'It’s atrocious:' US Attorney discusses case where victims had life savings destroyed
MADISON (CBS 58) -- Patrick O'Connor is a federal inmate, sentenced to 84 months in prison for a crime kept secret from his family and the victims he took everything from.
"A real personal tragedy, this case was unfortunate, it took advantage of a variety of victims who had their entire life savings destroyed," said U.S. Attorney for the Western District of Wisconsin Scott Blader.
It all started back in 2011.
"The scheme began rather simple and then evolved over time," said Blader.
According to court documents, O'Connor created Madison Financial Services and told investors he could make them 24 percent a year. Instead, he spent a large portion of the money, buying real estate, a boat, and a bulldozer.
The Department of Justice says 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.
"Unfortunately, that left a lot of people in a position where they’re financially destroyed," said Blader.
One of the ways O'Connor was able to dupe the investors was by giving them documents showing they were making money. Those documents were fictitious.
"When a person has account statements coming to them, then they should be scrutinizing them, if need be," said Blader, "Take them to your CPA, if you have real concerns, they can go to the Wisconsin Department of Financial Institutions and they can verify whether that account statement is accurate or not," said Blader.
"Good due diligence is going to be the anecdote to fraud," said Mary Allmon with Marietta Investment Partners.
"The more questions you ask, the better. A good advisor wants to answer your questions and this is your money, you’ve worked really hard to earn this so there’s no such thing as a bad question," she said.
Allmon said to ask someone you may invest money with if they are registered, how long they've been in business, what their background is, if they've had any securities violations, are they a fiduciary.
"Putting the interest of the client first and having that legal obligation, affirm that is a registered investment," said Allmon.
The other way O'Connor's scheme worked is because the victims trusted him, many of them considered him a friend.
"It’s atrocious, it’s atrocious and it talks about the callousness that you need to have if you’re going to engage in this type of fraud. You literally are befriending people while at the same time stealing and wasting their money," said Blader.
Blader says it is common for people to be scammed by a family member or friend.
"Many times if it’s a family member or close personal friend, people feel reluctant to ask them, 'How is my money doing?' and then more reluctant to say, 'I want to withdraw my money because I’m not happy with how it’s being invested' and that’s how these schemes become perpetrated," said Blader.
Blader says to, "never invest in something that seems too good to be true. If it's too good to be true, it probably is."
According to the Department of Justice, a criminal investigator from the Internal Revenue Service visited O'Connor at his home in Waunakee. The investigator questioned O'Connor about Madison Financial Services and its investments. When pressed to explain the transactions, O'Connor lied to the investigator.
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, according to the DOJ. The total loss to the investors was $9,686,848.
O'Connor received many letters of support during the sentencing, including one from his wife that said that he was genuine and sincere in his love and care for people and she wondered how this could have ever happened.
We tried to ask him and his attorney for sentencing, but they declined comment.
"There are many opportunities for that fraudster to back out and make it right and try to stop the loss before it becomes so great that it actually devastates people’s entire financial savings, in this case that didn’t happen," said Blader, "Quite often it doesn't happen and that's where the real harm is."