Records Sifted to Build Case in Fraud Inquiries

Behind an unmarked door, deep inside the main Orange post office, investigators are plowing through boxes and file cabinets seized on May 17 from the offices of Anaheim tax preparer Leslie (Bill) Hawkey.

The work is tedious and the hours are long, but sorting through every document confiscated by U.S. Postal Inspection Service and Internal Revenue Service agents is crucial in piecing together an alleged investment fraud case. The 4-month-old Hawkey investigation is being handled by the Anaheim Police Department, the state attorney general’s major fraud unit and the U.S. attorney’s office in Los Angeles.

So far, investigators say, the painstaking search through records has revealed that Hawkey allegedly operated 153 partnerships, rather than the 75 originally estimated by investigators. Hundreds of people in Orange County and elsewhere invested with Hawkey in an attempt to shelter a portion of their income from taxes. Investigators said they believe millions of dollars have been lost by investors, who may also have to pay stiff penalties and back taxes to the IRS.

Hawkey and members of his family who are in business with him allegedly diverted investors’ funds for other purposes and used money from new investors to pay off earlier ones, investigators said.

No charges have been filed in the case, but investigators are preparing evidence to present to a Los Angeles federal grand jury for review.

Richard Marmaro, Hawkey’s Los Angeles attorney, declined to say what Hawkey has been doing since the seizure of records forced him out of business.

“Bill Hawkey denies all the allegations that are being made and intends to vigorously defend any charges brought,” said Marmaro in an interview Wednesday. Marmaro said he also represents Hawkey’s son, Biff, and Hawkey’s daughters, Ann and Susan.

Bill Hawkey, his son and daughters encouraged clients to invest in land and gold mines, a movie entitled “Crypt of Dark Secrets” and fields of Jerusalem artichokes that ended up being eaten by a herd of wild antelope, according to the affidavit filed with the federal search warrant two months ago.

Biff Hawkey, a Wyoming attorney, allegedly set up the limited partnerships for investors. The Hawkey daughters worked in the office with their father, according to investigators and former employees. Investigators said that most investors had known the Hawkeys for years and initially hired them to prepare income tax forms.

The task of reviewing thousands of checks, jumbled customer records, tax forms and letters falls to Anaheim Police Detective Dale Walters and Herman “Bookie” Almond, a retired postal inspector with 20 years of experience in fraud cases. Almond was brought in as a special consultant to the government for this case.

“There is no question there is probable cause to believe a crime has occurred,” said Almond. Tracing how individual partnerships operated is a challenge because Hawkey’s business records are in “terrible” shape, Almond said. He said the web of partnerships appeared to be “at the point of collapse” when the investigation began.

Almond and Walters said they are winnowing through the piles of papers to focus on about a dozen partnerships for review by the grand jury. It would take too long and not be productive to study every partnership, Walters said. After reviewing the evidence, a grand jury must decide whether to indict the Hawkeys.

Detective Walters was recently appointed to serve as a deputy U.S. marshal so he could continue working on the case at the federal level. The cross-designation, as it is called, was necessary for Walters to have access to federal grand jury material, according to Judy Hayes, the assistant state attorney general assigned to the Hawkey case. Hayes said it is unusual to cross-designate a local police officer, but “it was more efficient to let Dale work the case with federal agents” because he was instrumental in the initial investigation.

Walters has been submerged in the Hawkey case since early March when former Hawkey employees and investors complained to Anaheim’s fraud division about the Hawkey partnerships.