DALLAS – An indictment returned by a federal grand jury yesterday in Dallas charges Patrick O. Howard, 36, of Dallas, Texas, with offenses related to his role in a scheme to defraud investors and to obtain money by materially false and fraudulent pretenses, announced Erin Nealy Cox, U.S. Attorney for the Northern District of Texas.
Specifically, Howard is charged with five counts of securities fraud and nine counts of mail fraud.
The indictment alleges that from January 2015 through April 2017, Howard owned Howard Capital and OE Capital located in Dallas, Texas, and exercised authority over the companies and Funds.
Howard represented himself to be a Registered Investment Advisor, and offered and sold membership units to investors for $50,000 apiece. Investors were told the Funds would invest proceeds from unit sales into third-party companies and that the Funds stood to profit when the companies paid revenue interests.
Howard mislead investors by telling them that their investment would earn a 12% minimum annual return, that OE Capital had average earnings of 20%, that investors’ investments and minimum returns were protected by insurance, and that the Funds purchased real estate to mitigate investors’ risk.
Howard mailed investors who elected to reinvest phony quarterly earnings account statements showing their accounts had been credited the minimum preferred return, when they had not. At the same time, investors who chose to receive their quarterly earnings as distributions were actually given Ponzi payments, or monies paid by other investors, rather than actual earnings of the Funds.
The indictment further alleges that Howard never used a single dollar of investor funds to purchase real estate, and used investors’ money on things the investors did not approve or even know of, including, a nearly $20,000 payment to buyout a former business partner and approximately a $225,000 payment to Howard’s personal bank account that was neither salary nor a bonus.
An indictment is merely an allegation and defendants are presumed innocent unless and until proven guilty beyond a reasonable doubt in a court of law. If Howard is convicted, the mail fraud counts carry a maximum statutory penalty of 20 years in federal prison and a $250,000 fine, as to each count.
The indictment also includes a forfeiture allegation that would require the defendants, upon conviction, to forfeit to the U.S. any property traceable to the offense.
The case is being investigated by the Federal Bureau of Investigation and the United States Postal Service. Assistant U.S. Attorney Andrew Wirmani is prosecuting the case.