Saturday, September 27, 2008

White Collar Criminal Gets Life in Prison

The L.A. Times reports on an investment swindler who preyed on retirees and was sentenced to life.

The convicted mastermind of an investment scam that bilked retirees out of nearly $190 million was sentenced Friday to spend the rest of his life in state prison.

Daniel Heath, 51, of Chula Vista was sentenced in Riverside County Superior Court to a term of 127 years and four months. According to Deputy Dist. Atty. Michael Quesnel, who prosecuted the case, Heath would have to spend half that time in prison before being eligible for parole.

What Mr. Heath did was sell people on supposedly secure investment products for their savings. He probably used their fears and uncertainties about the economic climate of recent years as a weapon against them. It sounds like a lot of misdirected talent and hard work. Imagine what it took to build an entire organization with three offices dedicated to this.

It's hard not to agree with the sentencing judge about the fact that his actions caused a lot of pain.

Judge Ronald L. Taylor told Heath that the severity of the sentence was partly based on the misery that the scheme had caused.

"There is not a doubt it has ruined the lives of many, many people," Taylor said.

What I'm not in agreement with is the length of the sentence. If Judge Taylor gives a con-man, even a very prolific con-man, a sentence like this, what does he do with violent offenders? Is the fact that Heath took the life savings of multiple victims enough reason to put him in jail for the rest of his life?

I say white collar criminals should not be taking up space in prisons. Isn't the overcrowding sometimes the very reason violent repeat offenders are paroled or sentenced lightly? I say guys like Heath should be made to pay, but not with a prison sentence. Hefty fines, full restitution, community service, these are the sanctions appropriate to the crime of fraud.

What's your opinion?


  1. "I say white collar criminals should not be taking up space in prisons. Isn't the overcrowding sometimes the very reason violent repeat offenders are paroled or sentenced lightly?"

    Yep! Answer, Death Penalty! Once you cremate them they take up like no space at all, and need no food or water.

    Honestly if you show enugh malace and do enugh harm to your fellow man you've lost your right to be a member of free society ever again (and again, I don't want to feed you either!) so white collar, blue collar...hell even Obama/Clinton's new buzz-word "Green Collar" crime, it doesn't matter to me, just like knife, gun, or fire bomb doesn't matter.

    Some people can't be fixed, so don't try and fix them...and if you're just going to let them die in prison, why prolong it?

  2. Mike,

    I don't necessarily agree that white collar criminals don't belong behind bars, I think that those convicted of victimless crimes shouldn't be.

    Import lobster in the wrong type of bag, no jail time. Rob people of their life savings; quite probably reducing the length of their lives by it, jail or as Beard says, death.

    This scum used their fears as you say with malice aforethought, multiple times. Isn't the purpose of jail to show what behaviors society will not condone, letting this guy run around loose doesn't send that message.

  3. i think you're being way too soft on this particular criminal, Mike, and by implication on criminals of similar kind. this man is a predator who focused on the weak and the old, the people least able to critically evaluate his scam and defend their life's savings against his predation.

    given the large scale on which he operated and organized his criminal career, i see no reason to think he would not be an instant recidivist the first chance he got; if he were ever set free, i would be amazed to see him not return to crime.

    i think his punishment is exactly right, and the court only got one detail wrong; they left open the possibility of parole, in the unlikely event he should manage to serve out just shy of sixty-four years in prison and apply for parole at the age of 115. that possibility should not be there, his sentence should be "imprisonment until death" and no waffling about it.

  4. Weer'd, Are you seriously suggesting the death penalty for fraud guys?

    Bob and Nomen, Are you seriously saying life in prison for fraud guys?

  5. i'm definitely saying life in prison for this particular fraudster. by implication, i think the crime of fraud can rise (as it has here) to the level where life imprisonment is warranted. it goes without saying i would never advocate that punishment for every fraudster, of course.

  6. Get a's too good for him.


  7. Remember, I live in Texas, where I can shoot you through and through the head for disturbing my property, not even theft, and likely get no-billed. I'm not kidding.

    Means where I PERSONALLY LIVE, I an leave my keys in the ignition in a running car and when I get back from going in the store my car is still there.

    Death kinda changes the mix as to if you'd risk a crime, doesn't it?

  8. Mike,

    You mention that Heath should not get a long sentence because what should we do with violent offenders. First, judges' jobs are not to give a defendant less time because in some other circumstance the judge would end up giving less time. The judge is obligated to follow the sentencing rules to determine the appropriate sentence in the case before him or her. In the Heath case there were basically 4 decisions for the judge to make. 1)Prison or Probation, 2)aggravated, standard or mitigated punishment on the base term(a choice of 2, 3 or 5 years), 3)aggravated, standard or mitigated punishment on the aggravated white collar crime enhancement (also 2,3,and 5)and 4) which counts to run concurrently and which counts to run consecutively. (The sentencing was a little more complex than that because of changes in the law (the crimes were committed over 10 years) and rules governing limiting punishment for multiple crimes committed at the same time) Judge Taylor punished the defendant for each individual transaction that was charged in the criminal complaint. Also It is important to note that had the defendant robbed the number of people (violent crime) not swindled them he would have received a punishment that would have taken him off the street for the rest of his life as well. Also, can you say that pulling a gun on an elderly woman and taking her purse is necessarily worse than taking her life savings?
    You speak about not wanting to fill up prison space with white Collar offenders because repeat offenders are then given lighter sentences. Dan Heath was a repeat offender. He had been ordered to stop his antics in 1998 by the California Department of Corporations. He raised over 100 Million dollars after the desist and refrain order.
    You mention that Heath should be made to pay with hefty fines, full restitution and community service. While it is nice to want to get the victims back their money. Mr. Heath (and all 3 codefendants) were ordered to pay the 117 Million dollar shortfall from their Ponzi Scheme. The SEC and the Riverside County District Attorney grabbed all their assets. The Receiver was able to confirm that virtually all the crooks money was seized by tracing the monies that were stolen from the victims (the money was easy to trace since this was not a "cash business" The short fall in this case is approximately 90 Million dollars after giving the victims about 20 cents on the dollar. How are the defendants going to pay that. They are not good business men. They are merely able to raise money by lying. Moreover, how do you make a person like Dan Heath work to pay back the lost money when he is still fighting the Riverside District Attorney over liquidating a frozen IRA (54,000 dollars) to pay back to the victims and he denies any culpability. Sometimes the only option is to lock somebody up so they will never harm anyone again.

  9. Mike,

    This guy, as another Michael, points out is a repeat offender.

    What stands out in my mind is the nature of the crime, bilking retirees. While many mentioned less severe problems, what happens when they need medical care?
    I've had to research long term or assisted care facilities not long ago. The investments this folks lost could have paid for such facilities. Now they problem don't have sufficient funds for such care.

    Couldn't that be argued as shortening their lives? It is a slow form of murder possibly. Would you want your parents, uncles/aunts fleeced this way?

    Yes, I say life in prison. There are some crimes that we MUST as a society say are not acceptable. If we allow people to prey on the weak or the aged with minimal consequence it may encourage others.

  10. i think this could tie in with the discussion we had recently about different kinds of evil. Mike brought up various species of murderer there, the "cold blooded" versus the "heat of the moment" types of actions, and i think some similar logic applies here.

    what this fellow did was to build a large-scale, widely distributed, criminal organization dedicated to bilking people out of their savings by fraudulent means in order to enrich himself. i'm having a hard time conceiving of a better example of malice aforethought. he reasonably had to have known he was breaking the law and doing morally wrong things, even as he spent time and effort to plan, organize, and manage a large ponzi scheme to do it with.

    to me, that very cold-bloodedness paints him as extraordinarily dangerous and likely to relapse. that's a large part of why i don't want him going free ever again.

    i'm not sure that what he did was necessarily worse than what a violent criminal might do, or that the two are even comparable. but i'm fully convinced that what he did was bad enough.

  11. Michael, Thanks for your comment. It sounds like you know a lot more about this stuff than I do and about this case in particular. I would like to ask a question though; I hope you're still reading.

    Are you saying that the fact that Heath continued operating after the cease and desist order should count as being a repeat offender? Wouldn't that be like a cop warning you about driving a little drunk a couple times, say in a small town where everybody knows one another, then finally gives you a citation. To me that would be the first one. Same with Heath. Unless he did some other crimes in his twenties and thirties, it seems to me he spent his forties building this business, as immoral as it was, but it was one ten-year long crime. No?

    Now let's say he got carried away with his own success, went way to far, resulting in untold damage to his investors, wouldn't it be possible to turn him around with all the fines, restitution and say concurrent sentences instead of consecutive. After serving a couple years his parole officer would ensure that he gets a straight job and stays away from investments altogether. What's wrong with that?

  12. If you won't go for life, will you at least let me have public flogging, the stocks, and waterboarding (in public, of course)?

  13. umm death penalty for that? bit harsh i think
    but he should be made to compensate his victims, his personal assets ceased and paid out and he should work in prison to make up the difference.
    Sometimes i wonder if doing physical harm to another person is not been punished less than if they cheat people out of their money.
    Priorities i say!!!

  14. am i reading this right? are the calls for death or torture as punishment for fraud actually to be taken seriously? i hope it is simple hyperbole.

    anyway, mikeb, there is some logic to your idea about white collar criminals not necessarily belonging in prison for life or otherwise lengthy sentences. let me just say at the onset that these guys definitely broke the law and earned a considerable stay in jail. perhaps, though, their skills could be better used and their victims more quickly repaid were they not just rotting in in prison; i will have to consider this for a few days. however, before we even debate the merit of friday's sentencing, it is important to understand the events leading up to that final chapter of this tragic story.

    first, these four men were arrested well over 4 years ago, in july of 2004. upon their arrest, the bail was set at $117million in direct violation of the eighth ammendment ("excessive bail ought not to be required"). the justification for this sum was a local statute authorizing bail amounts in fraud cases to be fixed in the amount of the defendant's alleged fraud. that is to say, if i accuse you of stealing a million dollars from me, you are held on a million dollars bail automatically, in effect presuming your guilt in violation of habeas corpus. further, the four men also had every single asset seized by the court, leaving no money for their spouses to buy groceries with, let alone pay for a bail bond in the amount of nearly $12million (10% of the total bail amount). also a consideration was the fact that an arraignment hearing did not take place until three weeks after the men were arrested. so, essentially, you have an impossible bail, no money to pay it with, and weeks without being formally accused -- certainly all the while the prosecution could build their case. who is proud of this?

    then you have the treatment of john heath who died last month of bone cancer at the age of 81. it had been clear since shortly after the arrests that this elderly man was in declining health. he'd lost quite a bit of weight as well as the ability to walk much at all within the first year of custody while awaiting trial. at the time of the older heath's sentencing, his terminal prognosis had already been made. the prosecution objected to the man dying under house arrest, which was no surprise considering they'd already objected to his use of a wheelchair at court appearances.

    i bring up these points as somebody who closely observed the actions of the riverside criminal justice system throughout the events leading up to and including this trial. as stated before, these four men earned their place in prison by what they did and how they behaved. wouldn't it be equally terrible, though, if sentences were reduced or overturned because of the county's numerous abuses of power? abuses in plain sight, well documented, and ripe for any advocacy group to take up in a take-down of questionable inmate treatment.

    my sympathies to the victims and their families who live daily with the effects of these awful events. so many lives were shattered forever, and i just hope our humanity does not become yet another casualty. as much as i hate dan heath for what he's destroyed, we need to do better than become an angry mob.

  15. wtf, thanks for coming by and commenting. I think the others are serious, even Thomas in a facetious way is being quite serious.

    I like what you shared with us about the bail setting and other abuses in this case. These are more evidence of the government doing whatever it wants which we've discussed on other threads.

    How about this? White collar criminals are sometimes extremely talented people. They are sometimes not only talented but very hard working. Instead of incarcerating them at tremendous expense, let's spend that money on beefing up the probation departments, hiring qualified people to supervise these characters. This way as Mimi said their talents could be used to make money to pay back their victims.

  16. well, i guess i'm a bit disappointed but not at all surprised. i have been well aware for quite some time of our society's seemingly lopsided view when it comes to money vs. humanity. young mothers can birth and strangle their just-born infants and walk away months later. when money's involved, though, people demand blood.

    again, i don't diminish in the slightest this situation or its impact on so many lives. on the contrary, i understand full well the destruction these men wrought on hundreds upon hundreds of families.

    back to your original question of the value in so harshly punishing white collar criminals, though. . . i agree that the expense of incarceration for such long sentences is the worst way for victims to receive financial restitution. an inmate can typically hope to make a few thousand dollars in a year of service while imprisoned. the government usually takes roughly 60% of those moneys to apply toward restitution. all four men in this case would need to work nearly 10,000 years to pay back that money. that is a silly enough idea without even mentioning the added time to make up for the loss of production from the now deceased john heath. not making light, just trying to make sense.

    obviously, that sum is intended to follow these men for the rest of their lives in the form of an ongoing punishment that never ends, regardless of how long their stay in jail ends up. it is meant to keep them from ever achieving any measurable success as no employer of high-wage jobs will hire a felon with fraud, money laundering, and elder abuse on their record.

    more fascinating facts: the victims received refunds in the amount of 22% of their initial investment. wouldn't it be interesting to know what the cost of receivership was? those firms generally take between 1/3 to 1/2 of the total recovered funds. lets say it's conservatively 1/3. that would bring the total recovered sum to 33% in assets sold. now comes the kicker. . . a lending institution is considered solvent when it maintains assets in excess of 6% of its clients' total deposits, meaning: no bank, lender, or credit firm could withstand 1/3 of its customers withdrawing their money at one time, in case nobody's noticed the utter chaos going on in the financial world right now.


  17. this talk of monetary restitution to the victims is a nice intellectual exercise, but let's face it, it's a fantasy. you know it, i know it, everybody knows it. because these particular perpetrators --- like, i'm willing to guess, most criminals --- have pretty much proven two things: the most efficient means they have for making money is by committing crimes; and they can't be trusted not to.

    forget dreams of making them earn honest money just to give it away. if these were people for whom that was a likely end result, they wouldn't have done what they did to begin with.

  18. ...and that last anonymouse was me, FWIW. blogger fucking sucks. posting that one took me easily a dozen clicks on the reload button, each with its own click on the resend information button, and this follow-up will be no easier. good thing i don't have anything better to do...

  19. HI NN, i dont mean necessarily making "honest" money , but lets freeze their assests and bank accounts and they should have plenty accumulated in the past to be pretty well off.
    I do realise if they would have to work in prison they would get what.. five bucks an hour?
    Dont get you much these days :(

  20. I'm with Mimi and wtf. It's a terrible waste to put talented and intelligent white collar criminals in jail. Something better should be figured out.

  21. Mike,

    I'm confused on what you want to do with the "talented and intelligent white collar criminal"?

    Should we have them teaching our kids? 'Okay boys and girls, that's enough about American History, let's move onto Criminal Accounting and how to properly "cook the books"?

    Should we have them helping the elderly, 'Trust me Mr. Aged Person, XYZ Investment company will provide a great guaranteed return.' Ooops, isn't that what Heath is accused of?

    What message does it send to society to say "Hey, you only defrauded people, don't go to jail and remove your from contact with the public that you cheated"

  22. actually, bob, couldn't true justice be defined by having to serve those you've sinned against? and obviously nobody's suggesting that service be done unsupervised. it could fall very neatly under the purview of the probation officer's duties, no? also, these indentured servants would not be expected to turn their paychecks over to their victims; it would be done for them.

    there certainly are quite a few logistical and security circumstances to consider, but that's to be expected. again, i don't necessarily advocate this solution, though i do find it intriguing and believe it at least deserves an honest look.

  23. WTF,

    Couple of problems with your idea:
    First, there is a point, regardless of Executive salaries, it isn't practical for one person to work off an amount of money. This guy ripped off $190 million dollars. I don't know what he could do for the individuals that would be worth that much.

    Second, not only did he hurt the individual, but he broke the laws of our society. There is a cost to the investigation and prosecution of those crimes...who would he work for then?
    Also, there is the concept of societal justice. Since others may have learned from his crimes and try to commit copy cat crimes; there is a cost to society as a whole. How does he pay off that cost to society as a whole?

    Lastly, historically indentured servitude has been abused as a form of punishment. That is why societies have moved away from it.

  24. Bob, In wtf's comment he did say there'd be plenty of logistical and security situations to consider. Since the guy's not going to earn enough to make amends either in prison or out, why not let him work for the victims in some way? It would be something like the blood atonement the Mormons have. Or would it be more like karma? Maybe he gets to do a year or so, something minimal because like you said he did break laws, but we can't have him clogging up the prison system.

  25. Mike,

    I would be all for letting him work for the victims---in prison.

    I think felons should be required to work with most if not all of the money going back to their victims.

    If one of the people he bilked dies because of starvation, lack of money to pay for prescriptions, etc; wouldn't that crook be guilty of murder or at least contributing to murder?

  26. yeah, i did say there was quite a bit to consider in changing how we deal with white collar criminals. i also said the guys in this case deserved to do time. so lets just make sure that point is clear instead of having to waste time and retread for a third or fourth time.

    i think the point you bring up, bob, about a victim dying as a direct result of their financial losses is actually an argument in favor of reform. while the $117million in restitution is likely never to be paid back, the 60% garnishment of prison wages isn't exactly helpful toward that end.

    look, i don't want people getting special treatment anymore than the next guy does, but california does have a prison overpopulation crisis on its hands. we love that our crime rates keep falling due to three strikes rules, but how many more prisons do we need to build and maintain? do small time drug offenders and white collar criminals really need to be taking up the beds that rapists and murderers should be? no, i don't have all the answers, but i'm at least willing to ask the questions and LISTEN to all of the answers.

  27. Mike,

    sorry I didn't respond for a few days. Been a little busy. The Desist and Refrain Order is different than a warning from a police officer to slow down. It is an order that is a felony to violate. As a matter of fact Heath was convicted of multiple counts of selling securities in violation of the Desist and Refrain Order.

    My use of that example was not to state that Dan Heath is a recidivist under California law (ie the three strikes law - don't want to get into a discussion about that) I was merely using it to illustrate the point that the judge (and the prosecutors) don't believe he can be turned around. It's important to note that Dan Heath was told by his own lawyers that what he was doing was illegal as early as 1996. He was told by the Department of Corporations what he was doing was illegal (the D&R's) in 1998. He was told by the lawyer that represented him in the action by the DOC that it was illegal. He was told by the numerous lawyers for the investors turned plaintiffs over the years that it was illegal. He was told by a representative of the Department of Insurance that what he was doing was illegal (He had an insurance license so they had reason to talk to him when he liquidated a victims' annuity to purchase his "investment"

    (You're right I do know a lot about this case. I watched the whole trial and all the proceedings)

    Dan Heath to this day does not believe he did anything wrong. This is illustrated in the article written by John Hall in the Californian which states: Heath did not address the court Friday. However, he did speak to a Riverside County probation officer who interviewed him in March.

    "He believes the company was shut down unfairly, causing the loss of the investors' money," the probation officer wrote in his report, which was filed with the court.

    Dan Heath also made similiar comments to Good Morning America.

    "The defendant stated his belief that he did not receive a fair trial and denied having any guilt for his actions," the report states.

    It would be nice if a couple years in jail and the guidance of a parole officer would turn the defendant around but as you can imagine that those prospects are particularly dim in light of all the others who warned Heath of the error of his ways (which he ignored)

  28. wtf,

    I would not lump white collar criminals in the same boat as small time drug offenders. One cannot argue (with a straight face) that white collar crimes are victimless.

  29. michael, i love that you zero in on something i said so succinctly without actually answering the question, straight faced or not.