Fraud Called Likely; Funds Frozen
Federal authorities froze the bank accounts of two men suspected of defrauding senior citizens of more than $60 million by inviting the seniors to free-lunch workshops at restaurants to discuss investment opportunities.
Daniel William Heath, 47, of Chino Hills and Denis Timothy O’Brien, 49, of Yorba Linda are suspected of defrauding more than 800 people of their retirement money by selling what they said were “safe, guaranteed notes” that would pay 5.5% to 8% interest annually, authorities said. Heath and O’Brien operate D.W. Heath and Associates Inc. with offices in Hemet, Brea and Pasadena.
“At least one person has told me they put all of their retirement money, several hundred thousand dollars, into this,” said Mark Mandio, the Riverside County deputy district attorney in charge of the criminal investigation. He said some of the seniors “actually received regular interest payments, but that doesn’t mean their principal investment is still there.”
Attempts to reach Heath and O’Brien on Friday were unsuccessful.
The U.S. Securities and Exchange Commission said Friday that it had frozen the accounts of Heath, O’Brien and four of their businesses. At a federal hearing in Los Angeles on Monday, the SEC will ask for a court-appointed official to oversee the businesses.
“It appears a lot of the investors’ money is gone,” said Lisa Gok, assistant regional director for the SEC.
SEC Regional Director Randall R. Lee labeled the alleged scam “particularly despicable.”
Authorities said O’Brien and Heath were not licensed to sell securities.
The Riverside County district attorney’s office executed search warrants Thursday night and Friday morning in Hemet, Chino Hills, Brea and Pasadena, and took boxes of documents and several computers. More allegedly defrauded customers and more lost cash are expected to be discovered in the files, Mandio said. Most of the sales were made in the last five or six years from the pair’s office in Hemet, Mandio said. More than 30% of the clients live Riverside County, he said.
Heath, O’Brien or their sales representatives invited seniors to the free-lunch workshops at Marie Callender’s restaurants in Hemet, Glendale and Pasadena, Mandio said. As recently as this past week, seniors were being introduced to Heath and O’Brien’s self-described “good investments” and then urged to sign up for one-on-one meetings at Heath and O’Brien’s offices for an assessment of their financial information and a sales pitch, Mandio said.
“Once [Heath and O’Brien] got them in the one-on-one situation, that can be very convincing,” he said. “Seniors are a lot more trusting of someone who looks good, talks well and dresses well. These guys are very white-collar, very articulate.”
Mandio said he anticipates filing criminal charges.
Other businesses owned by O’Brien and Heath are Private Capital Management Inc., Private Collateral Management Inc. and PCM Fixed Income Fund Inc.
