THE CON: Daniel Heath, with his father and business partner, ran a simple con: offer senior citizens a free lunch and pitch a high-return investment plan. Don’t mention that the company is unlicensed and makes almost no actual investments. Instead, use victims’ funds to keep the con afloat.
THE DAMAGE: $191 million
THE OUTCOME: Altogether, Heath and his two accomplices faced a staggering 400 criminal charges. In 2010, Daniel Heath was sentenced to 127 years in state prison and ordered to pay $117 in restitution.
Salesmen for Daniel W. Heath & Associates held the seminars in restaurants popular with senior citizens. They offered free lunch at a place like Marie Callender’s and unwound a pitch about low-risk, high-return investment plans. They persuaded their elderly marks to visit one of the firm’s offices in Riverside County for a one-on-one consultation. Then, they took their life’s savings.
Daniel W. Heath ran the heartless scheme with his father, John Heath, and business associate, Denis T. O’Brien. The story was the firm invested in real estate development, fast food restaurants and other businesses. To invest was to make a loan to a solid company, one with enough assets to serve as collateral.
The truth: less than half $191 million that Daniel Heath and his co-conspirators stole over the course of 10 years was used for investment. The money that was invested went into start-ups with no assets, many of which Daniel Heath had a controlling interest in. The rest of that money was used to pay off earlier investors and cover the firm’s overhead expenses.
Daniel W. Heath & Associates wasn’t even a licensed investment broker, which meant the securities they sold weren’t qualified by federal or state regulators. In 1998, the California Department of Corporations ordered the firm to stop selling securities – but apparently very little was done to keep an eye on its compliance.
A dozen years passed before the SEC launched an investigation in April 2010. During the five-month trial, the defendants said they didn’t realize they were doing anything wrong.
Altogether, the men were found guilty of 400 charges. Though Daniel Heath was ordered to pay $117 million in restitution, investors are expected to get less than 22 cents on each dollar invested.