Complaint Review: G. Patrick Dague - Nationwide

I met with Patrick Dague in 2009 to initiate a private placement of $12,500 in First Secured Investments, LLC (FSI).  Patrick claimed to be a Realtor/Investor and to have over two decades’ worth experience in doing foreclosure deals.  For the rest of 2009, 2010, and 2011, I was led to believe everything was functioning properly.  Every inquiry I made was returned with assurance that I should expect upwards of 30% annualized returns.

However, the updates have since been minimal and misleading at best. On April 30, 2011 I received a letter saying the “primary investor was happy with results” and simply wanted to “cash out.” In addition when all of this “winds down”, we will be “pleased with the investment returns.” In this letter Patrick revealed the program was not as large as I was led to believe, and in fact one investor had approximately 85% of the program’s funds ($600k of $706,500 raised). This is careless and unheard of in a program like this. Investors are normally limited to 10-20% of the total funds raised. If the program could not raise enough funds, then it should have been shut down while returning investor principal.

Between April 2011 and January 2013, there were exactly 3 updates: June 30, 2011 showing a partial return of investment, August 2, 2011 announcing the resignation of the co-Manager George Arthur, and February 10, 2012 with the K-1 stating that 2 houses were left to be sold and final checks were to be mailed out soon. None of these updates mentioned an ongoing lawsuit and its severity.  There were no indications of the cost of the lawsuit on the K1s, which again shows either deception or incompetence.

October 2, 2012 I finally receive several email responses from Patrick stating the main investor “made us stop buying and selling properties well over a year ago” and that this will “impact overall profits” but still making no mention of any lawsuit or massive expenses.

It wasn’t until January 29, 2013 in a letter from legal counsel Gary Erickson that I was made aware that my distribution was far less than promised, and that there was some lawsuit against the company.  There is no proof other than hearsay in regard to a lawsuit occurring. Patrick has not given a name, address nor any other info other than calling him investor “A”.  For all I know, if a lawsuit indeed occurred, it could have been settled quickly and supposed legal fees kept by FSI staff/counsel.

I complained to Patrick about what happened but received only vague responses, and only pointing his finger at the “key investor” as the only problem.  His final letter on February 26, 2013 included the 2012 K1 but again did not disclose audited financial statements, which would have revealed legal expenses due to a lawsuit. With no proof of litigation, a lawsuit could have been fabricated as a way to raid the LLC’s funds.

Patrick did not return further correspondences; his email bounced, and he had changed his telephone number and mailing address without any forwarding.  During a background search, I uncovered a previous bankruptcy Patrick filed in 2012.  He seems to have incurred substantial debt before ridding himself of these obligations.  I counted 23 credit cards and other debtors.  Remarkably, he does this roughly every 15 years (page 2) which gives the impression of him habitually incurring a great deal of debt, only to clear it through a bankruptcy.  Patrick has used his past bankruptcy as a tactic to threaten me into believing it has a bearing on my complaints against him.

Further background checking revealed that the legal counsel, Gary Erickson, has been involved with Patrick in a separate business called REO Profits.  Patrick has not disclosed this relationship or any business dealings with his legal counsel that may constitute a conflict of interest.  Moreover, I’ve uncovered he was the CEO of a company under investigation.

Summary:

When I invested $12,500 for an assurance that I would make a profit, I understood that there is a risk involved.  I also completely understand that past performance does not guarantee future success.  My complaint is not against ordinary adverse business events; but rather, I am claiming Patrick defrauded me through a systematic scheme of multiple deceptive activities:  repeated claims of significant profits, advertising flyers littered with highlights, underlines, and bold-faced text, improper program set-up, failure to disclose any indication of significant material events (until company wound down) or details of any lawsuit, failure to provide financial statements for 2011 and 2012, legal counsel conflict of interest, prior personal bankruptcies, and refusing certified mail or a forwarding address.  Any one of these items on their own may raise an eyebrow or seem improper.  But taken together, they are a clear indication of misleading and fraudulent conduct.  Whereas I lost a significant portion of my principle invested, Patrick made off with >$50,000 from the investment fund (as detailed in financial statements). I have been in contact with several other investors that also feel victimized by Patrick through one of his many virtual LLCs.