A Connecticut investment advisor is expected to pay more than $6 million in restitution after pleading guilty to tax evasion in connection with an embezzlement scheme.
Jeffrey Arsenault, 63, of Greenwich waived his right to be indicted and pleaded guilty on Wednesday during a hearing in federal court in New Haven, according to the U.S. Attorney’s Office for the District of Connecticut.
Federal officials said Arsenault was the managing member and majority owner of Old Greenwich Capital Advisors LLC, which is the investment manager of Old Greenwich Capital Partners LP, a private equity fund of funds.
Between 2013 and 2022, OGCP received investment distributions of at least $9.1 million, which should have been distributed to its investors, reinvested or used to pay “authorized” expenses, authorities said. Officials allege Arsenault used about $5.2 million of the funds for personal expenses or “other unauthorized” expenses, including those for college tuition and golf club dues.
From 2019 to 2022, Arsenault also received about $2.2 million in net income through OGCA by performing consulting services for third party investment firms, officials with the U.S. Attorney’s Office said. Officials said he was entitled to 70% of the net income based on his partnership agreement but chose to keep all of it and use the money for personal expenses.
From 2013 to 2016, Arsenault failed to report income from his embezzlement scheme on his individual federal income tax returns, which saved him about $1.1 million in taxes that would have been due, federal officials said. From 2017 through 2022, Arsenault allegedly failed to file any individual tax returns, which spared him about another $1 million in taxes, officials said.
To conceal the misappropriation of investor funds, officials allege that Arsenault between 2017 and 2020 booked false intercompany loans between OGCA and OGCP, which caused both groups to file false Forms 1065 and provide Arsenault false Schedule K-1s, authorities allege.
Between 2019 and 2022, Arsenault allegedly “mischaracterized and concealed” financial activity from his accountants, including deposits and wire transfers into his personal bank account, which led to them preparing false accounting records and tax returns for OGCA, according to officials.
As part of the deal he took, Arsenault has agreed to pay about $2.1 million of restitution to the IRS and an additional $4.6 million to the victims through a civil case, officials said. He is free on $50,000 bond pending sentencing, which has not been scheduled. He faces a maximum of five years in prison.