Will lawsuit against Assemblywoman Diane Harkey’s husband bring her down too?

Will the lawsuit against Assemblywoman Diane Harkey’s husband Dan bring her down as well?

There is an excellent article in today’s L.A. Times, O.C. edition, highlighting the lawsuit against Assemblywoman Diane Harkey’s husband Dan, and his Point Center Financial company.

The article does a great job of explaining exactly what it is that Dan did to get in such hot water.  He was a “hard-money lender,” which is to say that he was lending money to folks involved in real estate who could not get funding through regular channels.  Obviously that was risky.  Here are a few excerpts from the L.A. Times article that explain this further:

Hard-money lenders rely almost exclusively on the value of property used as collateral, expecting to profit when loans are repaid or to foreclose when they’re not. In a good economy, investors can make significant gains. Harkey said he paid investors 9% annually, sometimes more.

With those hefty payouts comes risk. If the real estate market crashes, hard-money lenders can end up with foreclosed properties suddenly worth far less than the money they lent. And investors, once confident that their loans to developers were backed up by property, can find that their holdings are now of little value.

Did Dan benefit from all of this?  You bet.  Check out this excerpt, which mentions Diane as well:

His adult life, thanks to success with Point Center Financial, included all the trappings of comfort and luxury: a multimillion-dollar home in a gated Orange County beach community ( Magic Johnson has a place next door), a Learjet for business trips and a fleet of luxury cars including a Bentley, a Porsche and a Jaguar. Harkey’s wife was elected last year to the California State Assembly, giving the family political muscle to accompany its financial might.

Did Dan explain the risk sufficiently to his investors?  And did he manage their money responsibly?  And did any of that money end up funding Diane’s campaigns?  Those seem to the be main issues in the lawsuit.  This could end up being the fall of not one but two Harkeys.


About Admin

"Admin" is just editors Vern Nelson, Greg Diamond, or Ryan Cantor sharing something that they mostly didn't write themselves, but think you should see. Before December 2010, "Admin" may have been former blog owner Art Pedroza.