Securities Law Prof Blog

Editor: Eric C. Chaffee
Univ. of Toledo College of Law

A Member of the Law Professor Blogs Network

Monday, September 29, 2008

Participants in "Free Lunch" Fraud Sentenced

A California judge 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 SEC.  The fraud raised more than $187 million from over 1,800 victims, mostly senior citizens and the elderly.  Daniel Heath was sentenced on September 26, 2008 to 127 years and four months in state prison; Denis O'Brien on April 4, to 40 years and four months; and John Heath (now deceased) 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 addition, in 2004, the SEC 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 against them.

http://lawprofessors.typepad.com/securities/2008/09/participants-in.html

SEC Action | Permalink

TrackBack URL for this entry:

http://www.typepad.com/services/trackback/6a00d8341bfae553ef010534dd6ff7970b

Listed below are links to weblogs that reference Participants in "Free Lunch" Fraud Sentenced:

Comments

Post a comment