Has GOP Assemblywoman Diane Harkey become toxic?

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“The Democratic Party of Orange County (DPOC) is calling on Congressman John Campbell (R-CA 48th) to publicly return all campaign funds given by Assemblymember Diane Harkey (R-CA 73rd) and her husband Dan Harkey, president of the embattled Point Center Financial,” according to an email I received today from the DPOC.

Here is the rest of the DPOC’s email hit on Harkey and Campbell:

Dan Harkey and Point Center Financial are being sued by 53 of their investors for fraud and running a Ponzi scheme.”  He is currently under investigation by the Securities and Exchange Commission, and being sued in Riverside County for racketeering, fraud, and intentional misrepresentation.

Assemblymember Diane Harkey is listed as a defendant because the lawsuit alleges that Dan Harkey illegally transferred funds from investors to Diane Harkey for political purposes. Public documents show her as an employee of the company.

The Orange County Register reports that the lawsuit filed against the Harkeys on November 6, 2008 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 reports that the investors’ lawsuit claims that 85% of Point Center’s loans have either defaulted or been foreclosed.

“The Harkeys’ combined contributions to Congressman Campbell from 2004 to 2008 totals $10,491,” said DPOC Chairman Frank Barbaro, “under these questionable circumstances, the Harkeys’ contributions to Congressman Campbell can hardly be considered legitimate and should be publicly returned immediately.”

I think that the DPOC’s on the right track.  Campbell SHOULD return the dirty Harkey money!  But rather than give it to Harkey he ought to give it to the investors who lost their money betting on Mr. Harkey’s company.

In related news, the San Diego Tribune’s Chris Reed (formerly of the O.C. Register) absolutely tore Harkey a new one in an editorial this week.  Here are a few excerpts:

Her husband, Dan Harkey, runs Point Center Financial, an Aliso Viejo company that lends investors’ money to land developers. It is the target of a Securities and Exchange Commission probe. It is also facing a lawsuit from 53 investors who say Dan Harkey used their money for dubious loans – and to fund his wife’s rapid rise in Orange County politics. Campaign disclosure firms show Diane Harkey has spent $2.1 million in personal funds since 2004.

However, the suit presents no evidence for the alleged diversion of money. An aide to Diane Harkey told The Orange County Register last month that the campaign funds came entirely from the wealth she had accumulated in a 30-year banking career. Both Harkeys said she had never worked for Point Center.

If all this were true, then, yes, Diane Harkey would be on solid ground with her assertion that the allegations were trumped up.

But a follow-up Register report said Diane Harkey had been listed as a Point Center official in state documents and in campaign disclosure forms for two political donations to other GOP candidates. Harkey’s own “statement of economic interests” said she received more than $100,000 in annual income from a rental property that happens to be Point Center’s headquarters. She also appears to be backing away from her claim that she didn’t use her husband’s money for political purposes.

Plainly, this matter deserves coverage. Yet in a phone interview, Harkey told us our questions amounted to “slander”; that news accounts of the mess were all “libel” written by journalists determined to “massacre” her family; and that she was the victim of a sexist double-standard.