Dan and Diane Harkey, Financial and Political Power Couple, Keep OC Courts Humming

If Orange County courts are hurting for operating funds as much as they claim to be, don't blame Dan and Diane Harkey, whose cases alone should help keep the lights on.


Dan Harkey, Legislator's Husband Tossed from Belly-Up Investment Firm, Targeted by State

Indeed, if I am missing any court cases involving the pair, please let me know in the comments section so that I can add them in an update. For now, I know of these:

* There has been a $12.5 million breach of fiduciary responsibility judgment pending against Dan Harkey and his bankrupt development investment company Point Center Financial since July 2013. Plaintiffs have been unable to collect from either Harkey; Diane managed first to get herself dismissed from the lawsuit, and now she claims to have dismissed herself from her marriage, claiming to have separated from her husband.

* But investors succeeded in court in getting Diane Harkey's $95,000 annual Assembly salary garnished through the end of her term at year's end because California law does not preclude her possible liability to creditors. The veteran Dana Point Republican challenged the order, only to be rejected this week by state Controller John Chiang, who oversees legislators' pay. If, as expected, Harkey wins a seat on the state Board of Equalization in November, the PCF investors say they will get those wages garnished as well.

* The PCF investors are also suing to get $100,000 Harkey loaned her Board of Equalization campaign and about $25,000 worth of horses she and her estranged husband own. “We are pursuing every legal remedy available under California law to satisfy these judgments, including community property,” Timothy Aires, attorney for 39 plaintiffs in the case, says in an Orange County Register report.

* During last summer's primary campaign for the seat on the Board of Equalization, which sets state tax policy, challenger and state Sen. Mark Wyland linked Diane Harkey to the financial woes of her husband. That produced a defamation lawsuit from Diane Harkey, who later dropped it as many pointed to her previous criticism of frivolous suits. But the judge in the defamation suit awarded about $12,000 in legal fees to Wyland, something Harkey is appealing–where else?–in court.

* Dan Harkey is also suing … some of those investors who sued him over the PCF debacle. In the complaint filed in Orange County Superior Court in July, Mr. Harkey accuses them of conspiring to ruin PCF and his own “reputation of excellence.” Harkey singles out retiree Kurt Sipolski for “Monday morning quaterbacking” as PCF imploded, engaging in fraud to blame it on Harkey through the media as well as the “malicious prosecution” of the investment company owner. Harkey seeks damages of “at least” $50,000 $50 million from Sipolski alone, as well as attorney fees and court costs reimbursed.

You can read more about Sipolski, a 67-year-old resident of Palm Desert, in a recent USA Today article on retirement investments gone wrong.

Here's the short take: Sipolski, who was stricken with polio as a child and is now confined to a wheelchair as a retiree, invested $150,000 in a PCF real estate development deal, hoping to live off the income. When the project went belly up, Sipolski and hundreds of other investors lost millions. They sued alleging a Ponzi scheme, elder abuse, breach of fiduciary obligations, fraud and unfair business practices.

Only the breach of fiduciary obligations allegation stuck, but so did the $12.5 million judgment, or so they thought. Harkey's suit against Sipolski and the others mentions the award is being challenged in court.

“It is utterly unimaginable that Dan Harkey has sued me, just one month to the day after the USA Today article exposed him,” Sipolski tells the Weekly.

Having burned through his savings, cashed in his pension and bank CDs and now living on $654 a month in Social Security, Sipolski reminds that his foe in litigation “is a multi-millionaire who has declared bankruptcy, claiming he has not even an extra $100 to pay the court-ordered award. Meanwhile, his new company, CAL COMM, claims to have $60 million in assets. So much for our judicial system, business ethics and frivolous, expensive lawsuits.”

Come on, buddy, how else we gonna keep those lights on?

Email: mc****@oc******.com. Twitter: @MatthewTCoker. Follow OC Weekly on Twitter @ocweekly or on Facebook!

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