44 Investors Sue for Damages from OC Ponzi Scheme

Well, who doesn’t love a good scheme caper, right? Probably the 44 investors who recently sued Dan Harkey and his entities, National Financial Lending LLC (“NFL”) and Point Center Financial, Inc. (“PCF”), for damages arising from a brazen scheme. After a lengthy jury trial, Harkey, PCF and NFL were found to be alter-egos engaged in such an abusive breach of their fiduciary obligations to their investors that the jury unanimously found Harkey and his sham entities acted with “malice, oppression and fraud” and awarded $11M for breach of fiduciary obligations, intentionally willfully and maliciously, plus punitive damages of over $1M for his “despicable conduct.”

Harkey recently appealed and it was rejected. In a 25-page, July 30 ruling, justices Richard Aronson, Eileen Moore and Richard Fybel rejected Harkey’s appeal, declaring that “substantial evidence supports the jury’s and the trial court’s conclusions that he repeatedly made “illusory” statements to pitched investors.

Here’s basically what happened according to the facts that came out during the appeal. Dan J. Harkey, (the husband of South Orange County congressional candidate Diane Harkey), employed an array of alluring statements in investment publications and seminars aimed to induce the firm’s elderly clients to invest in an enterprise that would lend money to borrowers on large real estate projects using the investors’ pooled funds. 

Harkey promised the investors their investment was safe because the loans would be backed by mortgages on which the borrowers would make monthly payments. But in reality, the investors’ money went to Harkey. They were repeatedly told these investments were diversified and safe, that the loan to value ratios were low, and none of Harkey’s investors had ever lost money. They were told the loans Harkey procured were backed by guarantees from well-heeled borrowers with assets to pay back the loans. They were assured they would not pay any management fees and that the borrowers were to pay all of Harkey’s origination fees and brokerage commissions.  None of this turned out to be true (as is the case in Ponzi schemes) and Harkey basically took all of the investors’ money.
So you don’t have to go all the way to Wall Street for a good Ponzi scheme and of course, where you find corruption and lies, there will be disputes.  When these nasty things affect YOUR business (which hopefully is NOT a Ponzi scheme) call on the good guy litigator wearing the white hat (and the Hawaiian shirt), Dean Sperling, who will work to resolve YOUR matter with YOUR best interests in mind!
More on this case:

Diane Harkey Campaigns for Congress on Ethics Platform While Her Husband is Labeled a Swindler