Advertisement
YOU ARE HERE: LAT HomeCollectionsSentencing

COURTS

Swindler gets life for bilking the elderly

The Chula Vista man reaped $190 million by selling bad investments to about 1,800 retirees.

September 27, 2008|David Colker | Times Staff Writer

The convicted mastermind of an investment scam that bilked retirees out of nearly $190 million was sentenced Friday to spend the rest of his life in state prison.

Daniel Heath, 51, of Chula Vista was sentenced in Riverside County Superior Court to a term of 127 years and four months. According to Deputy Dist. Atty. Michael Quesnel, who prosecuted the case, Heath would have to spend half that time in prison before being eligible for parole.

"From the outset," Quesnel said, "we looked upon this as the equivalent of a life imprisonment case."

Heath was convicted in January of 400 felony counts of securities fraud, grand theft and elder abuse for the scheme in which approximately 1,800 seniors were sold investments that turned out to be nearly worthless. His attorney, Chris Oliver, said the convictions and the sentence would be appealed.

During the five-month trial, prosecutors described the scheme in which senior citizens were invited to slick, free-lunch seminars at restaurants and hotels. The attendees were given the chance to buy supposedly conservative "secured" notes with "guaranteed" returns.

But it was a Ponzi scheme -- the investors were strung along with returns paid out of new money coming in at the seminars. The case led to a nationwide Securities and Exchange Commission study of "free-lunch investment seminars" that found widespread fraud.

Heath, who had offices in Pasadena, Orange County and the Inland Empire before his arrest in 2004, didn't address the court before sentencing. Dressed in a dark suit, he mostly stared straight ahead during the proceedings or took notes.

Judge Ronald L. Taylor told Heath that the severity of the sentence was partly based on the misery that the scheme had caused.

"There is not a doubt it has ruined the lives of many, many people," Taylor said.

Some victims said they were forced to sell their homes. One woman, whose statement was read by a prosecutor, said that instead of having independence during her retirement, she moved in with her children.

Many spoke of giving up travel, leisure activities and plans to support their grandchildren's education. Some even had trouble paying their utility bills. Several said they were forced to go back to work in their 70s.

"Our social life is going to my doctor," Scott Pickle said in court.

Two of Daniel Heath's former cohorts, including his father, had already gotten maximum terms for their part in the scam.

John Heath, who was portrayed during the trial as an effective salesman for the scheme, was 81 in February when he was sentenced to 28 years in prison. He died last month.

Another salesman, Denis O'Brien, was sentenced in April to 40 years in prison.

About 60 victims of the scheme were in the courtroom for the sentencing, and some spoke about how the scam had changed their lives.

Pat Patterson told the court that she and her husband had worked full time for decades to amass a retirement nest egg of about $500,000. They turned all of it over to Heath and his associates.

"Life as we knew it was over," Patterson said, when they realized they had been swindled. "It was all gone. Dreams die so hard."

Many of the victims received some court-ordered redress from the seized assets of Heath and his associates. But most lost at least three-quarters of whatever they originally signed over to Heath.

The victims said they were attracted to the Heath investments partly because they didn't promise extravagant returns.

The investments supposedly would go into conservative instruments such as advances on accounts receivables and would pay a "guaranteed" 9% or so over time.

But prosecutors said the money instead went into the fraudsters' pockets or their struggling businesses.

John Joy's voice was shaking as he described having to turn off the heat in his house to save money. And he and his wife went to the Salvation Army for some meals.

"You're a filthy, rotten rat," yelled Joy, 67, who traveled from his home in Williams, Ariz. He described how Heath had lured him into the scam by portraying himself as a trustworthy Christian.

"I told you that there would be hell to pay," Joy said, if the investment went bad. "And now that day has come."

Several victims spoke of finding an affinity with Heath's ardent affirmations of Christianity.

"He brought up the subject of religion," said Howard Beach, 83, a retired industrial appraiser who invested $135,000 with Heath.

Except for his attorney, the only people to speak in court on Heath's behalf were his brother and two sisters. They also lost money in the scheme, they said.

"I can see both sides of the picture," said Scott Heath, a musician who lives in Los Angeles. "I do love my brother."

He likened his brother's actions to those who made money off subprime mortgages.

"Guys who were making so much money, so fast," Scott Heath said. "That's how things can blind you."

He said the long sentence was unfair.

"Dan didn't murder anybody," he said. "Throwing his life away would be a tragedy."

But Quesnel said the life sentence would help curb fraud. "One of the goals was to send a clear message to scammers," he said

--

david.colker@latimes.com

Advertisement
Los Angeles Times Articles
|
|
|