By On the occasion of our 20th anniversary
By Gustavo Arellano
By R. Scott Moxley
By Alfonso Delgado
By Courtney Hamilton
By Joel Beers
By Peter Maguire
By Charles Lam
The lawsuit against the husband of Assemblywoman Diane Harkey has generated an Internet shitstorm
Dan Harkey, husband of state Assemblywoman Diane Harkey, has a term for the lawsuits, government investigations and bad press directed toward him and his company, Point Center Financial.
“I look at this as a 90-day flurry of bullshit,” he says over the phone. “It’s all designed to embarrass Diane.”
Faced with accusations of running a Ponzi scheme and an inquiry from the Securities and Exchange Commission (SEC), Harkey has taken to defending himself in the realm where, traditionally, bullshit flurries most freely: the Internet. In the past month, Harkey has launched two websites: One is designed to refute the accusations against his company, while the other smears the guy who, he says, stirred up all this trouble in the first place.
That guy is retired lawyer Lloyd Charton, a Dana Point neighbor of the Harkeys who invested with Aliso Viejo-based Point Center Financial. His name is the first among more than 50 plaintiffs in a lawsuit filed in November 2008 against Point Center and the Harkeys. He’s also the star of LloydChartonInvestigation.com, which Harkey started in early March. Expulsion from the grand jury. Toothpaste theft. DUI probation. A police report documenting foul language and immature actions toward a neighbor. All these things, culled from Harkey’s public-records search into Charton’s past, are posted for download on the website with supposedly explanatory captions.
Not-so-prominently placed are the circumstances or the time lines for any of these things. Charton was on the grand jury in the early 1970s; the downloadable document shows that he wasn’t expelled, as the website suggests, but rather excluded from some proceedings due to a policy violation. Two anonymous contributors have posted items saying Charton was kicked out of Santa Ana Country Club for filching toiletries; Charton says he doesn’t know what they’re referring to, while Harkey admits those items are “not verifiable.” The DUI, however, was real, and Charton says he regrets it happened—which it did in 1999.
“It’s a silly attempt by Dan Harkey to post negative things about me in an attempt to deflect the scam that he pulled,” Charton says about LloydChartonInvestigation.com. “I doubt there’s anyone who has reached the age of 62 without the occasional dispute with a neighbor or an occasional drunk-driving 10 years ago. So what? Who gives a shit? [Harkey’s] making a fool of himself. The effort he should be making is to explain the failed loans and the fraud.”
The anti-Charton website is another volley in a war of words between Harkey and the people who say he scammed them. In the gated community of Ritz Cove—hemmed in by a golf course, the Ritz-Carlton resort, Pacific Coast Highway and Salt Creek Beach—Charton and the Harkeys live a few doors down from each other. That’s how they met, and, Charton says, that’s partly why he trusted Harkey with $1.23 million of his money.
“He befriended me,” Charton says. “I found him quite charming, likable, gracious, friendly.”
The warm feelings even led Charton, a Democrat, to contribute $1,000 to Republican Diane Harkey’s losing 2006 bid for the state Senate. But in the same year, Charton says he became aware that some of the loans Point Center had been making to developers were likely to fail. So he asked Harkey to let him out of the investment pool.
Snippets of the resulting e-mail chain are now posted on LloydChartonInvestigation.com, presented to bolster the argument that Charton demanded preferential treatment and has been planning all along to drag Harkey into litigation and take control of the company. Charton says he was simply the first one to sound the alarm about Harkey’s business, which Harkey told the Los Angeles Times has seen about 60 percent of its loans default. (Harkey will no longer comment on the percentage of failed loans.) Any sane person who realized his or her money was invested in a sham company would ask for an out, too, Charton says.
There are 148 pages in the complaint filed by Charton and others in Orange County Superior Court. The suit is packed with tales of loans designed to fail, company-owned investment property left to blight and an advertising campaign that discounted the riskiness of the hard-money loans issued by Point Center Financial. And it’s all posted on Charton’s own website: PointCenterInvestigation.com. While its name is mimicked by Harkey’s anti-Charton online venture, the content differs. Charton’s site contains links to coverage of the suit and other media reports supporting the claims against the company—and few personal mentions of Harkey’s past.
But both “investigation” sites capitalize on the power of blameless Web-based gossip by allowing visitors to anonymously contribute. Charton’s site allows users to “vote” to remove Harkey from control of their investments; Charton claims that more than 300 investors have done so. And Harkey’s website has bred a cottage industry of Point Center employees and investors annoyed by Charton’s pot-stirring and allegedly domineering personality. Harkey says his IT staffer edits out profanity, but nothing else. One commenter sneers, “I am very familiar with Lloyd and his ‘above the pheasants’ [sic] attitude.”
Just last week, Harkey launched a separate site—PointCenterTruth.com—to take on Charton’s lawsuit instead of the man behind it. So far, it simply contains link to articles, pro-Harkey testimonials from friends and investors, plus a letter from Harkey that curtly rebuts some of the allegations against his company. But even that starts out with a personal jab: “Lloyd Charton is a disgruntled investor who happens to be my neighbor.”
Over the phone, Harkey maintains that all the allegations against him are false, including the assertion that he frequently bragged about bankrolling his wife’s political career with a million dollars of investor money. He says that the lawsuit is just a ploy cooked up by Dana Point gadflies who tried (and failed) to recall Diane as the city’s mayor in 2007, including former City Councilman James Lacy and local businessman Jerry Grunor. Grunor says he’s not involved. Lacy didn’t return calls to his law firm from the Weekly.
Charton insists that politics has nothing to do with the lawsuit, and he has a familiar term for Harkey’s defense: “Bullshit.”
“When the Department of Real Estate gets done with their investigation, and the SEC, then Dan Harkey will be paying the price for his misdeeds,” Charton says. “When that happens, it will have nothing to do with whether Lloyd Charton yelled at a neighbor.”