Elder Fraud 'Mastermind' Gets 127 Years

The following excerpts are reprinted from the 9/27/08 issue of The Californian. For a complete text please go to: http://www.nctimes.com/articles/2008/09/26/news/californian/riverside/zd68452ea010c7b73882574d10007f10c.txt

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Elder Fraud "Mastermind' Gets 127 Years.

RIVERSIDE ---- The largest case of elder fraud in Riverside County concluded Friday with Daniel William Heath, whom a judge called the "mastermind" of the criminal enterprise, being sentenced to 127 years in state prison. Heath, 51, of Chino Hills, is the last of the three men convicted by a jury in January to be sentenced for their part in a massive Ponzi operation that involved more than 1,800 victims ---- mostly elderly ---- nationwide.

More than $187 million was lost by the victims, many from Southwest County, after they invested 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, which prosecutors said is the classic way an illegal Ponzi, or pyramid, scheme operates.

Before Judge Ronald Taylor rendered the sentence Friday, 10 of Heath's victims spoke, sharing a collection of stories about how the scam devastated their lives. "It's all gone," Patricia Patterson said of her retirement savings, which she entrusted to Heath. "Dreams die so hard," she said. John Jay said he and his wife often don't have enough money now for essentials such as food, water, heat and medical expenses. Angered at one point while speaking, Jay began screaming at Heath, saying, "You're a filthy, rotten rat, you hear that?"  Susan Perkins told the judge that meeting Daniel Heath was the second worst day in the lives of her and her husband. Only the day their only child died was worse, she said. She and her husband each worked for 30 years to save for a happy retirement and lost it all to Heath, Perkins said. "Sixty years of work just went away. What did we work for?"

Prosecutor Michael Silverman also read comments from other victims who were not at the sentencing, some of whom said loved ones suffered strokes after hearing what happened to their money. Some now have trouble paying for medical care, while others said they're in their 70s and have had to return to the work force to make ends meet. Comments read by the prosecutor included: "This is as bad as armed robbery as far as we're concerned," "I will never trust anyone again," and "If I don't live too long, I'll be OK."

Taylor said he wasn't persuaded to alter the sentence by anything said by Heath's attorney or his family. The judge explained that there are 17 things he can consider for granting probation, and 14 of those leaned strongly against that approach. Taylor called the impact Heath's crimes had on his victims "immeasurable." "Without a doubt, he ruined the lives of many, many people," Taylor said. "Some have actually passed away after hearing of the loss of their life savings."

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. Also convicted earlier this year were John Heath, Daniel's 81-year-old father, and Denis Timothy O'Brien, 53, of Yorba Linda. All three men 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. O'Brien received a sentence of 40 years in prison, while the elder Heath was sentenced to 28 years. John Heath suffered from advanced cancer and died in prison on Aug. 17. A fourth defendant, Larre Jay Schlarmann of Carlsbad, pleaded guilty in November 2005 and received a 15-year prison sentence in exchange for his plea.

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

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