four private equity funds and the first TPG impact investing fund. A TPG spokesperson said he will keep his unvested stake in the firm itself and that TPG is unable to take back other interests, such as money that's invested alongside the private equity funds.
"We believe this to be an appropriate response according to our standards, the trusted relationship we have with our investors and the harm incurred," the TPG representative said in a statement. "The economics recaptured from Mr. McGlashan will primarily be reinvested back into the business to recruit, retain and strengthen the team."
The fallout is likely to take months or years to unwind, as McGlashan's last spokesperson earlier said he plans to fight the charges.
McGlashan's new spokesman could not immediately be reached for comment.
McGlashan, who joined the firm in 2004, is the founder and managing partner of TPG Growth, which makes investments in growth equity and middle-market buyouts. He's also cofounder and CEO of the Rise Fund, an investment fund focused on companies trying to tackle social and environmental issues.
McGlashan was among dozens of parents and coaches indicted by the FBI in an alleged scheme, masterminded by consultant Rick Singer, to get students into elite colleges. He was charged first with conspiracy to commit mail fraud and honest services mail fraud, then later with money laundering.
Within two days after the scandal broke, TPG fired McGlashan - though he said he quit - and hired top law firm Ropes & Gray and accounting firm EY to conduct a "thorough" investigation, per a statement from a TPG representative.
They did not find any evidence that other employees were "implicated in or aware of the conduct alleged in the charges against Mr. McGlashan," according to the statement. "Furthermore, the investigation found no evidence that fund or Firm monies were paid to Mr. Singer or his related entities, and no fraud or systematic misconduct associated with Mr. McGlashan's financial dealings with the funds or Firm."
According to an employee memo on Thursday seen by Business Insider, the investigation found that:
- One employee talked with but did not employ Singer, and two subsequently worked with him for legitimate college consulting.
- In March 2017, McGlashan had introduced members of the firm's private equity fund and its impact fund to Singer for potential investments. The teams decided against investing and had limited contact with Singer afterwards.
- While the firm didn't find any evidence of fraud, when they looked at McGlashan's company finances, they uncovered six expenses totaling nearly $25,000 that were either charged incorrectly to the funds or didn't have the right documentation. TPG is refunding the money to those funds.
Sign up here for our weekly newsletter Wall Street Insider, a behind-the-scenes look at the stories dominating banking, business, and big deals.
McGlashan has been accused of donating $50,000 to a nonprofit "with the understanding" that the college consultant Singer would arrange for someone to administer and then correct his son's ACT at a West Hollywood, California, testing center that Singer "controlled," according to the indictment. His 18-year old son, who, according to the indictment, did not know about the scheme, submitted his ACT score of 34 to Northeastern University in October. His son has withdrawn his college applications, according to the filing.
At a conference last month, TPG co-CEO Jon Winkelried said the original news was "pretty shocking."
"Any time something like this happens, it sort of takes your breath away for a minute," he said. Investors "naturally have a lot of questions. We've undertaken an investigation internally to make sure that none of the things Bill was engaged in were bleeding into the business."
TPG has more than $100 billion in assets, with the growth fund holding $13.2 billion in assets, according to the company's website.
- Read more:
- Brookfield is buying Oaktree and it could create 'a more formidable competitor' to Blackstone in the asset management industry
- 4 top investors give their best predictions for the business in 2019, from the culling of products to new types of private equity deals
- Private equity hiring has never been hotter, with VPs receiving up to four job offers a week and bonuses soaring
- A do-good investing firm founded by Warren Buffett's grandson and a former Gates Foundation exec just raised its first funding round from the world's richest families