TOPEKA – Democratic Sen. Tom Holland is reiterating his request that state banking regulators suspend operations of the company Beneficient and asking that all legislation tied to their so-called TEFFI, or Technology Enabled Fiduciary Financial Institution.
Legislation creating the foundation of Dallas-based Beneficient’s business model in Kansas was endorsed last year by Gov. Laura Kelly and nearly all members of the Legislature. In the 2022 session, House and Senate members again supported measures building on the state’s relationship with Beneficient.
Established to provide wealthy individuals an opportunity to secure loans against assets not easily converted to cash, the company was the subject of the letter Holland sent to state banking officials last week. In the letter, Holland referenced reporting by The Kansas City Star that raised questions about the broad influence Beneficient executives had on details of the state’s regulatory approach to TEFFIs.
The article pointed to a flurry of campaign contributions to Kelly, Attorney General Derek Schmidt and legislators tied to the formation of the TEFFI.
“You can think of it as Enron comes to the Sunflower state with the dash of Bernie Madoff to boot,” Holland said.
Holland said the inquiry should include Beneficient and GWG Holdings, which was Beneficient’s parent company during the state-required pilot program for the TEFFI. GWG Holdings and company officials are accused in a federal lawsuit of misleading investors and selling hundreds of millions of dollars in bonds now viewed as “worthless” in terms of market value.
GWG Holdings controlled Beneficient until November, when Beneficient was spun off as an independent entity.
Since sending the letter, Holland said he met with the Office of the State Bank Commissioner and after that conversation has concluded the TEFFI legislation is a “Beneficient-directed, Kansas Legislature-created, financial services pay-to-play scheme.”
The Kansas Legislature has purposely and repeatedly gone out of its way to stymie efforts by the OSPC to properly evaluate Beneficient’s TEFFI structure, despite concerns expressed by deputy bank commissioner Tim Kemp in December, Holland said. He said all TEFFI-related legislation must be repealed until the OSPC can do an adequate fiduciary evaluation.
“Once the Beneficient TEFFI passes OSPC muster, only then should the entity be allowed to resume business operations, having gone through a fully-vetted examination process and receiving its charter,” Holland said.
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