Hercules founder steps down amid college bribery allegations

Manuel Henriquez has voluntarily stepped aside from his duties at Hercules Capital (HTGC) after he and his wife were among the more than 30 parents charged for their alleged roles in a college admissions bribery and money laundering scam dubbed “Varsity Blues” by the FBI.

Henriquez, HTGC’s founder, chief executive and chairman, and his wife allegedly paid to have private proctors assist their two daughters during their ACT and SAT exams to secure higher scores on four separate occasions, and bribed the tennis coach at Georgetown University to accept their eldest daughter as a recruit for a sport she had not played competitively in years.

On Tuesday private equity participants including William McGlashan, founder of TPG’s Rise Fund, were named as defendants in the scandal.

The Henriquez family are alleged to have paid a minimum of $425,000 for these services to the Edge College and Career Network, known as the Key, the organisation at the centre of the FBI’s allegations. The family made these payments directly and through “donations” to the Key Worldwide Foundation, which was allegedly a front for the payments involved in the scandal, according to the complaint.

Henriquez also allegedly used his status as an alumnus at Northeastern University to help another student involved in the conspiracy get into the Boston-based school in exchange for one of his daughter’s test sessions.

HTGC announced he had “voluntarily stepped aside” from the company on Wednesday. The HTGC board elected Robert Badavas as the interim chairman of the board. Badavas was previously the lead independent director for HTGC for 13 years. The board also elected Scott Bluestein as the new chief executive. Bluestein was previously the chief investment officer. Henriquez will remain on the board and as an advisor.

“We have all the confidence in Scott,” Michael Hara, the managing director of investor relations and corporate communication at HTGC told sister publication Private Debt Investor. “The record year we had last year was very much on Scott’s watch. It really is his and the origination team’s collaborative work as much as anyone else’s.”

Hara also said Badavas will make a “great” interim chairman of the board and was the “right choice” for the position based on his long tenure with the company.

“We’re a tight team, which I think makes Hercules such a fun place to work,” Hara said. “Although a distraction, clients will get the same great service and same great products.”

Hercules Capital was founded in 2003 and is based in Palo Alto, California. The business development company focuses on venture debt lending and has more than $1.9 billion in assets under management.