Mere weeks ago, William McGlashan, the founder of TPG’s impact vehicle the Rise Fund and the new face of the institutional impact investment movement, was preaching to the Davos elite about the power of private funds to help end poverty.

Today he’s accused of using his wealth to create an unfair advantage.

Earlier this week McGlashan was among 33 parents indicted over their alleged participation in a US college entrance exam cheating scheme as well as a college recruitment scheme, according to an FBI affidavit.

TPG acted quickly, placing McGlashan on indefinite administrative leave effective immediately the same day and installing TPG co-chief executive Jim Coulter as interim managing partner of TPG Growth and The Rise Fund – not a bad replacement to have on hand to reassure investors.

On Thursday the firm terminated McGlashan’s employment, according to a TPG spokeswoman.

McGlashan’s was not the only swift and dramatic fall from grace in the private investment world. Hercules Capital founder Manuel Henriquez “voluntarily stepped aside” over his alleged involvement.

Let’s be clear: it’s safe to assume anyone working at a private equity firm indicted for fraud would be on their way out in short order. But while Henriquez’s alleged actions are unlikely to cause much blow-back for the private credit arena, the same cannot be said for McGlashan. Rightly or wrongly, those operating in impact investing are held to a higher personal standard, in that the integrity of the still-nascent concept of impact investing is tied to their integrity. Trust is a fragile thing.

And unfortunately for the impact investment world, McGlashan’s indictment is not the first scandal it has faced.

The troubles at Abraaj Group began when reports emerged in February last year that limited partners in its $1 billion healthcare impact fund had hired an auditor to trace money. A year later, and allegations of misuse of investor money have helped push the firm into liquidation.

TPG certainly won’t thank us for mentioning them in the same article as Abraaj. Clearly the two situations are a world apart. TPG is a firm that can suspend one exec and replace them with a respected PE veteran and continue more or less business as usual: no key person event has been triggered and we fully expect fundraising for The Rise Fund’s second vehicle to continue. Indeed, sources close to the firm had confirmed that, having held a first close in February, TPG has smartly given investors the chance to reaffirm their commitments.

Abraaj meanwhile has been brought to ruin by the actions of its founder. But there is one key parallel: both involve alleged conduct – professional in Abraaj’s case, personal in McGlashan’s – viewed as unethical. And it is that which makes it troubling for the impact investing movement at large.

Both firms – and indeed all firms that have brought out impact funds – have borne the brunt of insinuations that the “impact” label is just clever marketing designed to cast buyout barons as saviours of the world. And scepticism is understandable; as U2 frontman Bono himself, who co-leads the Rise Fund with McGlashan, said in an interview with The Wall Street Journal, “there is banana skin all over the floor”. He probably wasn’t expecting this particular banana skin.

That scepticism will continue. But beyond all the theorising about potential effects and what this means for private equity and impact at large, the news of McGlashan’s involvement in this scheme is, simply put, depressing.

Write to the authors: isobel.m@peimedia.com toby.m@peimedia.com