(214) 888-3112

Howard Capital and OE Capital

On February 14, 2017, the Securities and Exchange Commission filed suit against Patrick O. Howard, Howard Capital Holdings, LLC and Optimal Economic Capital Partners, LLC, as Civil Action No. 3:17-cv-00420-L in the United States District Court for the Northern District of Texas, Dallas Division.

On that date, The Honorable Sam Lindsey entered his Order Appointing Receiver over the Defendants in the action, appointing W. Craig Stokley as Receiver.  As a result, the Receiver has taken possession of the operations of OE Capital.  Information related to the Receivership relevant to Investors and Creditors is available on this site

Update Feb. 16, 2018:   “Dear Investors: As you may be aware, one of the assets of the Receivership Estate is the inventory of TU Flow bottles. The Receiver is currently soliciting bids for the inventory. If you are aware of any potentially interested parties, please forward the attached bid package to them and/or forward their information so that we can include them in this process. We appreciate your assistance in this regard. Download Bid Package

 

 

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.

 

The Securities and Exchange Commission (“SEC”) filed this case as an emergency action on February 14, 2017.  That same day, the Court entered the Order Appointing Receiver, appointing W. Craig Stokley as receiver over the estates of Defendants Howard, Howard Capital and OE Capital, and freezing the accounts of the Receivership Defendants. (Dkt.  9, 10).

The Receiver reviewed the allegations by the SEC and the evidence presented.  Based on the evidence presented by the SEC and his own independent analysis which included, among other things, interviews of Howard and OE Capital personnel, and review of agreements and records of OE Capital, the Receiver determined that there was no meaningful basis to contest liability, and it was in the best interest of the Investors and the Receivership Entities to agree to the SEC’s proposed interlocutory judgment and permanent injunction as opposed to incurring expenses in a futile effort to defend the case.  Accordingly, the Order and Final Judgment were entered against the Receivership Entities on March 7, 2017 (Dkt. 34 and 36, respectively).

Upon appointment, it was the Receiver’s objectives to: (a) first identify and preserve any and all assets of the Receivership Estate; (b) then identify any continuing financial obligations and make an assessment of those needs and discontinue incurring any new financial obligations that would not maximize the value of the Receivership Estate; (c) conduct an independent review of the SEC’s application for permanent injunction, brief in support, and make a determination as to whether there was any basis to contest liability and, if so, whether spending Receivership Funds to do so would be in the best interest of the Receivership Estate; and (d) investigate the contractual arrangements with third-parties and options related to same.

During the first week of the Receivership, the Receiver took the following initial actions:

(1)       Immediately confirmed that all financial institutions known to hold any Receivership Assets were notified and the assets held with those institutions were frozen;

(2)       Once the financial institution holds were in place, took physical possession of the premises where the Receivership Defendants headquarters were located at 1700 Pacific Avenue in Dallas, Texas, by notifying building management of the Orders, and having the locks changed to the office and U.S. mail boxes;

(3)       Accompanied the process server hired by the SEC to serve the Orders and made introductions to the Receivership Defendants’ staff;

(4)       Conducted initial interviews of the Receivership Defendants’ entire management team; and

(5)       Conducted meetings with and interviews of OE Capital employees to determine the scope, job responsibilities and daily job functions of the employees.

Additional action by the Receiver is identified in the Receiver’s Initial Status Report (Dkt. 40).

SEC v. Howard et. al DOCKET

1 Consent to Proceed before a US Magistrate Judge-201702241112

2 Complaint

3 Certificate of Interested Parties, Disclosure Statement-201702241115

4 Plaintiff’s Ex Parte Motion to Seal-201702241116

5 Motion for Preliminary Injunction-201702141117

6 Brief in Support of Motion for Prelim Inj. Ex Parte TRO, etc.-201702141123

7 Barbara Gunn Certification-201702141125

8 Appendix

8-1 Appendix in Support of P’s Emergency Ex Parte Motion for TRO etc.-201702141442

8-2 Appendix in Support of P’s Emergency Ex Parte Motion for TRO etc.-201702141444

8-3 Appendix in Support of P’s Emergency Ex Parte Motion for TRO etc.-201702241448

8-4 Appendix in Support of P’s Emergency Ex Parte Motion for TRO etc.-201702141452

8-5 Appendix in Support of P’s Emergency Ex Parte Motion for TRO etc.-201702141453

8-6 Appendix in Support of P’s Emergency Ex Parte Motion for TRO etc.-201702141454

8-7 Appendix in Support of P’s Emergency Ex Parte Motion for TRO etc.-201702241455

9 Summons Issued for Patrick Howard-201702141108

10 Order Appointing Receiver-201702151004

11 Order Granting Ex Parte Motion to File Under Seal and Temp Seal Docket and Proceedings-201702151005

12 Order Gratning TRO

13 Plaintiff’s Notice of Status-201702151109

14 Order Unsealing Case

15 Offier’s Return for Howard Capital Partners LLC

16 Officer’s Return for Optimal Economics Capital Partners

17 SEC’s Unopposed Mtn to Enter Agreed Interlocutory Judgment Against Defendant Patrick O. Howard

17-1 Exhibit A to SEC’s Unopposed Mtn re Patrick O. Howard

17-2 Exhibit B to SEC’s Unopposed Mtn re Patrick O. Howard

17-3 SEC’s Proposed Order pertaining to Unopposed Mnt re Patrick O. Howard

18 Jt Mtn to Enter Agreed Interlocutory Judgments against HCH and OE Capital

18-1 Exhibit A

18-2 Exhibit B

18-3 Exhibit C

18-4 Exhibit D

18-5 Proposed Order

19 Order Cancelling Hearing-201702241110

20 Notice of Appearance for KJS-201702281112

21 Receiver’s Unopposed Motion to Allow Initial Payments rel Employee Wages-201702281114

21-1 Proposed Order Granting Motion-201703171114

22 Notice of Appearance of Rachel Riley as counsel for Patrick O. Howard

23 Notice of Appearance of Barrett Howell as counsel for Patrick O. Howard

24 Summons Returned Executed as to Patrick O. Howard

26 Conformed Order Granting Mtn to Allow Initial Payments by Receiver

27 – 1 Exhibit A to Unopposed Mtn for Judgment

27 – 2 Exhibit B to Unopposed Mtn for Judgment

27 Unopposed Mtn for Judgment to Enter Agreed Final Judgment

28 – 1 Exhibit A to Jt Mtn for Judgment of Per Inj re HCH and OE Capital

28 – 2 Exhbit B to Jt Mtn for Judgment of Per Inj re HCH and OC Capital

28 – 3 Exhbit C to Jt Mtn for Judgment of Per Inj re HCH and OC Capital

28 – 4 Exhbit D to Jt Mtn for Judgment of Per Inj re HCH and OC Capital

28 Jt Mtn for Judgment of Per Inj against HCH and OE Capital

29 Application for Admissmion Pro Hac Vice

30 WCS and KJS NOA for Howard Capital and OE Capital

31 Notice of Appearance of Rachel Riley for Bezanson on behalf of POH

33 Order Granting SEC’s Unopposed Mtn to Enter Final Judgment of PI

34 Order Granting Jt Mtn to Enter Final Judgment of Perm Inj

35 Final Judgment Against Patrick O. Howard

36 Final Judgment of Perem Inj against OE Capital Partners

37 Final Judgment of Perm Inj against HCH

38 Unopposed Mtn to Modify and Clarify Order Appt Receiver

39 Conformed Order Modifying and Clarifying Order Appointing Receiver

40 Receiver’s Initial Status Report-201703161510

40-1 Receiver’s Initial Status Report Exhibit A-201703161512

40-2 Receiver’s Initial Status Report Exhibit B-201703161514

40-3 Receiver’s Initial Status Report Exhibit C-201703161514

42 – Brandon McCarth Notice of Appearance for Patrick O. Howard

44 Unopposed Motion to Approve WHRZT Inc’s Offer

44-1 Exhibit A to Unopposed Motion to Approve WHRZT Inc.’s Offer

45 Conformed Order Approving WHRZT, Inc.’s Offer

46 Receiver’s Unopposed Motion to Approve Lease Termination

46-1 Exhibit A to Unopposed Motion to Approve Lease Termination

47 Conformed Order Approving Lease Termination

48 Conformed Order Granting Mtn to Enter Agreed Interlocutory Judgment

49 Conformed Judgment

50 Conformed Order Granting Jtn Mtn to Enter Agreed Interlocutory Judgments

51 Judgment as to Defendant Oe Capital

52 Judgment as to Defendant Howard Capital Holdings

56 Motion to Show Cause-201704191659

57 Brief in Support of Motion to Show Cause-201704191658

58 Appendix in Support of Brief in Support of Motion to Show Cause-201704191657

59 Order on Receiver’s Motion to Show Cause

60 Receiver’s Quarterly Status Report

60-1 Exhibit A to Receiver’s Quarterly Status Report

61 Affidavit of Service on Christine Horne

62 Notice of Appearance of Counsel for Christine Horne

63 Receiver’s Unopposed Motion to Retain Mario Dolan-201705120917

64 Unopposed Motion for Authority

64-1 Exhibit A to Unopposed Motion to Show Authority

65 Receiver’s Quarterly Fee Application

65-1 Exhbit A-1 to Receiver’s Quarterly Fee Application

65-2 Exhibit A-2 to Receiver’s Quarterly Fee Application

65-3 Exhibit A-3 to Receiver’s Quarterly Fee Application

65-4 Exhibit A-4 to Receiver’s Quarterly Fee Application

65-5 Exhibit A-5 to Receiver’s Quarterly Fee Application

65-6 Exhibit A-6 to Receiver’s Quarterly Fee Application

65-7 Exhibit A-7 to Receiver’s Quarterly Fee Application

66 – Soblinskas’s Motion to Expediate Discovery

67 Affidavit of Service on Ronald D. Scherer

68 Response and Objection to Motino to Show Cause filed by Horne

69 Patrick O. Howard’s Response and Objection to Motion for Order to Show Cause

70 James Bell’s Agreed Moton to Withdraw as Attonry for Soblinskas

71 Motion to Extend Time for Soblinskas to File Written Brief

72 Notice of Appearance for Ramon de Jesus Rodriguez re Soblinskas

72-1 Proposed Order73 Motion to Withdraw Movant’s Mtn for Expedited Discovery

73-1 Proposed Order

74 Soblinskas Affidavit of Service

75 Order Granting Mtn to Withdraw Mtn to Expedite

76 Order Granting James Bell’s Withdrawal as Attorney

79 Order Granting Motion for Authority

80 Order Granting Motion to Retain Mario Dolan

81 Receiver’s Omnibus Resp In Supp of Show Cause

82 Appendix to Receiver’s Omnubus Response-201706050847

83 Motion to Resolve Court’s Order to Show Cause re Soblinskas

83-1 Proposed Order

84 Order Granting Joint Motion to Resolve Show Cause Order re Soblinskas

85 Howard’s Motion to Strike Receiver’s Resp-201706091628

85-1 Proposed Order Granting Howard’s Motion to Strike Receiver’s Resp-201706091629

86 Supplemental Document to First Mtn to Strike Receiver’s Omnibus Resp

87-Horne Supp Resp in Opp to Motion to Show Cause

87-1 Ex A Affidavit of Christine Horne

87-2 Ex B

87-3 Ex C

87-4 Ex D

88 Order Granting Receiver’s Quarterly Fee Application

89 Receiver’s Motion to Pay Accounting and Web Design Prof.

89-1 Exhibit A-2

89-2 Exhibit A-5

89-3 Exhibit A-6

89-4 Exhibit A-7

89-5 Proposed Order

90 Defendant Howard’s Motion for Expedited Discovery-201706161951

90-1 Proposed Order Granting D’s Motion for Expedited Discovery-201706161950

91 Howard’s Motion to Seal Response, Obj and Appendix

91-1 Proposed Order

92 Resp & Obj to Howard’s motion for expediated discovery

93 Appendix in Support of Response & Obj

94 Reply Brief of Patrick O. Howard

95 Appendix in Support of Reply Brief filed by Patrick O. Howard

96 Receiver’s Second Quarterly Status Report-201708011233

97 Q2 Receiver’s Fee Application

97-1 – Exhibit A-1 to Q2 Fee App

97-2 – Exhibit A-2 to Q2 Fee App

97-3 – Exhibit A-3 to Q2 Fee App

97-4 – Exhibit A-4 to Q2 Fee App

97- 5 – Exhibit A-5 to Q2 Fee App

97-6 – Exhibit A-6 to Q2 Fee App

98 Q3 Receiver’s Status Report

98-1 Exhibit A to Q3 Receiver’s Status Report

98-2 Exhibit B to Q3 Receiver’s Status Report

98-3 Exhibit C to Q3 Receiver’s Status Report

98-4 Exhibit D to Q3 Receiver’s Status Report

99 – 1 Exhibit A-1

99 – 2 Exhibit A-2

99 – 3 – Exhibit A-3

99 – 4 Exhibit B-1

99 – 5 Exhibit B-2

99 – Receiver’s Third Quarterly Fee Application

100 Unopposed Motion for Authority to Dispose of Certain Receivership Property

100-1 Exhibit A to Unopposed Motion

100-2 Exhibit B to Unopposed Motion

100-3 Exhibit C to Unopposed Motion

101 Conformed Order Granting Motion for Authority to Dispose of Certain Receivership Property

102 Order Granting [98] Mtn Authorization to Pay Accounting and Web Design

103 Memorandum Opinion and Order re Mtn for Order to Show Cause

104 Supplemental Order re Memorandum Opinion and Order

105 Receiver’s Fourth Quarterly Status Report

105-1 Exhibit A to Receiver’s Q4 Status Report

106 Order Placing Sherer on Notice

107 Notice of Receiver’s Intent to Dispose of Certain Receivership Property

108 Notice of Service on Ronald Scherer re Order

108-1 Scherer Confirmation of Service

109 Receiver’s Unopposed Motion to Retain Reid Collins & Tsai LLP as Special Litigation Counsel

110 Exhibit B to Receiver’s Unopposed Motion

111 2018 Q1 Quarterly Report

111-1 Exhibit A to 2018 Q1 Quarterly Report

112- Motion to Withdraw as Counsel for Defendant Patrick O. Howard

112-1 Proposed Order on Motion to Withdraw as Counsel for Patrick O. Howard

113 Conformed Order Granting Motion to Withdraw as Counsel for Howard

114 Mail returned as undeliverable to Patrick O Howard re Order on Mtn to Withdraw

115 Order Granting Receiver Motion to Retain Reid Collins & Tsai LLP as Special Litigation Counsel

116 Conformed Order Granting Receiver’s Mtn to Retain Reid Collins & Tsai LLP

117 Eric D. Madden Notice of Appearance

118 David Thomas Notice of Appearance

119 FM Receiver’s Fee Application (Oct2017 to May2018)

120 Receiver’s Second Quarter 2018 Report

120-1 Exhibit A

121 Order Granting in Part and Denying in Part Mtn for Authorization to Pay Fees

122 Returned Mail to Patrick O. Howard

123 Status Report by Receiver for Third and Fourth Quarter

123-1 Exhibit A to Status Report

123-2 Exhibit B to Status Report

125 Special Order

126 Order Transferring Case to Judge Ada Brown

127 Receiver’s Unopposed Motion to Approve proposed settlement and payment of fees

127-1 Proposed Order

128 – Restricted Document – Order Sealing Unopposed Mtn-201911190856

Docket Text- Sealed Order Granting Sealed and or ex Parte Motion-201912170829

130 Order Granting Receiver’s Unopposed Mtn to Settle with Former Counsel

 

 

 

 

 

 

 

 

The Receiver will provide claim forms for creditors and investors to make claims in the Receivership after determining and seeking collection of the assets of the Receivership Defendants if and when appropriate. Please check this page frequently related to the status of the claims process.

RECEIVER
W. CRAIG STOKLEY

8115 Preston Road, Suite 600
Dallas, Texas 75225
Telephone: (214) 888-3112
Facsimile: (214) 888-3109
cstokley@palterlaw.com

RECEIVER’S COUNSEL
KIMBERLY SIMS

8115 Preston Road, Suite 600
Dallas, Texas 75225
Telephone: (214) 888-3106
Facsimile: (214) 888-3109
ksims@palterlaw.com

Notice to Investors
Your K1s have been mailed to you for the tax years 2015 and 2016 at your address on file with OE Capital. If you do not receive the K1, please contact the Receiver’s counsel, Kimberly Sims, ksims@palterlaw.com or 214.888.3106.