International Law

Criminals Targetting Seniors Jailed

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From the SEC Press Release on a scheme that targeted seniors.

The Securities and Exchange Commission announced today that a judge in Riverside County, California, sentenced the last of three men to prison after they were convicted of 522 felony charges in a fraudulent scheme that was the subject of a prior enforcement action brought by the Commission, which raised more than $187 million from over 1,800 victims, mostly senior citizens and the elderly.

Sentenced were Daniel William Heath, 51, formerly of Chino Hills, California, Denis Timothy O'Brien, 53, formerly of Yorba Linda, California, and Heath's father, John William Heath, now-deceased, formerly of Covina, California. Daniel Heath was sentenced on September 26, 2008 to 127 years and four months in state prison: O'Brien on April 4, to 40 years and four months; and John Heath on February 22, to 28 years and four months.

Each defendant received the maximum sentence for their convictions and was ordered to pay a total of $117 million in restitution to the defrauded investors. In 2004, the Riverside County District Attorney's Office arrested and charged the defendants with committing securities fraud, elder abuse, grand theft, money laundering, tax fraud, and conspiracy, all under California law.

In January 2008, a Riverside County jury found Daniel Heath found guilty on 400 felony counts, O'Brien on 70 felony counts, and John Heath on 52 felony counts. In 2004, the Commission filed a complaint against Daniel Heath and O'Brien alleging they fraudulently induced elderly investors through "free lunch" seminars to invest in "secured" notes that paid a "guaranteed" return.

Final judgments of permanent injunction and other relief were entered enjoining them from violating the antifraud, securities registration, and broker-dealer registrations provisions of the federal securities laws for their role in the scheme and they were ordered to disgorge to the receiver their ill-gotten gains.

The Commission also instituted administrative proceedings against Heath and O'Brien barring them from association with a broker or dealer and they consented to the entry of the final judgments and administrative orders without admitting or denying the Commission's allegations and findings. In September 2007, the Commission instituted separate administrative proceedings against two other men involved in the scheme that were barred from association with any broker or dealer and ordered to disgorge ill-gotten gains and they consented to the entry of the orders without admitting or denying the Commission's findings. Administration of the court-order receivership over the Heath entities will continue.

Full post as published by Misleading Advertising Law on September 30, 2008 (boomark / email).