Anaheim Investment Counselor Targeted in Fraud Probe

An Anaheim tax and investment counselor who is the target of a federal investigation induced customers to invest in land and gold mines he did not actually own, as well as in a country-and-western record album, a movie entitled “Crypt of Dark Secrets” and fields of Jerusalem artichokes that ended up being eaten by wild antelope, federal investigators say.

U.S. Postal Inspection Service investigators said Leslie (Bill) Hawkey and his three grown children collected millions of dollars from hundreds of Orange County investors and are believed to have controlled about 100 fraudulent business partnerships. No arrests have been made, and no charges have been filed in the case.

An affidavit giving details of Hawkey’s unusual business dealings prompted U.S. Magistrate Ronald Rose to issue a search warrant for Hawkey’s offices in Anaheim and Gillette, Wyo. The affidavit was made public Friday.

About a dozen postal and Internal Revenue Service agents served the search warrant at Hawkey’s storefront office and a nearby storage area on May 17. The Postal Service is involved because Hawkey used the mails to communicate with investors and send checks. The IRS is involved because Hawkey prepared tax returns in addition to controlling the investments, investigators said.

Hawkey refused to discuss his investment partnerships with a Times reporter while federal agents were confiscating records from his West La Palma Avenue office on May 17. Neither he nor any member of his family could be reached for comment Saturday.

“I just received the affidavit and I’m not going to comment on it,” said Richard Marmaro, Hawkey’s Los Angeles attorney, in a phone interview Saturday. As to Hawkey’s whereabouts, Marmaro said, “My client hasn’t disappeared. He’s still in town.”

According to the affidavit, Hawkey frequently referred to his clients as “suckers, live ones, big ones and hot ones,” Susan Alessi, a former Hawkey employee, told Anaheim Police Detective Dale Walters in a March 8 interview. Walters’ interviews with Alessi, former office manager Kathleen Fischer and Hawkey investors were instrumental in providing information leading to the issuance of the search warrant, according to federal investigators.

The investigators said that Hawkey, who lives in Fullerton, worked with his son and two daughters to encourage investments in a variety of partnerships designed to produce tax benefits. His son, William (Biff) Hawkey, is an attorney who works in Gillette, Wyo., the investigators said. They said his daughters, Ann and Susan, both live in Orange County, but they would not say where.

A police officer who lost $17,000 by investing with Hawkey was among those Walters interviewed for the affidavit.

“The guy (Hawkey) was smooth,” said Bob Bandurraga, a policeman in Orange County for 19 years. “He never pressured me, and that’s how I got suckered in,” he said in an interview Saturday.

Bandurraga, who asked that his police department not be identified, said that the losses “really cut deep” and that his family is “scrimping” to repay the money they borrowed to invest with Hawkey.

Bandurraga said he borrowed $20,000 from Security Pacific National Bank in March, 1983, using his house as collateral. Hawkey accompanied him to the bank to pick up the check. Bandurraga invested the whole amount in two Hawkey partnerships.

Paid Some Profits

Hawkey paid Bandurraga about $3,500 in profits from the investments before Hawkey’s payments stopped. “I asked Hawkey for my money. Hawkey told me he was shifting money around,” said Bandurraga. When Hawkey failed to return his money a few months ago, Bandurraga went to the Anaheim police.

Hawkey also sold interests in California gold mines known as the Flat Iron Mine, Union Mine and Red Mountain mine, among others. The affidavit said the Hawkey family once owned interests in the mines, but after the mine owners sued them for failure to make royalty payments and other problems in 1983, the Hawkeys relinquished control of the mines in April, 1984.

According to San Bernardino County officials quoted in the affidavit, no gold or tungsten mining took place at any of the Hawkey mines in that county.

Hawkey’s former employees told police that Hawkey wooed investors by showing them a glass vial filled with gold flakes supposedly taken from his mines. One Anaheim investor who appeared at Hawkey’s office on May 17 said he had received a $9,000 tax bill from the IRS in relation to a disallowed 1980 investment in a Hawkey gold mine.

Hundreds of investors in Hawkey’s Jerusalem artichoke partnerships also had problems, according to the affidavit. Don Marquiss, a Wyoming farmer, told investigators that he tried to grow Jerusalem artichokes--an edible tuber that is related to the sunflower plant--for the Hawkeys, with little success. Marquiss said his neighbors laughed at his efforts because Jerusalem artichokes are “virtually unheard of in Wyoming.”

Antelope Ate Crop

In 1983 and 1984, Marquiss told investigators he tried to grow the plants for cattle feed. He lost one crop when “winds blew the tops off the plants” and another crop to “wild antelope (who) ate the tops off,” according to the affidavit.

It could not be determined from the affidavit whether the country-and-western album or the horror movie were actually produced or, if so, whether they were successful.

Hawkey, who frequently told investors their partnerships were backed by a $9-million “Hawkey Family Trust,” told an investor in March, “I’m broke,” according to the affidavit.