News

SANTA ANA - The chairman of the Democratic Party of Orange County today urged Rep. John Campbell to return about $10,000 in campaign contributions from Assemblywoman Diane Harkey and her husband, whose firm is under investigation by the Securities and Exchange Commission.

Harkey's husband Dan is president of Point Center Financial, which is being sued by 53 of its investors for alleged fraud and operating a Ponzi scheme and that in addition to the SEC probe, the Aliso Viejo firm is being sued in Riverside County for racketeering, fraud and intentional misrepresentation, Frank Barbaro said.

Harkey is listed as a defendant because the lawsuit alleges that Dan Harkey illegally transferred funds from investors to his wife for political purposes, and that public documents show her as an employee of the company, Barbaro said.

Harkey, R-Dana Point, has said that she and her husband commingled personal funds and has denied doing anything illegal in connection with her campaign funds.

Neither she nor Campbell could be reached for comment in response to Barbaro's call.

Dan Harkey has said in published reports that the SEC is looking into a $25 million investment pool that funded construction loans and predicted that the SEC would find no irregularities in the pool, noting that the California Department of Real Estate took no actions after a similar review.

The company specializes in hard-money loans -- short-term, high-interest offerings to developerswho often cannot obtain funding from banks.

Hard-money lenders require a large equity stake in the property for loans they issue.

Barbaro cited reports in the Orange County Register that the lawsuit filed against the couple on Nov. 6 alleges that Dan Harkey exaggerated the value of property and was able "to make millions by collecting his fees upfront" which allowed him to profit from the loans even if they went unpaid.

The Register also reported that the investors' lawsuit claims that 85 percent of Point Center's loans have either defaulted or been foreclosed.

Barbaro said that the couple's combined contributions to Campbell, R- Irvine, from 2004-08 totals $10,491, and that "under these questionable circumstances, the Harkeys' contributions to Congressman Campbell can hardly be considered legitimate and should be publicly returned immediately."