Twin Cities Investment Firm Founder Admits To Fraud
The founder of a Wayzata investment firm recently pleaded guilty to defrauding investors out of more than $2.5 million.
In fact, he admitted in his plea agreement that the scheme defrauded more than 10 victims of up to $7 million, according to Minnesota’s U.S. Attorney’s Office.
Gary Vibbard, who now lives in Florida, founded and led Wayzata-based R. Capital Advisors. In his plea agreement, Vibbard admitted that, between 2008 and 2010, he sold investments in his firm to investors and investment fund managers—but instead of paying profits to investors, he used the funds from new investors to repay earlier ones, according to Minnesota’s U.S. Attorney’s Office.
Specifically, Vibbard pleaded guilty to mail fraud. The U.S. Attorney’s Office said it will recommend a sentence of five years and three months for the crime—adding that Vibbard will also be ordered to pay restitution and may be required to pay a fine, as well. His sentencing hearing has not yet been scheduled.
A Businessweek profile of Vibbard indicates that his career spanned many positions outside R. Capital Advisors. For example, it states that Vibbard had developed a “systematic, three-stage capital-raising process” in 1984 and first used it to raise $100 million from Harvard’s Endowment Fund for an unnamed energy client. Following early successes, Vibbard reportedly realized that his capital-raising process would work in most market conditions and investment sectors and began to use it to support alternative asset fund managers. He also participated in the purchase and restructuring of Spectrum 7 Energy, President George W. Bush’s oil company in Texas, among other things, according to Businessweek.
A 2011 Star Tribune story said that Vibbard filed for Chapter 7 bankruptcy in Minnesota in 2000 as surety for Strategic Capital Holding Corporation and Strategic Capital Partners, just a few years before founding R. Capital Advisors.
Separate from Vibbard’s criminal case, investors in 2011 sued Vibbard, seeking $3 million and accusing him of selling unregistered securities based on exaggerated claims. Subsequent court filings indicate that the case was “dismissed with prejudice as time-barred by the applicable statute of limitations” in 2012.