Patrick said he had no knowledge of the financial schemes of his backer, W. Harold Sellers of Houston, when he persuaded Sellers to become the main investor in the purchase of a Houston radio station. Its success proved crucial to Patrick’s rebound from bankruptcy after his chain of sports bars failed.
Seeking to recover some of the money bilked from thrifts in the 1980s savings and loan crisis, two federal entities eventually sued Sellers. Among other things, they alleged that he used laundered S&L loan money to finance Patrick’s plan to buy what is now KSEV 700 AM in late 1988. Earlier that year, Sellers fraudulently obtained $86 million in loans from the New Orleans thrift, federal officials charged.
“At least $658,653 was used by Sellers to acquire 62 percent of the stock and finance operations in Sunbelt Broadcasting Co. Inc., which at the time owned one radio station (KSEV) in the Houston area,” the FDIC and federal Resolution Trust Corp. said in their lawsuit.
The agencies alleged the radio station purchase was part of Seller’s “systematic campaign to divest himself of assets that would otherwise have been available to compensate the victim(s) of his fraud.” That campaign began as the failure of the savings and loan became imminent, eventually sparking a federal investigation of Sellers and his financial dealings.
Sellers initially denied he was at fault. The lawsuit was settled in 1998, when a federal judge entered a $33 million judgment against Sellers. His ruling did not address ownership of the radio station.
Patrick’s business dealings have come under renewed scrutiny as he battles for the GOP nomination for lieutenant governor in the May 27 runoff.
Patrick said in a written statement to The Dallas Morning News last week that he did not know any fraudulently obtained funds were used in the purchase of the radio station.
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