Oscar Black, a prominent Weatherford businessman, pleaded guilty Tuesday to mail fraud that resulted in losses of $3.59 million to two banks and $3.1 million to people investing in his cattle operation, according to federal court documents.
Black, 58, had guaranteed to pay 12 percent a year to investors mainly drawn from the cutting-horse world, including several from North Texas, during a seven-year period beginning in 2000.
Black, who also owned a Weatherford mortgage company and served two years as director of the First National Bank of Weatherford, misled investors when his OB Cattle business began losing money and used their funds to cover its expenses, according to documents he signed.
If the plea is accepted, he faces up to 20 years in federal prison, a maximum fine of $250,000 and payment of restitution. A sentencing date has not been set in U.S. District Court in Fort Worth.
His attorney, Tim Evans of Fort Worth, said his client had above-board intent at first but got caught in a financial squeeze when cattle prices dropped and feed costs shot up.
"He paid like clockwork for four years," said one investor, Billy Atwood, 60, a cutting-horse competitor and owner from Kosciusko, Miss. "The fifth of every month I got a check."
Atwood, who had met Black as a fellow undergraduate at Mississippi State University, said he was initially taken aback by the investment proposal.
"When he first brought it up, I asked him, ‘Why would you pay me 12 percent when the interest rate charged by banks is less?' He said, ‘I have some loans at 2 percent, some at 8, some higher, and it revolves out.'
"Oscar showed me a file of people doing this for a number of years who didn't want their capital back," Atwood, who lost more than $1 million with Black, said in a telephone interview. "In the end, it looks like he took some people's money and paid off others. It all stopped when he wrote me a check that bounced about March 2007."
Evans said Black struggled to weather a storm of mounting debts by "robbing Peter to pay Paul" but insisted that it was never a Ponzi racket, where part of new investors' money is used to pay off earlier obligations.
"It's not like you've got some con man who set up a scheme knowing it would fail," he said. "When things fell apart, he did some things he shouldn't have and made misrepresentations, and that's a violation of the law and that's why he pleaded guilty."
The attorney stressed that Black has not only cooperated with authorities but also didn't declare bankruptcy and so lost his Parker County home.
"He could have kept his homestead but allowed for it to go to foreclosure" to cover some of the losses, Evans said.
Black's loans from First National Bank and Wells Fargo Bank, $590,000 and $3 million respectively, were collateralized, meaning that the more than a dozen individual investors will bear the brunt of the venture's collapse, Evans said.
"They include elderly couples, and some investors are very upset, and I certainly sympathize, [while] a few are exaggerating in lawsuits. That's not to mean they did not lose," he said. "About 20 lawsuits have been filed, and [Black] didn't contest any, which is very unusual."
One investor, hotel developer and cutting-horse enthusiast Dan Miller of the Parker County town of Poolville, said: "All my dealings with him were perceived as very sincere; that's what troubles me so much. He's a person you believe, want to believe."
In the end, Miller said Black "hasn't bothered to give me a reason," but added: "I am a grown man, and I made a bad decision. And he has to live with the consequences."