State Seeks Freeze of Funds for Scanners
A state judge was asked to freeze $6.7 million raised by promoters to fund two medical centers using Imatron Inc. scanners, after the California Department of Corporations alleged investors were defrauded.
Telephone solicitors promoting the Heartscan Imaging centers, to be built in Beverly Hills and Palm Springs, promised investors returns of more than 45%, according to state investigators. The centers never opened.
Although salespeople claimed less than 7% of the investors’ money would go toward commissions, the actual amount paid was 46%, or more than $3 million, according to state officials.
“There is no indication that investors were ever informed that this amount of their invested funds would be used to pay sales commissions,” said George Crawford, senior trial counsel for the Department of Corporations, in papers filed before Orange County Superior Court Judge James M. Brooks last Wednesday. The department is responsible for enforcing state securities laws.
Money for the Heartscan Imaging centers was raised last year by Orange County promoters Patrick Kavanaugh and Henry Fernandez. Neither was available for comment. Joseph Walker, Fernandez’s attorney, declined to comment.
Charles Lowery, pastor of the Santa Monica Pentecostal Church, who also does apartment maintenance work and sells cars at the local Dodge dealership, invested $15,000 in Heartscan.
“My goal for investing was to help me continue my ministry without having to work two other jobs,” said Lowery, 57, in a sworn statement. Lowery said he invested $15,000 after a meeting with Kavanaugh and Fernandez at a Newport Beach restaurant. Lowery said the promoters assured him that there would be great demand for the scanning center in Palm Springs.
Fernandez is also alleged to have taken $836,876 in advances from the pool of funds raised from investors, in addition to commissions, according to state investigators.
Two $1.8-million Imatron electron beam tomographic scanners leased to the promoters from GE Capital, a unit of General Electric Co., are now stored in a warehouse.
Images created by the devices give doctors three-dimensional pictures of organs such as the heart. GE purchased the scanners from Imatron and leased them to Heartscan.
One saleswoman claimed falsely she was calling as an agent of Imatron, based in south San Francisco, according to state investigators.
“This really concerns me,” said Lewis Meyer, chief executive of Imatron. “Now I understand why we’ve been getting these angry phone calls. People think it’s us.”
Meyer said Imatron has already received about 90% of the purchase price for the units, with the balance due upon installation. He said his company will work with GE to resell the scanners, if necessary.
