DALLAS — A McKinney man who ran a Ponzi scheme has been sentenced to five years in federal prison and ordered to pay $13 million in restitution to his victims, according to acting U.S. Attorney for the Northern District of Texas Prerak Shah.
Patrick O. Howard pleaded guilty to securities fraud in November 2020. U.S. District Judge Jane J. Boyle sentenced Howard Thursday and he was taken into custody immediately after the hearing, the U.S. Attorney's Office said in a release.
In plea papers, Howard admitted to running a Ponzi-type scheme, recruiting more than 100 investors to purchase $13 million in membership units for $50,000 apiece, according to the U.S. Attorney's Office.
Howard is the owner of Insured Liquidity Partners CGF I, Insured Liquidity Partners CGF II, and Capital Ventures, LLC, the release said.
His companies promised investors 12% annual returns, paid quarterly, and “insured liquidity.”
The U.S. Attorney's Office said Howard falsely represented himself as a registered investment advisor and promised investors they could not lose money due to insurance that offset poor performance. Howard persuaded one investor to turn over his entire retirement savings, according to the U.S. Attorney's Office.
Instead of properly investing the money, the U.S. Attorney's Office said the companies issued fake account statements and paid investors who elected to receive their earnings quarterly out of the investments of later investors rather than out of the earnings of the fund.
One of the two victims who testified at his sentencing told the judge she lost her daughter’s college savings after investing with Howard, according to the release.
A number of federal agencies investigated the case, include the FBI's Dallas Field Office, the U.S. Postal Inspection Service and the U.S. Securities & Exchange Commission. It was prosecuted by Assistant U.S. Attorney Andrew Wirmani, the U.S. Attorney's Office said.
