Patrick O. Howard, Ponzi Scheme, Texas 2021

A McKinney man who conned investors out of more than $13 million has pleaded guilty to securities fraud in the Northern District of Texas. Patrick O. Howard, the owner of Insured Liquidity Partners CGF I, Insured Liquidity Partners CGF II, and Capital Ventures, LLC, was charged in June 2018.

According to a statement from the U.S. Attorney for the Northern District of Texas Erin Nealy Cox, Howard repeatedly lied about his funds' performance, inducing investors, including several retirees, to turn over considerable sums of money that he then squandered. The Northern District of Texas is committed to investigating and prosecuting financial fraud.

Howard admitted to running a Ponzi-type scheme, recruiting more than 100 investors to purchase $13 million in membership units for $50,000 apiece. His companies promised investors 12% annual returns, paid quarterly, and 'insured liquidity.' However, instead of properly investing the money, the companies issued phony account statements and paid any investors who elected to receive their earnings quarterly out of the investments of later investors, rather than out of the earnings of the fund.

Howard falsely represented himself as a registered investment advisor and claimed his companies saw 20% annual earnings. Promising that investors could not possibly lose money due to insurance that offset poor performance, the defendant induced at least one investor to turn over his entire retirement savings to the fund.

The Federal Bureau of Investigation's Dallas Field Office and the Postal Inspection Service conducted the investigation, with a parallel investigation conducted by the U.S. Securities & Exchange Commission. Assistant U.S. Attorney Andrew Wirmani is prosecuting the criminal case.

Howard now faces up to five years in federal prison. His sentencing has been set for March 4, 2021.

The case is a stark reminder of the importance of due diligence when investing in unregistered investments. Investors are urged to be cautious of promises of unusually high returns and to thoroughly research any investment opportunity before turning over their hard-earned money.

Source: https://www.justice.gov/usao-ndtx/pr/ponzi-scheme-operator-pleads-guilty-securities-fraud