Verdicts in Heath case: 400 guilty, 1 not-guilty

By: JOHN HALL - Staff Writer | Friday, January 11, 2008 11:27 PM PST ∞

CORONA -- After two consecutive mornings of verdict reading ended Friday, the final tally in Riverside County's largest-ever case of elder fraud was guilty on 400 counts and not guilty on one.

Daniel William Heath, 51; his father, John William Heath, 81; and Denis Timothy O'Brien, 53, were convicted of a variety of felony charges, including selling unqualified securities, elder abuse, violating a court order

to stop selling securities, selling securities by misrepresentation, grand theft, burglary and money laundering.

About 250 of the 401 verdicts were announced Thursday, but court had to end midday because a juror had a previous commitment. So, the remainder were read Friday.

The massive Ponzi scheme netted an estimated 1,600 mostly elderly victims nationwide -- including many in Southwest Riverside County -- who lost a total of about $190 million after investing in a variety of

entities including D.W. Heath & Associates and Private Capital Management Inc., also known as Private Collateral Management Inc.

Money coming in to the entities from new investors was used to pay earlier investors.

The sole not-guilty count was No. 383 and those words were not heard until just before noon Friday. That verdict came on one of the elder abuse charges after jurors found that the victim was not 65 years old at the

time of her financial transaction with Daniel Heath's company.

"That shows that jurors didn't just rubber-stamp these verdicts. They found the one count we obviously were wrong about," prosecutor Michael Silverman said outside the Corona courtroom after the reading of the verdicts.

The courtroom assistant, Debbie Rider, spent several hours reading the verdicts, wiping her forehead and sipping from a cup of water at times Thursday and Friday mornings.

Judge Ronald Taylor told jurors what they had participated in was "a Herculean undertaking."

Riverside County District Attorney Rod Pacheco said by telephone Friday that he is confident this was likely the largest fraud case of any type to be tried in California.

"I'd say this is one of the top three verdicts in the history of this office, as well," Pacheco said. "This was an unbelievable achievement."

But, most importantly, the county's top prosecutor said, it brings justice for the estimated 1,600 victims.

The trial, which started the last week in August, ranged from emotional testimony by many elderly victims to dry, complicated evidence about financial transactions.

"It was like being back in college again," jury forewoman Laura Lubin, of Norco, said about much of the terminology, on which jurors had a crash-course during the trial. This was her first time on a jury, she said.

Lubin, a school psychologist, said one of the hardest things for her was trying to put aside the emotion of the case as the trial went on.

"There were days, both in the courtroom and at home, when I cried. For both sides. It was very emotional," she said.

Once jurors were finally able to start deliberating the case -- which took them about a month to complete -- they "agonized for days on some counts," Lubin said. Other counts, she added, were much easier to decide.

As jurors gathered in a thin hallway in the small Corona courthouse Friday afternoon, a woman, one of Heath's victims walked up and said, "All I know to say is just thank you, thank you, thank you."

Daniel Heath faces up to 117 years in state prison, while his father could be sentenced to up to 28 years and O'Brien 37 years, according to calculations done by prosecutors. However, the judge, by law, also could

sentence any or all of them to as little as probation.

Each is scheduled to return to court to be sentenced on a different day: John Heath on Feb. 22, O'Brien on Feb. 29 and Daniel Heath on March 21 as his attorneys are considering filing a motion for a new trial.

Deputy District Attorney Michael Quesnel said prosecutors believe that Daniel Heath "would likely do this again" if given the chance.

"He is a dangerous person to an elderly person's pocketbook, if out of prison," he said.

Fellow prosecutor Silverman added to that, saying Heath was someone who didn't give a second thought to ruining the lives of 1,600 people over more than a decade.

"It's unfathomable," he said.

Defense attorneys for Daniel and John Heath were not in the courtroom Friday. Neither could be reached for comment.

Joel Renk, O'Brien's attorney, spoke for the others and said, "I think we're all disappointed" with the guilty verdicts.

"We figured this would be an all or nothing thing, so we kind of knew when the first guilty verdicts were read (Thursday) which way this was going to go," Renk said.

He said he will be discussing with his client whether or not to appeal the verdicts.

Prosecutors say this case should send a message not only to potential criminal scammers -- that they'll be caught and prosecuted -- but also to those who could become victims.

"You need to check out any investments you are going to make," Silverman said. "Contact regulators and use any of the numerous resources available to people, especially with the Internet."

Quesnel said that, unless an investor is well-versed in investments and can afford to possibly lose a lot of money, "they should stick to stocks and bonds, things like that."

"Investors need to be very leery of nontraditional investments," Quesnel added.

About 10 years ago, Heath & Associates was issued a desist and refrain order by the U.S. Securities and Exchange Commission, which told the company, among other things, to stop acting as a broker without a license.

David Brown, an SEC attorney, was involved in the prosecution of the Heaths and O'Brien.

In the courthouse Friday, Brown said, "This case serves as a reminder to people to be aware of the 'free lunch' seminar."

While there are many companies that use the free lunch seminar legitimately, Brown said it is important that people check them out thoroughly before taking the next step.

Many of those who invested with Heath and then lost those investments first became aware of Heath and his entities after being invited to a free lunch seminar.

Law enforcement shut down Heath's operations in April 2004, when they served a number of search warrants at his offices, including one in Temecula.

"This case was one of the first to bring that to light to the SEC that it is a problem," Brown said.

From 2005 through 2007, Brown said, the SEC brought about 40 enforcement actions in cases just like Heath's.

Jerry Jensen, 62, of Cerritos, invested with Heath in 2001 and says he and his wife lost more than $100,000.

He, like many of the other investors at the courthouse, were upbeat after all the verdicts had come in.

"We are not victims, we're victors," Jensen said with a smile.

Contact staff writer John Hall at (951) 676-4315, Ext. 2628, or jhall@californian.com.