Howard Capital and OE Capital

By its Complaint, the SEC alleged as follows:

1. Since February 2015, Howard Capital and OE Capital, which are owned and controlled by Howard, raised more than thirteen million dollars by selling securities in the form of membership units (“Units”) in three Texas limited liability companies: (1) Insured Liquidity Partners CFG I, LLC (“CFG I”), (2) Insured Liquidity Partners CFG II, LLC (“CFG II”), and (3) OE Capital Ventures, LLC (“OE Fund”) (collectively, the “Funds”). Howard operated each company as an investment fund. He offered and sold Units in the funds personally and through sales agents he employed at OE Capital.  He also retained two other firms—C4 Benefits Group, Inc. (“C4 Benefits”), and Trajan Income, Inc. (“Trajan Income”)—paying them a 5% commission to sell the Units.

2. Howard used offering proceeds to fund a radio-advertising campaign to attract investors. The advertisements, along with numerous written offering materials, contained representations that investors would earn a 12% annual return at a minimum. The Funds purportedly generated this return over a three-year investment period by investing in third-party portfolio companies in exchange of a share of the companies’ revenue. Howard Capital, OE Capital, Howard, C4 Benefits, and Trajan Income and sales agents they employed offered and sold the Units in investment seminars, in personal meetings and by telephone and email.

3. In reality, the Receivership Defendants issued investors phony account statements showing returns, which in fact did not exist, and they disseminated written offering materials containing numerous untrue and misleading statements as to material facts, including the following:

a. That investors would receive a minimum return of 12%, paid quarterly. In reality, quarterly cash payments to investors were mostly Ponzi payments—taken from other investors’ contributions.

b. That the Funds achieved average growth of 20%. In reality, the Funds have earned just $33,334 since inception, a growth rate of only 0.25%.

c. That, for CFG II, “the Company is backing the minimum preferred yield and principal with insurance based assets.” In reality, CFG II never purchased any such insurance-based assets.

d. That the OE Fund would pay no sales commissions. In reality, OE Fund paid at least $175,000 in sales commissions.

e. That Howard was a Registered Investment Adviser (“RIA”). In reality Howard was never an RIA.

f. Shortly after the first fund’s inception in early 2015, CFG I’s private-placement memorandum (“PPM”) represented that it would invest 89% of the offering proceeds in third-party companies. In reality, CFG I raised $833,993, but it invested only $50,000 in one portfolio company. Howard used the remaining proceeds to pay himself and expenses unrelated to CFG I’s stated objectives.