North Texas venture capitalist Patrick O. Howard is a sharp-dressed resident of McKinney, but probably not for too much longer.
Howard, who is 49 and the owner of Howard Capital and OE Capital of Dallas, pleaded guilty Tuesday via video teleconference to running a Ponzi-type scheme and defrauding investors out of millions of dollars in 2015, 2016 and 2017.
Prosecutors with the U.S. Attorney’s Office in the Northern District of Texas said Howard recruited more than 100 investors to purchase $13 million in securities by making false promises and providing the investors with phony account statements.
Howard faces up to five years in prison at his upcoming sentencing on March 4.
According to documents filed by assistant U.S. Attorney Andrew Wirmani, Howard falsely promised investors 12% annual returns and misled investors by telling them that OE Capital had average earnings of 20% a year.
Howard also misled investors when he told them that the funds, called Insured Liquidity Partners CGF I, Insured Liquidity Partners CGF II and Capital Ventures, depended on “insurance based assets purchased to offset company underperformance,” court records show.
Investors who chose to be paid their quarterly earnings instead of having those funds be reinvested were paid out of the investments of later investors, according to documents.
Wirmani is also the lead prosecutor in the case against the Forest Park Medical Center doctors and administrators.
Court records filed in a companion case against Howard by the U.S. Securities and Exchange Commission show that Howard lied about being a registered investment advisor and about not paying sales commissions.
An article about Howard’s investment funds in the Dallas Business Journal said he targeted young and middle-aged investors who earned between $100,000 and $150,000 a year.
“This defendant repeatedly lied about his funds’ performance, inducing investors – including several retirees – to turn over considerable sums of money that he then squandered,” said U.S. Attorney Erin Nealy Cox. “The Northern District of Texas is committed to investigating and prosecuting financial fraud.”
Howard is represented by Dallas criminal defense attorney John Teakell, who is a former federal prosecutor and a former trial lawyer with the SEC. Efforts to obtain a comment from Howard were unsuccessful.