Assemblywoman Diane Harkey's Husband Dan Ordered to Pay $11.6 mil for Ponzi-Like Scheme
Assemblywoman Diane Harkey (R-Dana Point) was removed from the Point Center Financial (PCF) fraud case last month, but her family still suffered mighty blows Thursday and Friday. First, after a four-month trial, the jury found PCF CEO Dan Harkey, Diane's husband, guilty of breaching his "fiduciary obligation" to his investment clients with "malice, fraud and oppression." Then, a day after ordering Harkey to pay $4.5 million, the jury indicated it will more than double the award for other reasons. Total tab: $11.6 million.
Among the charges Harkey was found guilty of were 11 counts of elder abuse because he preyed on older people to invest their life savings of $50,000 to $3 million each in various PCF programs tied to commercial real estate projects, many of which went bust.
Harkey was sued for using "slick print ads and direct mailings, carefully crafted public offering circulars, sophisticated marketing materials and well choreographed 'invitation only' seminars" to appeal to the potential investors and eventually gain their trust."
Dan Harkey was accused of collecting "huge and unlawful" fees and loaning money to borrowers who were "poor credit risks," initially hiding what was characterized as a Ponzi-type scheme by paying old investors with new investment monies.
Diane Harkey, who has cited her business acumen at PCF and other companies while running for office, was initially sued because some builder-borrowers of projects that later collapsed had contributed thousands of dollars to her political campaigns. A judge severed her from the case in June.
Point Center Financial filed for Chapter 11 bankruptcy in January.