U.S. Department
of Justice
Press Release
Waunakee Man Sentenced to 84 Months for Fraud Scheme
For Immediate Release
U.S. Attorney's Office, Western District of Wisconsin
MADISON, WIS. - Scott C. Blader, United States Attorney for the Western District of Wisconsin, announced that Patrick O’Connor, 61, Waunakee, Wisconsin, was sentenced yesterday by U.S. District Judge William Conley to 84 months in federal prison for wire fraud and money laundering. O’Connor, a real estate developer and licensed real estate agent, pleaded guilty to these charges on April 4, 2019.
The government’s investigation revealed that between 2011 and 2018, O’Connor solicited funds from several individuals for investment in an entity he created entitled “Madison Financial Services.” As part of his solicitations, O’Connor made various material misrepresentations to investors regarding Madison Financial Services. For example, O’Connor represented that Madison Financial Services would invest all of the investors’ funds into a TradeStation online brokerage account. O’Connor represented that he would use the TradeStation account to actively trade purchased securities and he projected an average annual return on the investment of 2% a month, or 24% annually.
In fact, O’Connor used a large portion of the investors’ funds for his own personal expenses, including expenses related to his real estate development business and to repay other investors. In addition, of the funds that O’Connor actually deposited into his TradeStation accounts and actively traded, he either lost or withdrew the vast majority of the funds and rarely generated any profit.
To further perpetuate the fraud, O’Connor provided investors with purported account statements from their investments with Madison Financial Services. The account statements were fictitious and showed the investors’ supposed year-to-date profits and their supposed current portfolio balance. In addition, O’Connor made Ponzi-style payments to some investors and stated that the money was interest income earned from their investment in Madison Financial Services.
On October 26, 2017, a criminal investigator from the Internal Revenue Service visited O’Connor at his home in Waunakee. During the interview, the investigator questioned O’Connor regarding the particulars of Madison Financial Services and its investments. Specifically, the investigator asked about a $500,000 check from an investor where only $300,000 was transferred into O’Connor’s TradeStation account. Records showed O’Connor used the remaining $200,000 to pay off a real estate loan and for various personal expenses. When pressed to explain the transactions, O’Connor lied to the investigator and stated the investor was also investing in his real estate company. O’Connor also falsely stated that any remaining money used for his own personal expenses came from a fee charged to the client for his services.
In the months following the interview with the IRS investigator, O’Connor continued to solicit people for investments and convinced two investors to provide him with over $1.7 million. In total, O’Connor convinced six investors to invest over $12 million with him. The total loss to the investors once the fraud scheme was revealed was $9,686,848.
In imposing the sentence, Judge Conley stated O’Connor’s Ponzi scheme was “calculated and predatory” and the total amount of money that he stole was “staggering.” Judge Conley noted that O’Connor was living a lie while destroying his investors’ finances, and it was a life full of pride, hubris, and greed. Judge Conley also noted that O’Connor’s decision to take more money from investors after being interviewed by law enforcement was “morally bankrupt.”
The charges against O’Connor were a result of an investigation conducted by IRS Criminal Investigation. The prosecution of the case has been handled by Assistant U.S. Attorney Aaron Wegner.
Updated July 31, 2019
Topic
Financial Fraud
Component