Point Center Financial Ponzi Scheme
Harkey held a senior position and was invested in her family’s company, Point Center Financial, which was sued by its investors – including retirees – for operating “a classic Ponzi scheme.” The company was found liable for $10 million in damages, and then found guilty of 11 charges of elder abuse. What’s more, Harkey used the profits from the company to fund her own political campaigns. She was even sued by people who were ripped off by this shady company to recoup their losses that she allegedly spent on her own political ambitions.
As the fraudulent company was under investigation by the SEC, and while Harkey was in the California State Assembly, she accepted $16,600 from firms borrowing millions from the fraudulent company. She even doubled down, saying it was “totally proper.”
The California Court of Appeal recently affirmed the multi-million dollar Ponzi scheme judgment against Harkey's husband. Dan Harkey had urged the appellate panel to overturn the original jury findings that he breached his fiduciary duties, committed financial elder abuse and flagrantly violated agreements with numerous investors who’d believed his fraudulent claims.
In a July 30 ruling, the court 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... Harkey looted the plaintiffs’ investment funds by running a Ponzi scheme to amass fees in their own interest on loans with only a pretense of underwriting and sham rollover loans violating operating agreements."
Despite trying to distance herself from the fraudulent company, Harkey’s connections are obvious. Besides using the profits to fund her political campaigns and being named in lawsuits related to the company, Harkey was: Invested in the company, listed as the company’s secretary in official filings, and reporting this company as her employer in campaign finance documents. And when pressed about the source of her massive political spending, Harkey admitted that it possibly came from the company’s fraudulent profits.
Board of Equalization Mismanagement
As head of the state Board of Equalization (BOE), Harkey’s mismanagement of the body was so catastrophic that Governor Brown was forced to interfere and strip it of most of its decision making powers and reduce its staff by 90%. A state audit found that the organization had misallocated tens of millions of dollars and that Harkey had violated state rules and regulations by using public employees and resources to advance her own political career. Specifically, a state audit found that Harkey misused 113 taxpayer-funded employees in an event that “appear[ed] self-promoting”, and that the BOE had tripled its spending on “education and outreach events” to nearly $3 million.
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