William McGlashan quits TPG following federal charges: updated

TPG executive William McGlashan reportedly quit the firm Thursday, March 14, after federal authorities charged him and other wealthy parents of using fraud to get their children into top U.S. universities.

McGlashan said through a spokesperson that he was resigning from the TPG Rise Fund, which he founded and was chief executive, and TPG Growth, where he was managing partner, Reuters reported.

“I will be focused on addressing the allegations that have been presented, and there are aspects of the story that have yet to emerge that I wish I could share,” he said, according to Reuters.

Separately, TPG issued a statement saying it had fired McGlashan, Reuters reported. “We believe the behavior described to be inexcusable and antithetical to the values of our entire organization,” TPG said in a statement, according to Reuters.

TPG had put McGlashan on indefinite leave on Tuesday, March 12. 

McGlashan founded TPG Growth, which has raised four funds, most recently closing Fund IV on $3.7 billion. The growth platform managed more than $13 billion in assets as of December.

He also co-founded and was CEO of TPG’s Rise Fund, an impact investing platform whose board includes heavyweights such as rock star Bono, TPG Founding Partner David Bonderman, LinkedIn co-founder and venture capitalist and Reid Hoffman and eBay founder Pierre Omidyar. The first Rise fund closed on $2.1 billion in 2017. The firm is in market with the second Rise Fund, targeting $3.5 billion.

On March 12, TPG spokesman Luke Barrett issued a statement to Buyouts that said: “As a result of the charges of personal misconduct against Bill McGlashan, we have placed Mr. McGlashan on indefinite administrative leave effective immediately. Jim Coulter, Co-CEO of TPG, will be interim managing partner of TPG Growth and The Rise Fund. Mr. Coulter will, in partnership with the organization’s executive team, lead all investment work for both going forward,” 

It’s not clear if the management change triggered key-man provisions in any of the funds. Barrett did not respond to a question from Buyouts about key-man provisions. Such provisions mean that LPs can immediately end a fund’s ability to invest if the fund loses the requisite amount of contractually designated key executives. Most funds have more than one key executive. 

McGlashan, a resident of Mill Valley, California, could not be reached by Buyouts for comment. He did not respond to a request sent over LinkedIn’s messaging system.

McGlashan is one of 50 people around the country accused in a broad FBI investigation of gaming the system to get their children into top universities. Others charged in the investigation include actress Lori Loughlin, known for her portrayal as Aunt Becky in the sitcom “Full House,” and former PIMCO CEO Doug Hodge. 

At least one venture capitalist was also charged: Robert Zangrillo, founder of Miami-based private investment firm Dragon Global Management. Buyouts sister publication VCJ has the story here.

McGlashan, who was wiretapped talking about the alleged scheme, allegedly conspired with an anonymous accomplice, known as Cooperating Witness 1, to pay $50,000 to have someone correct his son’s standardized ACT Exam after he took it, according to the criminal complaint. He also asked about arranged testing for his two younger children, the complaint alleges.

McGlashan also talked to the confidential witness about setting up a fake athletic profile for his son that would allow him to be accepted into the University of Southern California as a recruited athlete, the complaint said. The witness asked McGlashan for a photo of his son playing some kind of sport with his face visible so he could superimpose an image of McGlashan’s son onto the image of a kicker, the complaint alleges.

This cost of the scheme was $250,000, the complaint said. 

“Okay. Okay. Let me look through what I have. Pretty funny. The way the world works these days is unbelievable,” McGlashan responded, according to a transcript in the complaint. 

Action Item: Read the portion of the affidavit about McGlashan here: FBI affidavit excerpt on McGlashan.

Action Item: Download the full affidavit here: Operation Varsity Blues complaint.

Note: This story was originally published on March 12 with the headline: TPG puts William McGlashan on indefinite leave following federal charges. The story and headline were updated on March 14 with additional information following reports that McGlashan had quit the firm.