COMMISSION OBTAINS PRELIMINARY INJUNCTION IN $60 MILLION SECURITIES FRAUD SCHEME TARGETED AT ELDERLY VICTIMS IN SOUTHERN CALIFORNIA

U.S. Securities and Exchange Commission
Litigation Release No. 18703 / May 11, 2004
COMMISSION OBTAINS PRELIMINARY INJUNCTION IN $60 MILLION SECURITIES FRAUD SCHEME TARGETED AT ELDERLY VICTIMS IN SOUTHERN CALIFORNIA
SECURITIES AND EXCHANGE COMMISSION v. D.W. HEATH & ASSOCIATES, INC., PRIVATE CAPITAL MANAGEMENT, INC., PRIVATE COLLATERAL MANAGEMENT, INC., PCM FIXED INCOME FUND I, LLC, DANIEL WILLIAM HEATH, AND DENIS TIMOTHY O'BRIEN, No. CV 04 - 02949JFW(Ex)(C.D. Cal.)

On May 6, 2004, the Securities and Exchange Commission ("Commission") obtained a preliminary injunction in a multi-million dollar securities fraud scheme perpetrated by six Southern California defendants: D.W. Heath & Associates, Inc., Private Capital Management, Inc., Private Collateral Management, Inc., and PCM Fixed Income Fund I, LLC, all with offices in Hemet, Brea, Temecula, and Pasadena; Daniel William Heath, 47, of Chino Hills; and Denis Timothy O'Brien, 49, of Yorba Linda. The defendants agreed to the entry of the preliminary injunction. The Commission alleges that the defendants, who raised at least $60 million, lured elderly victims to workshops with the promise of a free lunch and then bilked them out of their retirement money by purporting to sell them safe, guaranteed notes. U.S. District Judge John F. Walter of the U.S. District Court for the Central District of California also set a hearing on the Commission's application for appointment of a permanent receiver for May 20, 2004.

The Commission's complaint, filed on April 28, 2004, in federal court in Los Angeles, alleges that the defendants fraudulently induced at least 803 elderly investors nationwide to invest in PCM notes that purportedly pay a "guaranteed" return of 5.5% to 8% per year. The defendants claim that investor funds will be used to make secured loans to businesses. The defendants also represent that independent IRA administrators conducted "due diligence" on the PCM Notes and that either investors will be repaid their principal at maturity, or they may redeem all or part of their investment before maturity, subject to a 10% penalty. Finally, the defendants claim that PCM and the PCM Fund are California entities.

According to the complaint, these representations are false. There is no evidence that there are any secured loans. The PCM Notes also are not liquid because the defendants have failed to promptly return investor funds. The complaint further alleges that some investors have had to threaten to file, or actually filed, lawsuits against the defendants to get back their money. Nor is it true that IRA administrators have conducted due diligence. Finally, there is no record that either PCM or the PCM Fund are California legal entities.

The Court's Order of May 6, 2004, preliminarily enjoins the defendants from future violations of the registration and antifraud provisions of the federal securities laws, Sections 5(a), 5(c) and 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. The Order also freezes the assets of all defendants (except O'Brien), orders an accounting, prevents the destruction of documents, and expedites discovery. The Commission also seeks permanent injunctions, and other relief, including disgorgement and civil penalties against all defendants. The Commission acknowledges the assistance of the Riverside County District Attorneys' Office, the California Department of Corporations, and the United States Postal Inspection Service.



http://www.sec.gov/litigation/litreleases/lr18703.htm

FEDERAL, STATE, AND LOCAL LAW ENFORCEMENT HALT $60 MILLION FRAUDULENT SCHEME TARGETED AT ELDERLY VICTIMS IN SOUTHERN CALIFORNIA

U.S. Securities and Exchange Commission
Litigation Release No. 18689 / May 3, 2004
FEDERAL, STATE, AND LOCAL LAW ENFORCEMENT HALT $60 MILLION FRAUDULENT SCHEME TARGETED AT ELDERLY VICTIMS IN SOUTHERN CALIFORNIA
SECURITIES AND EXCHANGE COMMISSION v. D.W. HEATH & ASSOCIATES, INC., PRIVATE CAPITAL MANAGEMENT, INC., PRIVATE COLLATERAL MANAGEMENT, INC., PCM FIXED INCOME FUND I, LLC, DANIEL WILLIAM HEATH, AND DENIS TIMOTHY O'BRIEN No. CV 04 - 02949JFW(Ex)(C.D. Cal.)

The Securities and Exchange Commission ("Commission") filed an emergency action on April 28th to halt an on-going multi-million dollar securities fraud scheme perpetrated by six Southern California defendants: D.W. Heath & Associates, Inc., Private Capital Management, Inc., Private Collateral Management, Inc., and PCM Fixed Income Fund I, LLC, all with offices in Hemet, Brea and Pasadena; Daniel William Heath, 47, of Chino Hills; and Denis Timothy O'Brien, 49, of Yorba Linda. The Commission alleges that the defendants, who have raised at least $60 million to date, lured elderly victims to workshops with the promise of a free lunch and then bilked them out of their retirement money by purporting to sell them safe, guaranteed notes. The Commission coordinated its investigation with the United States Postal Inspection Service, the California Department of Corporations, and the Riverside County District Attorney's Office, which late yesterday executed criminal search warrants at the defendants' offices in Hemet, Brea and Pasadena and at Heath's and O'Brien's homes. Also yesterday, U.S. District Judge John F. Walter of the U.S. District Court for the Central District of California issued orders freezing the defendants' assets.

The Commission's complaint, filed in federal court in Los Angeles, alleges that the defendants fraudulently induced at least 803 elderly investors nationwide to invest in PCM notes that purportedly pay a "guaranteed" return of 5.5% to 8% per year. The defendants claim that investor funds will be used to make secured loans to businesses. The defendants also represent that independent IRA administrators conducted "due diligence" on the PCM Notes and that either investors will be repaid their principal at maturity, or they may redeem all or part of their investment before maturity, subject to a 10% penalty. Finally, the defendants claim that PCM and the PCM Fund are California entities.

According to the complaint, these representations are false. There is no evidence that there are any secured loans. The PCM Notes also are not liquid because the defendants have failed to promptly return investor funds. The complaint further alleges that some investors have had to threaten to file, or actually filed, lawsuits against the defendants to get back their money. Nor is it true that IRA administrators have conducted due diligence. Finally, there is no record that either PCM or the PCM Fund are California legal entities.

In its lawsuit, the Commission obtained an order freezing the assets of all defendants (except O'Brien), an accounting, an order preventing destruction of documents, an order expediting discovery, and an order temporarily enjoining all of the defendants from future violations of the securities registration and antifraud provisions of the federal securities laws, Sections 5(a), 5(c) and 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. The Commission also seeks preliminary and permanent injunctions, and other relief, including disgorgement and civil penalties against all defendants. A hearing to determine whether a temporary receiver should be appointed over Heath & Associates, PCM, Private Collateral Management, and the PCM Fund is scheduled for Monday, May 3, 2004 at 1:30 p.m. A hearing on whether a preliminary injunction should be issued against the defendants and whether a permanent receiver should be appointed is scheduled for May 10 2004, at 1:30 p.m. The Commission acknowledges the California Department of Corporations, the Riverside County District Attorneys' Office and the United States Postal Inspection Service for their assistance in this investigation.

SEC Complaint in this matter



http://www.sec.gov/litigation/litreleases/lr18689.htm

SEC Complaint in the matter of SEC v. D.W. HEATH & ASSOCIATES, INC.; et al

JOSE F. SANCHEZ, Cal. Bar No. 161362
LISA A. GOK, Cal. Bar No. 147660
J. CINDY ESON, Cal. Bar No. 219782
ROBERTO A. TERCERO, Cal. Bar No. 143760
DAVID S. BROWN, Cal. Bar No. 134569
CAMMY C. DUPONT, Cal. Bar No. 176660
Attorneys for Plaintiff
Securities and Exchange Commission
Randall R. Lee, Regional Director
Sandra J. Harris, Associate Regional Director
5670 Wilshire Boulevard, 11th Floor
Los Angeles, California 90036-3648
Telephone: (323) 965-3998
Facsimile: (323) 965-3908

UNITED STATES DISTRICT COURT
FOR THE CENTRAL DISTRICT OF CALIFORNIA
EASTERN DIVISION

SECURITIES AND EXCHANGE
COMMISSION,
Plaintiff,

vs.

D.W. HEATH & ASSOCIATES, INC.;
PCM FIXED INCOME FUND I, LLC;
PRIVATE CAPITAL MANAGEMENT,
INC.; PRIVATE COLLATERAL
MANAGEMENT, INC.; DANIEL
WILLIAM HEATH; AND DENIS
TIMOTHY O’BRIEN,
Defendants.

Case No. CV 04-02949 JFW (Ex)
COMPLAINT FOR VIOLATIONS
OF THE FEDERAL SECURITIES
LAWS

Plaintiff Securities and Exchange Commission (“Commission”) alleges as
follows:

JURISDICTION AND VENUE
1. This Court has jurisdiction over this action pursuant to Sections
20(b), 20(d)(1) and 22(a) of the Securities Act of 1933 (“Securities Act”), 15
U.S.C. §§ 77t(b), 77t(d)(1) & 77v(a), and Sections 21(d)(1), 21(d)(3)(A), 21(e)
and 27 of the Securities Exchange Act of 1934 (“Exchange Act”), 15 U.S.C.
§§ 78u(d)(1), 78u(d)(3)(A), 78u(e) & 78aa. Defendants have, directly or
indirectly, made use of the means or instrumentalities of interstate commerce, of
the mails, or of the facilities of a national securities exchange, in connection with
the transactions, acts, practices, and courses of business alleged in this complaint.
2. Venue is proper in this district pursuant to Section 22(a) of the
Securities Act, 15 U.S.C. § 77v(a), and Section 27 of the Exchange Act,
15 U.S.C. § 78aa, because certain of the transactions, acts, practices, and courses
of conduct constituting violations of the federal securities laws occurred within
this district.
SUMMARY
3. This case involves the ongoing fraudulent and unregistered offer and
sale of securities perpetrated by Daniel William Heath (“Heath”) and Denis
Timothy O’Brien (“O’Brien”) through various affiliated entities, D.W. Heath &
Associates, Inc. (“Heath & Associates”), Private Capital Management, Inc.
(“PCM”), Private Collateral Management, Inc. (“Private Collateral Management”),
and the PCM Fixed Income Fund I, LLC (the “PCM Fund”) (collectively,
“defendants”). Since at least 1996, defendants have targeted senior citizens and
induced them to invest their retirement and other funds in promissory notes
offered through PCM or the PCM Fund (the “PCM Notes”). Defendants have sold
the PCM notes to at least 803 elderly investors nationwide. The current value of
these investments is at least $69.9 million, all of which is purportedly under the
management and control of defendants.
4. To lure investors, defendants have held – and are scheduled to hold
in the coming months – group workshops and one-on-one meetings, in which they
tout the PCM Notes as safe, secured, and liquid investments. Specifically, Heath,
O’Brien, and defendants’ sales agents represent to investors, among other things,
that (1) investor money is pooled to make business loans that are secured by the

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borrowers’ assets; (2) the PCM Notes pay a “guaranteed” return of at least 5.5% to
8% per year, which can be paid in cash or allowed to accrue at the investors’
discretion; (3) investors will be repaid their principal at maturity, or they may
redeem all or part of their investment before maturity subject to a penalty of up to
10%; (4) independent third-party IRA administrators conducted “due diligence”
on the PCM Notes for the protection of investors; and (5) PCM and the PCM Fund
are California business entities.
5. These representations are all false. First, defendants have not used
investor funds to make any secured loans. Defendants have not recorded any
UCC-1 financing statements that show PCM, the PCM Fund, or any of the
defendants as a secured creditor on any loans. The PCM Notes also are not liquid.
In fact, defendants have failed to promptly honor redemption requests from
investors, who have been able to take their money out only after threatening to
file, or actually filing, a lawsuit against defendants. Nor is it true that defendants’
IRA administrators have conducted due diligence or otherwise approved the PCM
Notes as a safe investment. Furthermore, there is no record that PCM or the PCM
Fund are California business entities.
6. In addition to these misrepresentations, defendants appear to be
operating an undisclosed Ponzi scheme. In fact, a November 2002 Private
Placement Memorandum (“PPM”) provided by Heath to the IRA administrators –
but never distributed to investors – states that funds from new investors will be
used to pay principal and interest to existing investors.
7. Defendants also failed to disclose to investors that in March 1998, the
California Department of Corporations (“DOC”) issued two desist-and-refrain
orders (“D & R Orders”) against Heath & Associates, Heath, PCM, and the PCM
Fund for engaging in the unregistered sale of securities and for acting as
unregistered broker-dealers. Despite the fact Heath consented to these orders,
defendants continue to use unlicensed sales agents to conduct an unregistered

- 4 -
offering. Heath and O’Brien also are misleading investors into believing that the
D & R Orders do not apply to the PCM Notes offering, when they know
otherwise. Defendants have not registered themselves or their offering with the
Commission.
8. The defendants, by engaging in the conduct described in this
complaint, have violated, and unless enjoined will continue to violate, the
securities registration and antifraud provisions of the Securities Act and Exchange
Act. By this complaint, the Commission seeks a temporary restraining order and
other emergency relief, preliminary and permanent injunctions, disgorgement with
prejudgment interest, and civil penalties against all of the defendants; an asset
freeze against and the appointment of a receiver over Heath & Associates, PCM,
Private Collateral Management, and the PCM Fund; and a personal asset freeze
against Heath.
THE DEFENDANTS
9. D.W. Heath & Associates, Inc., was incorporated in California in
1998. It has offices in Hemet, Brea, and Pasadena, California, but the address
provided to the California Secretary of State is a commercial receiving mail
facility (i.e., a mail drop) in Placentia, California. Heath & Associates purports to
be a financial services company established in 1983 that provides investment
advice and estate planning services to senior citizens. Heath & Associates is the
servicing and marketing agent for PCM and the placement and servicing agent for
the PCM Fund. On March 30, 1998, the DOC issued D & R Orders against and
stipulated to by Heath & Associates, Heath, PCM, and the PCM Fund for the
unregistered sale of securities and for acting as an unregistered broker-dealer.
Heath & Associates is not registered with the Commission.
10. PCM Fixed Income Fund I, LLC, purports to be a California limited
liability company, but is a business entity of unknown form. It uses the same
business address as Heath & Associates in Hemet, California. The PCM Fund is

- 5 -
not registered with the Commission.
11. Private Capital Management, Inc., purports to be a corporation, but is
a business entity of unknown form. It is the general manager of the PCM Fund
and receives investor funds. PCM is also referred to as “a Private Collateral
Management company” in documents provided to investors. PCM is not
registered with the Commission.
12. Private Collateral Management, Inc., was incorporated in California
in 1995, but the California Secretary of State recently suspended its corporate
status. Its address of record is the same mail drop as Heath & Associates. Private
Collateral Management is not registered with the Commission.
13. Daniel William Heath, age 47, resides in Chino Hills, California. He
controls Heath & Associates, the PCM Fund, PCM, and Private Collateral
Management. Heath is the president and senior financial consultant of Heath &
Associates, the chief executive officer and chief financial officer of the PCM
Fund, the co-founder, president, chief executive officer, and chief financial officer
of PCM, and the president of Private Collateral Management. Heath is the
signatory on PCM’s bank accounts. He does not hold any securities licenses and
is not registered with the Commission.
14. Denis Timothy O’Brien, age 49, resides in Yorba Linda, California.
He is a director of Heath & Associates, where he also serves as an associate and
financial consultant. O’Brien does not hold any securities licenses and is not
registered with the Commission.
THE FRAUDULENT SCHEME
A. Defendants’ Offering And Sales Efforts
15. Since at least 1996 to the present, defendants have offered and sold
PCM Notes to at least 803 investors nationwide. The PCM Notes purportedly held
in investors’ IRA accounts are valued at $69.9 million. This figure has been
calculated by adding the total principal invested with defendants and the accrued

- 6 -
interest promised by defendants to investors.
16. Defendants target senior citizens in their ongoing solicitations. Heath
& Associates sponsors free financial workshops for senior citizens at various
Southern California restaurants. Using leads developed from senior citizens who
attended previous workshops, defendants mail and telephone invitations to
prospective investors, luring them with a free lunch. At least one investor saw a
newspaper ad for the workshops.
17. Defendants also are using an Internet website (www.seniorz.org) to
promote their upcoming workshops. According to the website, workshops are
scheduled through the end of April 2004, at five different Southern California
locations. Defendants have scheduled workshops at a restaurant in Glendale,
California, through June 2004.
18. Heath & Associates has held two investor workshops per month at
one restaurant in Hemet, California for at least the past seven years. In that
restaurant, serving staff is not allowed in the room during the workshops.
19. At the workshops, senior citizens listen to presentations by Heath and
O’Brien, who describe themselves as financial consultants. They assure investors
that the PCM Notes are safe, secured, and liquid. They represent that IRA
administrators have conducted “due diligence” on the PCM Notes and that
investors can use IRA funds to buy them. Heath and O’Brien explain at the
workshops that the notes are “secured” corporate notes that are “backed by assets”
of the borrower. They further tell prospective investors that the PCM Notes are
much safer than stocks and bonds, do not fluctuate in price, and pay a much higher
rate of return than bank certificates of deposits. They also tell prospective
investors that the PCM Notes pay a “guaranteed” annual return of 5.5% to 8%,
which investors can elect to receive each month or reinvest in the PCM Notes.
20. To learn more about the PCM Notes, prospective investors are
required to sign up for a free, one-on-one consultation with a Heath & Associates

- 7 -
financial consultant. Prospective investors can schedule their follow up
consultation at the end of the workshop. They are given a list of financial
documents – including bank, brokerage, and mutual fund statements, and their tax
returns for the last two years – to bring with them to their one-on-one
appointment. Prospective investors are also asked to fill out a “Seminar
Questionnaire” that asks for the name and telephone number of two other people
whom they know “would benefit from this seminar.”
21. Investors are not provided with any other documents at the
workshops, except for a one-page brochure about Heath & Associates, which
includes “testimonials” from clients and professional associates.
22. Heath, O’Brien, and defendants’ other sales agents conduct the
one-on-one sessions with prospective investors. At these sessions, Heath and
O’Brien reiterate that the PCM Notes are “safe” because they are “secured” and
“backed by assets,” and that the returns paid to investors are “guaranteed.”
O’Brien compares the notes to a home mortgage, where the lender can foreclose
on the property if the borrower defaults. Heath and O’Brien also explain that
PCM pools investor funds to make collateralized loans to small and medium-sized
companies, and that PCM is experienced in making these loans and in managing
the loan portfolio for investors. No other use of investor funds is disclosed to
prospective investors.
23. During the one-on-one sessions, Heath and O’Brien also tell investors
that PCM and the investors share in the profits generated by the interest paid on
the loans by the borrowers. They also represent that the PCM Notes mature in two
to six years. Investors, however, are assured that they may redeem all or part of
their principal before maturity subject to a penalty of up to 10%. O’Brien assured
at least one investor that he could get his money out at any time, and that the
amount of the penalty would decrease as his PCM Note matured.
/ / /

- 8 -
24. Some investors purchase the PCM Notes at their first one-on-one
session, while others do so during second or third appointments.
25. Defendants do not provide investors with any offering materials or
financial statements about PCM or the PCM Fund. Some investors have been
given a PCM brochure in connection with their first investment. Other investors
received the brochure years after they invested, and only after asking Heath &
Associates for some information about their investment. This brochure is targeted
at senior citizens, and describes generally that the PCM Notes are secured
corporate notes designed for investors seeking high current monthly income,
capital preservation, and liquidity, and that investors may redeem their PCM Notes
through a “quarterly repurchase program.”
B. The Mechanics Of Investing With Defendants
26. If a prospective investor decides to invest in the PCM Notes through
an IRA account, the investor must open a new IRA account with an IRA
administrator previously selected by Heath & Associates. Once the new IRA is
opened, the investor then transfers funds from his existing IRA account into the
new one, and directs the IRA administrator to purchase the PCM Notes on his or
her behalf. The IRA administrator transfers the investor’s funds to PCM or the
PCM Fund as payment for the PCM Notes. Investors can designate their Heath &
Associates financial consultant as the “Financial Representative” on their new
IRA.
27. If a prospective investor decides to invest non-IRA funds in the PCM
Notes, Heath and O’Brien tell the investor to make out a check to PCM or Private
Capital Management. If the investor does not have funds readily available, Heath
& Associates will help the prospective investor sell other investments to free up
cash to invest in the PCM Notes. In one case, a Heath & Associates financial
consultant wrote a letter by hand to the investor’s annuity company, instructing
that the annuity be sold, and had the investor sign the letter on the spot without

- 9 -
informing the investor that she would have to pay taxes and fees for liquidating
her annuity.
28. When investors purchase the PCM Notes through an IRA, the funds
are held in the name of the PCM Fund. When investors purchase the PCM Notes
using non-IRA funds, the funds are held in the name of PCM. The defendants,
however, generally do not explain the difference between PCM and the PCM Fund
when describing the investment at the workshops or during the one-on-one
sessions. Some investors did not know whether their funds were invested in PCM
or the PCM Fund until after they gave their money to Heath &Associates and they
received documentation showing how their money was invested.
29. Some investors are given a receipt and asked to sign an “Investments
Agreement,” in which they indicate whether their interest payments are to be paid
monthly or allowed to accrue on account. This Agreement also authorizes Heath
& Associates to act as the “sole servicing agent” for the investment. Some
investors were also asked to sign a PCM “New Account Application.” Neither the
Investments Agreement nor the New Account Application discloses any
information about the PCM Notes.
30. In connection with a non-IRA investment, some investors have
received a promissory note and a security agreement. Others merely have received
a purchase confirmation and receipt reflecting an investment in a “secured
corporate note.”
31. After making their initial investment, investors receive quarterly
account statements either from Heath & Associates or the IRA administrator. The
account statements show both the purported value of the investment, the amount
of interest generated, and any principal or payments that have been made or
interest that has accrued. For IRA investments, the IRA administrator generates
the account statement based on information provided by Heath & Associates.
/ / /

- 10 -
32. Some investors receive their investment returns in monthly payments.
Defendants usually send interest checks to investors at the beginning of each
month.
C. Defendants’ Misrepresentations And Omissions
1. The Defendants Are Operating An Undisclosed Ponzi Scheme
33. While defendants represent that investor funds will be used to make
collateralized loans to businesses, a PPM for the PCM Notes offering dated
November 1, 2002, which Heath provided to Heath & Associates’ IRA
administrators in 2003, states that investor funds will be used to, among other
things, make principal and interest payments to other investors. This PPM was
never disseminated to investors, even though some investors specifically requested
a PPM or any offering materials. Such undisclosed use of investor funds
constitutes a Ponzi scheme.
2. The PCM Notes Are Not Secured
34. Neither PCM, the PCM Fund, nor any of the other defendants have
provided any secured loans to borrowers. No UCC-1 financing statements that
identify PCM, the PCM Fund, or any of the defendants as a secured creditor have
been filed with the State of California or any other state. Nor are Heath &
Associates, PCM, or Private Collateral Management licensed to operate under the
California Finance Lenders Law or the California Residential Mortgage Lending
Act. Even if defendants have used investor funds to make any collateralized
loans, the security interests in the collateral have not been perfected under the
UCC, and consequently, contrary to defendants’ representations, investors’ funds
are not secured or protected.
3. The PCM Notes Are Not Liquid
35. Some investors have been unable to redeem their PCM Notes as
Heath, O’Brien, and defendants’ sales agents have represented. Rather than
honoring redemption requests, Heath & Associates has told some investors that

- 11 -
the PCM Notes “renew automatically.” At least one investor had to wait five
months to redeem her investment while Heath & Associates purportedly “audited”
her account. O’Brien told one investor that a $50,000 redemption would disrupt
their operations and that they would have to pay him in monthly installments of
$10,000. And when that investor retained an attorney, Heath unexpectedly went
to the investor’s home and tried to convince him that he should not have an
attorney representing him and that he would be better off just leaving things in
Heath’s hands. Other investors could not redeem their investments until they
resorted to threatening or filing a lawsuit. In another case, Heath and O’Brien
flatly denied that the investor could make “premature” redemptions because it was
not “typed” in the PCM Note that the investor received.
4. Defendants Did Not Disclose And Lied About the D & R Orders
36. Defendants failed to disclose to investors that in March 1998, the
DOC issued the D & R Orders against Heath, Heath & Associates, PCM, and the
PCM Fund for engaging in the unregistered sale of securities and for acting as
unregistered broker-dealers. Heath knew about the orders, as he consented to and
signed the stipulation for the entry of the D & R Orders.
37. In early 2003, the IRA administrator used by Heath & Associates at
the time learned that the D & R Orders had been issued. When the IRA
administrator could not obtain assurances from Heath and Heath & Associates that
they were complying with the D & R Orders, the IRA administrator stopped
accepting any new or additional investments in the PCM Notes. As a result, in
March 2003, the IRA administrator sent a certified letter to investors notifying
them of the two D & R Orders. In response, Heath & Associates sent a letter to
the same investors and falsely represented that its future solicitations would
comply with California state securities laws and would be made through NASD
licensed broker-dealers. Defendants never have complied with the D & R Orders,
and continue to be unlicensed, to use unlicensed brokers, and to engage in an

- 12 -
unregistered offering.
38. In addition, after March 2003, Heath and O’Brien repeatedly
downplayed the significance of the D & R Orders or falsely represented to
investors that they did not apply to the PCM Notes offering. They claimed that
defendants were not selling securities. Heath also told the IRA administrator that
the D & R Orders were unrelated to the PCM Fund, and that they should not have
been on his record, but that it would cost too much to have them “wiped off.”
Heath told an investment adviser, who was trying to get information for an
investor, that the D & R Orders were inapplicable because he was operating under
an exemption as “the issuer” and he was not “brokering the deal.” Similarly,
O’Brien also told investors that the letter from the IRA administrator should not
have been sent to all investors because the D & R Orders only affected
approximately 14 new investments. In addition, O’Brien told at least one investor
that the DOC had issued the D & R Orders because an investor had complained
that she should get her money back because PCM had failed to file a form with the
DOC.
5. The IRA Administrators Did Not Approve The Offering
39. Heath & Associates has used two different IRA Administrators
during the course of the PCM Notes offering. Heath and O’Brien repeatedly have
misrepresented the role that the IRA administrators played in the offering. They
have told prospective and existing investors that the IRA administrators have
performed due diligence for the protection of investors. The two IRA
administrators, however, have never conducted “due diligence” or approved the
PCM Notes in any way.
6. PCM And The PCM Fund Are Not California Business Entities
40. Heath and O’Brien represent to investors that PCM and the PCM
Fund are California legal business entities. O’Brien represented to at least one
investor that PCM is a California corporation. The PPM provided to the IRA

- 13 -
administrators represents that the PCM Fund is a California limited liability
corporation. Neither representation is true. Neither PCM nor the PCM Fund are,
or have ever been, registered as California legal business entities.
D. Heath’s And O’Brien’s Scienter
41. As the principal officer and control person of defendant entities,
Heath knew, or was reckless in not knowing, that (1) the PCM Notes offering was
an apparent Ponzi scheme because he gave the IRA administrators the PPM and
controlled PCM’s bank accounts; (2) the PCM Notes were not liquid because he
personally participated in tactics designed to delay investors’ liquidations of their
accounts; (3) the PCM Notes were not secured and safe because he did not cause
UCC-1 financing statements to be filed in order to perfect collateralized loans
purportedly made by PCM and the PCM Fund; (4) he failed to disclose the D & R
Orders and misrepresented their applicability to the PCM Notes offering; (5) the
IRA administrators did not conduct “due diligence” on the PCM Notes; and (6)
PCM and the PCM Fund have never been California corporate entities.
42. O’Brien, a Heath & Associates director, also knew, or was reckless in
not knowing, that (1) the PCM Notes are not liquid because he has failed to
disclose to investors that their Notes renew automatically and that “premature”
redemptions are not permitted; (2) the D & R Orders are not disclosed to investors;
and (3) Heath & Associates, Heath, PCM and the PCM Fund are misrepresenting
their compliance with the D & R Orders.
43. As a sales agent offering and selling securities, O’Brien had an
affirmative duty, and was required, to conduct an independent investigation
related to the PCM Notes. Appropriate due diligence would have revealed to him
the true nature of the PCM Notes offering, including the apparent Ponzi scheme,
the lack of liquidity, and the D & R Orders. O’Brien, however, did not conduct
any independent investigation regarding his and other sales agents’ representations
about the PCM Notes to investors. Indeed, O’Brien has admitted to one investor

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that he did not know, nor did he need to know, how investor funds were used.
FIRST CLAIM FOR RELIEF
UNREGISTERED OFFER AND SALE OF SECURITIES
Violations of Sections 5(a) and 5(c) of the Securities Act
44. The Commission realleges and incorporates by reference paragraphs
1 through 43 above.
45. The defendants, and each of them, by engaging in the conduct
described above, directly or indirectly, made use of means or instruments of
transportation or communication in interstate commerce or of the mails, to offer to
sell or to sell securities, or to carry or cause such securities to be carried through
the mails or in interstate commerce for the purpose of sale or for delivery after
sale.
46. No registration statement has been filed with the Commission or has
been in effect with respect to the offerings alleged herein.
47. By engaging in the conduct described above, each of the defendants
violated, and unless restrained and enjoined will continue to violate, Sections 5(a)
and 5(c) of the Securities Act, 15 U.S.C. §§ 77e(a) and 77e(c).
SECOND CLAIM FOR RELIEF
FRAUD IN THE OFFER OR SALE OF SECURITIES
Violations of Section 17(a) of the Securities Act
48. The Commission realleges and incorporates by reference paragraphs
1 through 43 above.
49. The defendants, and each of them, by engaging in the conduct
described above, directly or indirectly, in the offer or sale of securities by the use
of means or instruments of transportation or communication in interstate
commerce or by use of the mails:
a. with scienter, employed devices, schemes, or artifices to
defraud;

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b. obtained money or property by means of untrue statements of a
material fact or by omitting to state a material fact necessary in
order to make the statements made, in light of the
circumstances under which they were made, not misleading; or
c. engaged in transactions, practices, or courses of business which
operated or would operate as a fraud or deceit upon the
purchaser.
50. By engaging in the conduct described above, each of the defendants
violated, and unless restrained and enjoined will continue to violate, Section 17(a)
of the Securities Act, 15 U.S.C. § 77q(a).
THIRD CLAIM FOR RELIEF
FRAUD IN CONNECTION WITH THE
PURCHASE OR SALE OF SECURITIES
Violations of Section 10(b) of the Exchange Act
and Rule 10b-5 thereunder
51. The Commission realleges and incorporates by reference paragraphs
1 through 43 above.
52. The defendants, and each of them, by engaging in the conduct
described above, directly or indirectly, in connection with the purchase or sale of a
security, by the use of means or instrumentalities of interstate commerce, of the
mails, or of the facilities of a national securities exchange, with scienter:
a. employed devices, schemes, or artifices to defraud;
b. made untrue statements of a material fact or omitted to state a
material fact necessary in order to make the statements made, in
the light of the circumstances under which they were made, not
misleading; or
c. engaged in acts, practices, or courses of business which
operated or would operate as a fraud or deceit upon other

- 16 -
persons.
53. By engaging in the conduct described above, each of the defendants
violated, and unless restrained and enjoined will continue to violate, Section 10(b)
of the Exchange Act, 15 U.S.C. § 78j(b), and Rule 10b-5 thereunder, 17 C.F.R.
§ 240.10b-5.
PRAYER FOR RELIEF
WHEREFORE, the Commission respectfully requests that the Court:
I.
Issue findings of fact and conclusions of law that the defendants committed
the alleged violations.
II.
Issue judgments, in a form consistent with Fed. R. Civ. P. 65(d),
temporarily, preliminarily, and permanently enjoining the defendants and their
officers, agents, servants, employees, and attorneys, and those persons in active
concert or participation with any of them, who receive actual notice of the order or
judgment by personal service or otherwise, and each of them, from violating
Sections 5(a), 5(c), and 17(a) of the Securities Act, 15 U.S.C. §§ 77e(a), 77e(c),
and 77q(a), and Section 10(b) of the Exchange Act, 15 U.S.C. § 78j(b), and
Rule 10b-5 thereunder, 17 C.F.R. § 240.10b-5.
III.
Issue, in a form consistent with Fed. R. Civ. P. 65, a temporary restraining
order and a preliminary injunction freezing the assets of each of Heath, Heath &
Associates, the PCM Fund, PCM, and Private Collateral Management, appointing
a receiver over Heath & Associates, the PCM Fund, PCM, and Private Collateral
Management, prohibiting each of the defendants from destroying documents, and
requiring accountings from each of the defendants.
/ / /
/ / /
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IV.
Order each defendant to disgorge all ill-gotten gains from their illegal
conduct, together with prejudgment interest thereon.
V.
Order each defendant to pay civil penalties under Section 20(d) of the
Securities Act, 15 U.S.C. § 77t(d), and Section 21(d)(3) of the Exchange Act, 15
U.S.C. § 78u(d)(3).
VI.
Retain jurisdiction of this action in accordance with the principles of equity
and the Federal Rules of Civil Procedure in order to implement and carry out the
terms of all orders and decrees that may be entered, or to entertain any suitable
application or motion for additional relief within the jurisdiction of this Court.
VII.
Grant such other and further relief as this Court may determine to be just
and necessary.
DATED: April 27, 2004 s/ Jose F. Sanchez
JOSE F. SANCHEZ
DAVID S. BROWN
CAMMY C. DUPONT
Attorneys for Plaintiff
Securities and Exchange Commission

Two sons of former Sheriff Floyd Tidwell involved

Nineteen charged in bail bonds investigation

Two sons of former Sheriff Floyd Tidwell involved

By JAMES RAMAGE/Staff Writer

VICTORVILLE — Two sons of former Sheriff Floyd Tidwell were among 19 county bail agents and others charged Thursday by the San Bernardino County District Attorney's Office for extortion, solicitation of bail by jail inmates and insurance code violations.

Charges were filed against bail agents, notaries public, an attorney and several inmates, according to the San Bernardino County District Attorney's Office.

The charges follow two years of in-depth investigation by the San Bernardino County Sheriff's Department and the California Department of Insurance into county bail agents' businesses, the District Attorney's office said.

The investigation followed complaints by competing bail agents and inmates claiming they were pressured into hiring certain bail businesses, said Deputy District Attorney Cheryl Kersey of the Major Crimes Unit.

Those charged were affiliated with Boone's Bail Bonds and Tidwell's Bail Bonds in Fontana, West Valley Bail Bonds in Ontario and Jerry Brandt Bail Bonds in Highland, sheriff's officials said.

Former sheriff's deputy Daniel Tidwell of Phelan was also charged with possessing two assault weapons plus stealing a shotgun and a rifle while serving as a deputy, in addition to the charges of illegal business practices, Kersey said.

Tidwell's brother, bail agent Steve Tidwell of San Bernardino, was also charged, Kersey said.

Notary Public Shirley Tidwell of Phelan has been accused of certifying documents without having witnessed them, contrary to the requirements of her office, Kersey said.

Conspiracy to solicit bail by inmates and bail agents is a violation of the California Insurance Code, according to the District Attorney's Office.

The District Attorney's Office also accused Rancho Cucamonga attorney Geoffrey Newman of paying bail agents and inmates to solicit clients for him — collectively described as solicitation of a crime and attorney capping charges — Kersey said.

"It's something that needed to be looked into," Kersey said.

Seven of the 19 charged were sent letters to appear for arraignment on Feb. 18, the District Attorney's Office reported, while the other 12 had warrants issued for their arrest.

Further charges may be filed against other individuals and bail businesses during the ongoing investigation, Kersey said.

James Ramage can be reached at james_ramage@link.freedom.com or 951-6242.

San Bernardino County Finds That Curing Political Corruption Takes Time and Teeth

By Hugo Martín
July 14, 2003 in print edition B-4

Only months after he became San Bernardino County’s top administrative officer in 1994, James Hlawek confided to his friend Harry Mays, the man he had just replaced, that he was going to retire with more than just a pension, according to court records.

He planned to get rich.

Over the next five years, Hlawek pocketed hundreds of thousands of dollars in bribes, mostly paid in fat bundles of cash by businessmen seeking his influence on county contracts and permits, court records show.

But he wasn’t alone. Nearly a dozen San Bernardino County officials and leaders in area cities have been convicted over the past decade – including Hlawek and Mays – of accepting bribes in a series of corruption scandals that shocked Inland Empire residents and embarrassed local leaders.

To rebuild the public trust, San Bernardino County officials have adopted several reform measures, launched internal audits, installed a whistle-blowing hotline, hired an ethics officer and created a special public integrity unit for the district attorney’s office.

But repairing the damage has proved daunting. While officials insist that San Bernardino County government is now free of graft and corruption, county employees, activists and others say serious reform measures with tough penalties must be adopted to send a signal that the old ways of doing business in the county are over.

“So much damage was done structurally to the organization that it will take some time to fix it,” said Chris Prato, general manager of the San Bernardino Public Employees Assn.

Critics like Prato point out, for example, that the ethics officer hired last year has no authority to investigate allegations of wrongdoing or impose penalties on violators. Even the San Bernardino County Grand Jury, in its annual report released July 1, recommended that the county not allow public officials to accept gifts from anyone doing business with the county.

“I don’t think they have gone far enough,” said former Rialto City Councilman Ed Scott, who is vying for a seat on the Board of Supervisors next year.

The county’s tarnished image persists, observers say, because the examples of corruption were so brazen and involved officials in the highest levels of local government.

In addition to Hlawek and Mays, the county’s tax collector and its top investment officer pleaded guilty in 1999 to charges of accepting bribes. County Supervisor Jerry Eaves, a former state assemblyman, is awaiting trial on charges that he accepted more than $6,000 in Las Vegas vacations and more than $33,000 in campaign contributions in exchange for his support of a controversial billboard project. He has pleaded not guilty.

The scandals also entangled former Dist. Atty. Dennis Stout, who was the subject of a joint Sheriff’s Department and FBI investigation. Investigators were looking into charges that Stout leaked confidential information about Eaves to Scott, who was one of Eaves’ political rivals. No charges were brought against Stout, but his campaign opponent, Mike Ramos, questioned Stout’s ethics during the 2002 campaign. Stout dropped out after a poor showing in the primary.

In the working-class city of Colton, four elected officials, including the mayor, pleaded guilty to accepting bribes in exchange for their support of development deals in the city. One of those officials, former Councilman James Grimsby, was sentenced in May to 15 months in prison for accepting $25,000 in cash and gifts from a Colton businessman for supporting several development projects, including three restaurants in a southeast area of the city.

Just before his sentencing, Grimsby pleaded for leniency and blamed his troubles on his third ex-wife, who cooperated with the FBI’s investigation by secretly taping conversations with him.

In the city of San Bernardino, state prosecutors charged two former City Council members in April with 19 counts of accepting thousands of dollars in bribes to support several development projects in the late 1990s. The trial is pending.

As for cases in which government officials have already pleaded guilty, many of the bribes came in the form of thick bundles of cash, paid out in clandestine meetings in restaurants and government buildings, according to court records.

Prosecutors and court records say Hlawek, who served as the county’s chief administrative officer from 1994 to 1998, conspired with his predecessor, Mays, to get the county to approve a lucrative waste disposal contract for a firm that paid Hlawek thousands of dollars in bribes. In 1999, Hlawek and Mays pleaded guilty to federal charges of conspiracy to accept bribes. Mays has already completed his two-year prison term. Hlawek awaits sentencing.

Prosecutors charged that in 1994 Hlawek also conspired with several Colton city officials to approve permits to allow local businessmen to erect several billboards on county-owned land in Colton.

According to court records, one of the businessmen involved in the billboard scheme met with Hlawek in 1996 in the basement of the county Hall of Administration, where he gave the then-chief administrative officer a brown paper bag stuffed with $25,000 in cash.

Some ethics experts say San Bernardino County can demonstrate a strong commitment to reform by creating an independent watchdog panel, similar to the ethics commission created in Los Angeles after conflict-of-interest scandals during the Tom Bradley administration.

The Los Angeles Ethics Commission has a full-time staff dedicated to enforcing the city’s campaign finance, lobbying and ethics laws. The panel also has the power to impose fines on elected officials found guilty of violating those laws.

“You need to set a definite tone,” said Bob Stern, president of the nonpartisan Center for Government Studies in Santa Monica. He said an independent ethics panel could help San Bernardino County set that tone.

“The problem in San Bernardino County is that people thought they could get away with it,” he said.

But San Bernardino County officials note that state and federal corruption laws already impose harsh penalties on violators. They also insist that they have already sent a clear message by adopting a series of anti-corruption measures, including:

* A requirement that applicants for top county positions go through a criminal and financial background check;

* A code of ethics created by an international association of government administrators;

* A $25,000-a-year limit on how much county departments can pay one firm without the approval of county supervisors;

* A waste, fraud and abuse hotline, monitored by the county auditor-controller;

* A requirement that anyone doing business with the county disclose whether any former county employees are employed.

The county has also sued dozens of firms and government officials in connection with past corruption schemes and has recovered nearly $9 million lost in the various bribery and kickback deals.

“I think the county has taken some very significant steps [toward] preventing the past from reoccurring,” said Jim Pesta, the county’s ethics resource officer and former personnel director for the Roman Catholic Diocese of San Bernardino.

Pesta’s primary duties are educating and training county employees on the code of ethics that applies to county workers. He also helps the auditor-controller evaluate complaints made to the county’s waste, fraud and abuse hotline, which has received dozens of calls and e-mails.

Despite such reforms, county officials are still struggling to regain the trust of county employees and residents.

As recently as June, some county employees questioned the integrity of the Board of Supervisors when the county considered awarding a $13-million contract to supply the county with 4,000 electronic voting machines. A county panel recommended giving the contract to Sequoia Voting Systems of Oakland.

During a public hearing, Supervisor Dennis Hansberger questioned the bidding process because the winning bid was more expensive than the lowest bid.

He directed county staff to reconsider the award. Dave Ellis, who has worked as a campaign consultant to Hansberger, is a lobbyist for the firm that offered the lowest bid and is now getting a second shot at the contract.

Prato, the county employee union leader, said Hansberger’s objection, considering his relationship to Ellis, “makes you wonder.”

Hansberger denies that his relationship with Ellis played a role in his objection to the bidding process. He said he never talked to Ellis about the contract. But he said he understands why some people remain leery.

“You don’t go through what the county has gone through and expect to rebuild the public trust overnight,” he said.

County Administrative Officer Wally Hill, formerly the top county administrator in Yuma, Ariz., was hired in February partly on his reputation for integrity and honesty. But he said county employees have asked him bluntly whether he can be trusted.

“I can understand the skepticism that employees have,” he said. “It’s a situation where the trust and respect has to be earned rather than assumed.”

Gary Thornberry, who grew up in Colton and now manages a cement plant there, said he has watched his hometown struggle through the embarrassing corruption episode and hopes all its corrupt leaders are gone.

“The perception is that everything is now being done ethically,” he said.

But keeping the public trust is not easy and Thornberry worries that the city could easily suffer a setback.

“I think the new council members have to prove themselves over time,” he said. “That is the most important thing, because if there is another incident, it will set everything back.”

Related Articles

• San Bernardino County Records Are Subpoenaed Jun 03, 2006
• Ex-S.B. County Officials Face More Penalties Feb 10, 2005
• Former County Chief Sentenced in Bribery Case Nov 30, 2005
• County Aims to Recover Millions Jun 10, 2004
• Bribes to Secure Contracts Are Described in a County’s Lawsuit Jun 11, 2004

Scotland Yard Chief Says Legalize It

One of Britain's most senior police officers has joined the legalization chorus. Chief Superintendent Anthony Wills, borough commander of Hammersmith and Fulham in London, called for the government to take over the drug trade since it cannot stop it.

In an interview with the Hammersmith and Shephards Bush Gazette last week, Wills said even hard drugs, such as crack cocaine and heroin, should be legalized. "I would have no problems with decriminalizing drugs full stop," said Mr Wills. "There have to be very stringent measures over the production and supply of drugs, and we have got to remove the drug market from criminals. I do not want people to take drugs, but if they are going to, I want them to take them safely, with a degree of purity and in a controlled way."

Wills repeated his insistence that he was not promoting drug use. "I am not saying people should take drugs. They are very bad for you, but the reality of the world we live in is this: If people want to get drugs, they can get them. Drugs are a fact of life, and you cannot eradicate them," Wills said. "My only concern is to increase the safety of the community and not to allow these ghastly people to make a fortune out of other people's misery."

Wills, a 30-year veteran who commands more than 2,000 officers, said that no matter how harsh drug laws are, they are doomed to failure. "There are some places where people are beheaded if they sell drugs, but even this does not stop the trade."

And enforcing the cannabis laws is a waste of police resources, Wills added. "I am very liberal in relation to possession of drugs," he said. "Policing cannabis is a waste of our time, as I do not feel the effects of cannabis are any worse than over-consumption of alcohol."

Wills may have joined the growing number of high police and government officials who have gone off the reservation on drug policy, but the Blair government remains steadfast. "All controlled drugs are harmful and will remain illegal," the Home Office noted tersely in response to Wills' remarks. "The Government's drug strategy focuses on the most dangerous drugs as the misery they cause cannot be underestimated. We have not seen the interview and so cannot comment on it."

What Good Can a Handgun Do Against an Army.....?

A friend of mine recently forwarded me a question a friend of his had posed: "If/when our Federal Government comes to pilfer, pillage, plunder our property and destroy our lives, what good can a handgun do against an army with advanced weaponry, tanks, missiles, planes, or whatever else they might have at their disposal to achieve their nefarious goals? (I'm not being facetious: I accept the possibility that what happened in Germany, or similar, could happen here; I'm just not sure that the potential good from an armed citizenry in such a situation outweighs the day-to-day problems caused by masses of idiots who own guns.)" If I may, I'd like to try to answer that question. I certainly do not think the writer facetious for asking it. The subject is a serious one that I have given much research and considerable thought to. I believe that upon the answer to this question depends the future of our Constitutional republic, our liberty and perhaps our lives. My friend Aaron Zelman, one of the founders of Jews for the Preservation of Firearms Ownership, once told me:

"If every Jewish and anti-nazi family in Germany had owned a Mauser rifle and twenty rounds of ammunition AND THE WILL TO USE IT (emphasis supplied, MV), Adolf Hitler would be a little-known footnote to the history of the Weimar Republic."

Note well that phrase: "and the will to use it," for the simply-stated question, "What good can a handgun do against an army?", is in fact a complex one and must be answered at length and carefully. It is a military question. It is also a political question. But above all it is a moral question which strikes to the heart of what makes men free, and what makes them slaves. First, let's answer the military question. Most military questions have both a strategic and a tactical component. Let's consider the tactical.

A friend of mine owns an instructive piece of history. It is a small, crude pistol, made out of sheet-metal stampings by the U.S. during World War II. While it fits in the palm of your hand and is a slowly-operated, single-shot arm, it's powerful .45 caliber projectile will kill a man with brutal efficiency. With a short, smooth-bore barrel it can reliably kill only at point blank ranges, so its use requires the will (brave or foolhardy) to get in close before firing. It is less a soldier's weapon than an assassin's tool. The U.S. manufactured them by the million during the war, not for our own forces but rather to be air-dropped behind German lines to resistance units in occupied Europe. Crude and slow (the fired case had to be knocked out of the breech by means of a little wooden dowel, a fresh round procured from the storage area in the grip and then manually reloaded and cocked) and so wildly inaccurate it couldn't hit the broad side of a French barn at 50 meters, to the Resistance man or woman who had no firearm it still looked pretty darn good. The theory and practice of it was this: First, you approach a German sentry with your little pistol hidden in your coat pocket and, with Academy-award sincerity, ask him for a light for your cigarette (or the time the train leaves for Paris, or if he wants to buy some non-army-issue food or a perhaps half-hour with your "sister"). When he smiles and casts a nervous glance down the street to see where his Sergeant is at, you blow his brains out with your first and only shot, then take his rifle and ammunition. Your next few minutes are occupied with "getting out of Dodge," for such critters generally go around in packs. After that (assuming you evade your late benefactor's friends) you keep the rifle and hand your little pistol to a fellow Resistance fighter so they can go get their own rifle.

Or maybe you then use your rifle to get a submachine gun from the Sergeant when he comes running. Perhaps you get very lucky and pickup a light machine gun, two boxes of ammunition and a haversack of hand grenades. With two of the grenades and the expenditure of a half-a-box of ammunition at a hasty roadblock the next night, you and your friends get a truck full of arms and ammunition. (Some of the cargo is sticky with "Boche" blood, but you don't mind terribly.)

Pretty soon you've got the best armed little maquis unit in your part of France, all from that cheap little pistol and the guts to use it. (One wonders if the current political elite's opposition to so-called "Saturday Night Specials" doesn't come from some adopted racial memory of previous failed tyrants. Even cheap little pistols are a threat to oppressive regimes.)

They called the pistol the "Liberator." Not a bad name, all in all. Now let's consider the strategic aspect of the question, "What good can a handgun do against an army....?" We have seen that even a poor pistol can make a great deal of difference to the military career and postwar plans of one enemy soldier. That's tactical. But consider what a million pistols, or a hundred million pistols (which may approach the actual number of handguns in the U.S. today), can mean to the military planner who seeks to carry out operations against a populace so armed. Mention "Afghanistan" or "Chechnya" to a member of the current Russian military hierarchy and watch them shudder at the bloody memories. Then you begin to get the idea that modern munitions, air superiority and overwhelming, precision-guided violence still are not enough to make victory certain when the targets are not sitting Christmas-present fashion out in the middle of the desert.

I forget the name of the Senator who observed, "You know, a million here and a million there, and pretty soon you're talking about serious money." Consider that there are at least as many firearms--handguns, rifles and shotguns--as there are citizens of the United States. Consider that last year there were more than 14 million Americans who bought licenses to hunt deer in the country. 14 million--that's a number greater than the largest five professional armies in the world combined. Consider also that those deer hunters are not only armed, but they own items of military utility--everything from camouflage clothing to infrared "game finders", Global Positioning System devices and night vision scopes. Consider also that quite a few of these hunters are military veterans. Just as moving around in the woods and stalking game are second nature, military operations are no mystery to them, especially those who were on the receiving end of guerrilla war in Southeast Asia. Indeed, such men, aging though they may be, may be more psychologically prepared for the exigencies of civil war (for this is what we are talking about) than their younger active-duty brother-soldiers whose only military experience involved neatly defined enemies and fronts in the Grand Campaign against Saddam. Not since 1861-1865 has the American military attempted to wage a war athwart its own logistical tail (nor indeed has it ever had to use modern conventional munitions on the Main Streets of its own hometowns and through its' relatives backyards, nor has it tested the obedience of soldiers who took a very different oath with orders to kill their "rebellious" neighbors, but that touches on the political aspect of the question).

But forget the psychological and political for a moment, and consider just the numbers. To paraphrase the Senator, "A million pistols here, a million rifles there, pretty soon you're talking serious firepower." No one, repeat, no one, will conquer America, from within or without, until its citizenry are disarmed. We remain, as a British officer had reason to complain at the start of our Revolution, "a people numerous and armed." The Second Amendment is a political issue today only because of the military reality that underlies it. Politicians who fear the people seek to disarm them. People who fear their government's intentions refuse to be disarmed. The Founders understood this. So, too, does every tyrant who ever lived. Liberty-loving Americans forget it at their peril. Until they do, American gun owners in the aggregate represent a strategic military fact and an impediment to foreign tyranny. They also represent the greatest political challenge to home-grown would-be tyrants. If the people cannot be forcibly disarmed against their will, then they must be persuaded to give up their arms voluntarily. This is the siren song of "gun control," which is to say "government control of all guns," although few self-respecting gun-grabbers such as Charles Schumer would be quite so bold as to phrase it so honestly.

Joseph Stalin, when informed after World War II that the Pope disapproved of Russian troops occupying Trieste, turned to his advisors and asked, "The Pope? The Pope? How many divisions does he have?" Dictators are unmoved by moral suasion. Fortunately, our Founders saw the wisdom of backing the First Amendment up with the Second. The "divisions" of the army of American constitutional liberty get into their cars and drive to work in this country every day to jobs that are hardly military in nature. Most of them are unmindful of the service they provide. Their arms depots may be found in innumerable closets, gunracks and gunsafes. They have no appointed officers, nor will they need any until they are mobilized by events. Such guardians of our liberty perform this service merely by existing. And although they may be an ever-diminishing minority within their own country, as gun ownership is demonized and discouraged by the ruling elites, still they are as yet more than enough to perform their vital task. And if they are unaware of the impediment they present to their would-be rulers, their would-be rulers are painfully aware of these "divisions of liberty", as evidenced by their incessant calls for individual disarmament. They understand moral versus military force just as clearly as Stalin, but they would not be so indelicate as to quote him. The Roman Republic failed because they could not successfully answer the question, "Who Shall Guard the Guards?" The Founders of this Republic answered that question with both the First and Second Amendments. Like Stalin, the Clintonistas could care less what common folk say about them, but the concept of the armed citizenry as guarantors of their own liberties sets their teeth on edge and disturbs their statist sleep. Governments, some great men once avowed, derive their legitimacy from "the consent of the governed." In the country that these men founded, it should not be required to remind anyone that the people do not obtain their natural, God-given liberties by "the consent of the Government." Yet in this century, our once great constitutional republic has been so profaned in the pursuit of power and social engineering by corrupt leaders as to be unrecognizable to the Founders. And in large measure we have ourselves to blame because at each crucial step along the way the usurpers of our liberties have obtained the consent of a majority of the governed to do what they have done, often in the name of "democracy"--a political system rejected by the Founders. Another good friend of mine gave the best description of pure democracy I have ever heard. "Democracy," he concluded, "is three wolves and a sheep sitting down to vote on what to have for dinner." The rights of the sheep in this system are by no means guaranteed.

Now it is true that our present wolf-like, would-be rulers do not as yet seek to eat that sheep and its peaceable wooly cousins (We, the people). They are, however, most desirous that the sheep be shorn of taxes, and if possible and when necessary, be reminded of their rightful place in society as "good citizen sheep" whose safety from the big bad wolves outside their barn doors is only guaranteed by the omni-presence in the barn of the "good wolves" of the government. Indeed, they do not present themselves as wolves at all, but rather these lupines parade around in sheep's clothing, bleating insistently in falsetto about the welfare of the flock and the necessity to surrender liberty and property "for the children", er, ah, I mean "the lambs." In order to ensure future generations of compliant sheep, they are careful to educate the lambs in the way of "political correctness," tutoring them in the totalitarian faiths that "it takes a barnyard to raise a lamb" and "all animals are equal, but some animals are more equal than others." Every now and then, some tough old independent-minded ram refuses to be shorn and tries to remind the flock that they once decided affairs themselves according to the rule of law of their ancestors, and without the help of their "betters." When that happens, the fangs become apparent and the conspicuously unwilling are shunned, cowed, driven off or (occasionally) killed. But flashing teeth or not, the majority of the flock has learned over time not to resist the Lupine-Mandarin class which herds it. Their Founders, who were fiercely independent rams, would have long ago chased off such usurpers. Any present members of the flock who think like that are denounced as antediluvian or mentally deranged. There are some of these dissidents the lupines would like to punish, but they dare not--for their teeth are every bit as long as their "betters." Indeed, this is the reason the wolves haven't eaten any sheep in generations. To the wolves chagrin, this portion of the flock is armed and they outnumber the wolves by a considerable margin. For now the wolves are content to watch the numbers of these "armed sheep" diminish, as long teeth are no longer fashionable in polite society. (Indeed, they are considered by the literati to be an anachronism best forgotten and such sheep are dismissed by the Mandarins as "Tooth Nuts" or "Right Leg Fanatics".) When the numbers of armed sheep fall below a level that the wolves can feel safe to do so, the eating will begin. The wolves are patient, and proceed by infinitesimal degrees like the slowly-boiling frog. It took them generations to lull the sheep into accepting them as rulers instead of elected representatives. If it takes another generation or two of sheep to complete the process, the wolves can wait. This is our "Animal Farm," without apology to George Orwell.

Even so, the truth is that one man with a pistol CAN defeat an army, given a righteous cause to fight for, enough determination to risk death for that cause, and enough brains, luck and friends to win the struggle. This is true in war but also in politics, and it is not necessary to be a Prussian militarist to see it. The dirty little secret of today's ruling elite as represented by the Clintonistas is that they want people of conscience and principle to be divided in as many ways as possible ("wedge issues" the consultants call them) so that they may be more easily manipulated. No issue of race, religion, class or economics is left unexploited. Lost in the din of jostling special interests are the few voices who point out that if we refuse to be divided from what truly unites us as a people, we cannot be defeated on the large issues of principle, faith, the constitutional republic and the rule of law. More importantly, woe and ridicule will be heaped upon anyone who points out that like the blustering Wizard of Oz, the federal tax and regulation machine is not as omniscient, omnipotent or fearsome as they would have us believe. Like the Wizard, they fan the scary flames higher and shout, "Pay no attention to the man behind the curtain!"

For the truth is, they are frightened that we will find out how pitifully few they are compared to the mass of the citizenry they seek to frighten into compliance with their tax collections, property seizures and bureaucratic, unconstitutional power-shifting. I strongly recommend everyone see the new animated movie "A Bug's Life". Simple truths may often be found sheltering beneath unlikely overhangs, there protected from the pelting storm of lies that soak us everyday. "A Bug's Life", a childrens' movie of all things, is just such a place.

The plot revolves around an ant hill on an unnamed island, where the ants placate predatory grasshoppers by offering them each year one-half of the food they gather (sounds a lot like the IRS, right?). Driven to desperation by the insatiable tax demands of the large, fearsome grasshoppers, one enterprising ant goes abroad seeking bug mercenaries who will return with him and defend the anthill when the grasshoppers return. (If this sounds a lot like an animated "Magnificent Seven", you're right.) The grasshoppers (who roar about like some biker gang or perhaps the ATF in black helicopters, take your pick) are, at one point in the movie, lounging around in a "bug cantina" down in Mexico, living off the bounty of the land. The harvest seeds they eat are dispensed one at a time from an upturned bar bottle. Two grasshoppers suggest to their leader, a menacing fellow named "Hopper" (whose voice characterization by Kevin Spacey is suitably evil personified), that they should forget about the poor ants on the island. Here, they say, we can live off the fat of the land, why worry about some upstart ants? Hopper turns on them instantly. "Would you like a seed?" he quietly asks one. "Sure," answers the skeptical grasshopper thug. "Would you like one?" Hopper asks the other. "Yeah," says he. Hopper manipulates the spigot on the bar bottle twice, and distributes the seeds to them.

"So, you want to know why we have to go back to the island, do you?" Hopper asks menacingly as the thugs munch on their seeds. "I'll show you why!" he shouts, removing the cap from the bottle entirely with one quick blow. The seeds, no longer restrained by the cap, respond to gravity and rush out all at once, inundating the two grasshoppers and crushing them. Hopper turns to his remaining fellow grasshoppers and shrieks, "That's why!" I'm paraphrasing from memory here, for I've only seen the movie once. But Hopper then explains, "Don't you remember the upstart ant on that island? They outnumber us a hundred to one. How long do you think we'll last if they ever figure that out?"

"If the ants are not frightened of us," Hopper tells them, "our game is finished. We're finished."

Of course it comes as no surprise that in the end the ants figure that out. Would that liberty-loving Americans were as smart as animated ants. Courage to stand against tyranny, fortunately, is not only found on videotape. Courage flowers from the heart, from the twin roots of deeply-held principle and faith in God. There are American heroes living today who have not yet performed the deeds of principled courage that future history books will record. They have not yet had to stand in the gap, to plug it with their own fragile bodies and lives against the evil that portends. Not yet have they been required to pledge "their lives, their fortunes and their sacred honor." Yet they will have to. I believe with all my heart the lesson that history teaches: That each and every generation of Americans is given, along with the liberty and opportunity that is their heritage, the duty to defend America against the tyrannies of their day. Our father's fathers fought this same fight. Our mother's mother's mothers fought it as well. From the Revolution through the world wars, from the Cold War through to the Gulf, they fought to secure their liberty in conflicts great and small, within and without.

They stood faithful to the oath that our Founders gave us: To bear true faith and allegiance--not to a man; not to the land; not to a political party, but to an idea. The idea is liberty, as codified in the Constitution of the United States. We swear, as did they, an oath to defend the Constitution against all enemies, foreign and domestic. And throughout the years they paid in blood and treasure the terrible price of that oath. That was their day. This is ours. The clouds we can see on the horizon may be a simple rain or a vast hurricane, but there is a storm coming. Make no mistake.

Lincoln said that this nation cannot long exist half slave and half free. I say, if I may humbly paraphrase, that this nation cannot long exist one-third slave, one-third uncommitted, and one-third free. The slavery today is of the mind and soul not the body, but it is slavery without a doubt that the Clintons and their toadies are pushing.

It is slavery to worship our nominally-elected representatives as our rulers instead of requiring their trustworthiness as our servants. It is slavery of the mind and soul that demands that God-given rights that our Forefathers secured with their blood and sacrifice be traded for the false security of a nanny-state which will tend to our "legitimate needs" as they are perceived by that government. It is slavery of a more traditional sort that extorts half of our incomes to pay, like slaves of old, for the privilege of serving and supporting our master's regime.

It is slavery to worship humanism as religion and slavery to deny life and liberty to unborn Americans. As people of faith in God, whatever our denomination, we are in bondage to a plantation system that steals our money; seizes our property; denies our ancient liberties; denies even our very history, supplanting it with sanitized and politicized "correctness"; denies our children a real public education; denies them even the mention of God in school; denies, in fact, the very existence of God.

So finally we are faced with, we must return to, the moral component of the question: "What good can a handgun do against an army?" The answer is "Nothing," or "Everything." The outcome depends upon the mind and heart and soul of the man or woman who holds it. One may also ask, "What good can a sling in the hands of a boy do against a marauding giant?" If your cause is just and righteous much can be done, but only if you are willing to risk the consequences of failure and to bear the burdens of eternal vigilance.

A new friend of mine gave me a plaque the other day. Upon it is written these words by Winston Churchill, a man who knew much about fighting tyranny: "Still, if you will not fight for the right when you can easily win without bloodshed; if you will not fight when your victory will be sure and not too costly; you may come to the moment when you will have to fight with all the odds against you and only a precarious chance of survival. There may be a worse case. You may have to fight when there is no hope of victory, because it is better to perish than to live as slaves." The Spartans at Thermopylae knew this. The fighting Jews of Masada knew this, when every man, woman and child died rather than submit to Roman tyranny. The Texans who died at the Alamo knew this. The frozen patriots of Valley Forge knew this. The "expendable men" of Bataan and Corregidor knew this. If there is one lesson of Hitlerism and the Holocaust, it is that free men, if they wish to remain free, must resist would-be tyrants at the first opportunity and at every opportunity. Remember that whether they the come as conquerors or elected officials, the men who secretly wish to be your murderers must first convince you that you must accept them as your masters. Free men and women must not wait until they are "selected", divided and herded into Warsaw Ghettos, there to finally fight desperately, almost without weapons, and die outnumbered. The tyrant must be met at the door when he appears. At your door, or mine, wherever he shows his bloody appetite. He must be met by the pistol which can defeat an army. He must be met at every door, for in truth we outnumber him and his henchmen. It matters not whether they call themselves Communists or Nazis or something else. It matters not what flag they fly, nor what uniform they wear. It matters not what excuses they give for stealing your liberty, your property or your life. "By their works ye shall know them."

The time is late. Those who once has trouble reading the hour on their watches have no trouble seeing by the glare of the fire at Waco. Few of us realized at the time that the Constitution was burning right along with the Davidians. Now we know better.

We have had the advantage of that horrible illumination for more than five years now--five years in which the rule of law and the battered old parchment of our beloved Constitution have been smashed, shredded and besmirched by the Clintonistas. In this process they have been aided and abetted by the cowardly incompetence of the "opposition" Republican leadership, a fact made crystal clear by the Waco hearings. They have forgotten Daniel Webster's warning: "Miracles do not cluster. Hold on to the Constitution of the United States of America and the Republic for which it stands--what has happened once in six thousand years may never happen again. Hold on to your Constitution, for if the American Constitution shall fail there will be anarchy throughout the world." Yet being able to see what has happened has not helped us reverse, or even slow, the process. The sad fact is that we may have to resign ourselves to the prospect of having to maintain our principles and our liberty in the face of becoming a disenfranchised minority within our own country. The middle third of the populace, it seems, will continue to waffle in favor of the enemies of the Constitution until their comfort level with the economy is endangered. They've got theirs, Jack. The Republicans, who we thought could represent our interests and protect the Constitution and the rule of law, have been demonstrated to be political eunuchs. Alan Keyes was dead right when he characterized the last election as one between "the lawless Democrats and the gutless Republicans." The spectacular political failures of our current leaders are unrivaled in our history unless you recall the unprincipled jockeying for position and tragi-comedy of misunderstanding and miscommunication which lead to our first Civil War.

And make no mistake, it is civil war which may be the most horrible corollary of the Law of Unintended Consequences as it applies to the Clintonistas and their destruction of the rule of law. Because such people have no cause for which they are willing to die (all morality being relativistic to them, and all principles compromisable), they cannot fathom the motives or behavior of people who believe that there are some principles worth fighting and dying for. Out of such failures of understanding come wars. Particularly because although such elitists would not risk their own necks in a fight, they have no compunction about ordering others in their pay to fight for them. It is not the deaths of others, but their own deaths, that they fear. As a Christian, I cannot fear my own death, but rather I am commanded by my God to live in such a way as to make my death a homecoming. That this makes me incomprehensible and threatening to those who wish to be my masters is something I can do little about. I would suggest to them that they not poke their godless, tyrannical noses down my alley. As the coiled rattlesnake flag of the Revolution bluntly stated: "Don't Tread on Me!" Or, as our state motto here in Alabama says: "We Dare Defend Our Rights."

But can a handgun defeat an army? Yes. It remains to be seen whether the struggle of our generation against the tyrants of our day in the first decade of the 21st Century will bring a restoration of liberty and the rule of law or a dark and bloody descent into chaos and slavery. If it is to be the former, I will meet you at the new Yorktown. If it is to be the latter, I will meet you at Masada. But I will not be a slave. And I know that whether we succeed or fail, if we should fall along the way, our graves will one day be visited by other free Americans, thanking us that we did not forget that, with help of Almighty God, in the hands of a free man a handgun CAN defeat a tyrant's army.

Wesson Names Nancy Bohl To Speaker's Commission On Police Conduct

Sacramento - Assembly Speaker Herb J. Wesson Jr. (D-Los Angeles/Culver City) today named the final set of commissioners to the Speaker's Commission on Police Conduct, which he created in July in response to the videotaped beating of a handcuffed youth.

The appointment of Assemblymembers Judy Chu (D-Monterey Park) and Lou Correa (D – Santa Ana), psychologist Dr. Nancy Bohl, law enforcement training expert Sgt. Pat Gomez, youth advocate David Kakashiba, attorney R. Samuel Paz, and psychologist Dr. Sandra Smith bring the current number of commissioners to 25. The Commission’s five subcommittees will hold public hearings across the state over the next three months.

"My goal from the beginning was to create a balanced panel of experts from academia, law enforcement, psychology and other related fields," Speaker Wesson said. "And I am confident these latest appointees will help us reach our goal in California—that there will be zero incidents of police abuse and zero tolerance when incidents occur. One incident is too many."

The Commission will review past research and recommend legislation that addresses issues of police training, community policing, police accountability and the use of force. The Speaker hopes that the work of the Commission will foster a stronger bond between law enforcement and the citizens they protect through mutual respect and understanding.

Assemblymember Chu represents the 49th Assembly district in Southern California. She graduated with a bachelor's degree from UCLA and a Ph.D. in clinical psychology from the California School of Professional Psychology, and served as a faculty member in the psychology department in the Los Angeles Community College District for twenty years. When racial tensions surfaced in local schools, Dr. Chu broke new ground and built new bridges between communities by establishing a conflict resolution-training program for students. Prior to becoming a member of the California State Assembly, she served on the Monterey Park City Council for thirteen years starting from 1988 to 2001, and served as Mayor of the city three times. Chu was an U.S. Department of Commerce appointee to the Race and Ethnic Advisory Committee of the U.S. Census Bureau and she currently Chairs the Assembly Select Committee on Hate Crimes.

Assemblymember Lou Correa represents California's 69th Assembly District in Southern California. He holds a degree in Economics from California State University, Fullerton; and both a Jurist Doctorate and a Masters in Business Administration from the University of California, Los Angeles. Prior to becoming a member of the California State Assembly, Correa was an investment banker, a real estate broker and a business consultant. Long active in community affairs, Correa served on the Board of Directors of the Orange County Community Development Council, the county's anti-poverty council, and on the California Small Business Board. Recently, he received the Legislator of the Year award from the state's leading crime victim advocacy organization, the Crime Victims United of California.

Dr. Nancy Bohl has been providing psychological services to law enforcement officers for the past 19 years. She has worked with agencies such as the FBI, the Secret Service and the San Bernadino County Sheriff’s Department. She is currently serving as Director of "The Counseling Team," an emergency counseling team in Southern California. Bohl is an adjunct faculty member of San Jose State University, Riverside City College, San Bernadino Valley College, and a frequent lecturer at the FBI Academy.

Sergeant Pat Gomez has over 21 years of law enforcement experience and currently is the Director of the Professional Peace Officers Association. He trains and supervises deputies who teach topics such as use of force, anger management, tactical communications, critical decision-making and use of less lethal weapons. He is the past President of the Sheriffs Relief Association.

David Kakishiba, of Berkeley, currently serves as the Executive Director of the East Bay Asian Youth Center, a private non-profit community organization serving the interests of children, youth, and their families. In 1999, he was awarded the Charles Bannerman Memorial Fellowship in recognition of his long-time service to and advocacy for children, youth, and families. David has also served as an appointee to various local government boards and commissions, including the City of Berkeley Police Review Commission. He moved to the East Bay in 1977 to attend the University of California, Berkeley, and began working for the East Bay Asian Youth Center in 1980.

R. Samuel Paz has practiced law in Los Angeles since 1974, working on high profile cases such as representing victims of the LAPD Rampart scandal. He has served in a number of community and legal organizations including the National Police Accountability Project, the Hispanic Advisory Council to the L.A. Police Commission, the ACLU and the Mexican American Bar Association of L.A. County.

Dr. Sandra Smith is a clinical psychologist from Oakland, California with a practice focussing on individual, couple and family psychotherapy. She has received a BA from Howard University in Washington D.C. and a Masters and Ph.D. from U.C. Berkeley. She has worked as an organizational consultant for the private sector and government on such issues as cultural diversity, communication and work-place violence. Dr. Smith performs psychological screenings of applicants for police officers, firefighters, communication dispatchers and probation officers

With the addition of these seven commissioners, the Commission will be composed of the following members:

Speaker of the Assembly Herb J. Wesson (D – Los Angeles/Culver City), Commission Chair

Assemblymember Jerome Horton (D – Inglewood), Commission Chair
# Assemblymember Wilma Chan (D – Oakland)

# Assemblymember Judy Chu (D-Monterey Park)

# Assemblymember Lou Correa (D – Santa Ana)

# Assemblymember Marco Firebaugh (D – Cudahy)

# Assemblymember Jay LaSuer (R – La Mesa)

# Assemblymember Ken Maddox (R – Garden Grove)

# Assemblymember Gloria Negrete-McLeod (D – Chino)

# Tom Anderson

# Dr. Nancy Bohl

# Erwin Chemierinsky

# Sgt. Pat Gomez

# Alice A. Huffman

# Ted Hunt

# Earl Ofari Hutchinson

# Rev. Norman S. Johnson, Sr.

# David Kakashiba

# Joseph D. McNamara

# Maribel Medina

# R. Samuel Paz

# Constance L. Rice

# Laurie Smith

# Dr. Sandra Smith

# Police Chief Arturo Venegas, Jr.

Each commissioner will sit on at least one of five subcommittees. The Commission will gather the subcommittee reports early next year and recommend legislation for the 2003 legislative session.

District attorney ends bid for reelection

Redlands Daily Facts, 2002-03-15
By Chris Nguyen Staff Writer

District Attorney

Dennis Stout is giving up his bid for a third term as the county's top prosecutor.

Stout announced his withdrawal from the race for district attorney a week after he finished second in the primary election, behind Deputy District Attorney Mike Ramos, who won 42.7 percent of the vote.

Stout won 35.3 percent of the vote, and a third candidate, defense attorney Frank H. Guzman, garnered 21.9 percent.

Both Ramos and Guzman had attacked Stout's handling of the investigation into corruption in the county.

Stout and Ramos were headed for a runoff in November, and while Stout has publicly stepped out of the race, state law requires that his name remain on the ballot.

In a prepared statement, Stout said further pursuit of the position he's held since January 1995 would be futile.

"After much soul searching last weekend, and analyzing the results of the primary election, I arrived at the conclusion that further prolonging the district attorney's race would be pointless," he said.

"The voters have given me the message that they desire change," he said. "With that in mind, I am withdrawing from the campaign today and will no longer expend time or effort in seeking re-election to a third term."

Ramos said Stout's decision is appropriate.

"Mr. Stout saw the writing on the wall," he said.

While Stout plans to stop campaigning, Ramos said he will not.

"We need to continue to go out and make contact with people," Ramos said. "It will be nice that it won't be an adversarial campaign."

Ramos said Stout will help familiarize him with the district attorney's position by including Ramos in top-level management meetings.

"I have been preparing myself for this job for years," Ramos said.

County supervisors said Stout's decision is honorable and wise.

"He and his office have been through a lot, and this is the right thing to do," Supervisor Bill Postmus said.

Supervisor Dennis Hansberger also said Stout was right to step aside, but added that he had expected Stout to fight harder to be re-elected.

In the months leading up to the March primary, Stout trailed Ramos in fund-raising.

Ramos brought in five times more campaign money than Stout did between January and June of last year, according to county records. Ramos collected $78,413 to Stout's $15,619.

While both men are Republicans, Ramos this week was endorsed for the nonpartisan post by the county's three Democratic state legislators.

Stout's backers included State Senate Republican Leader Jim Brulte of Rancho Cucamonga and police officers associations from Ontario and San Bernardino.

Stout's achievements as district attorney have been overshadowed by a scandal involving former Rialto Councilman Ed Scott, who ran against Supervisor Jerry Eaves in 2001.During his campaign, Scott told members of a task force consisting of the Sheriff's Department, the FBI and U.S. Attorney's Office in Los Angeles that top district attorney's officials offered to help him defeat Eaves, whom they were investigating.

In January 2000, authorities began recording Scott's conversations with Stout, Assistant District Attorney Dan Lough and Chief Investigator Barry Bruins.

An internal investigation concluded that the conduct of Lough and Bruins was inappropriate but not criminal. Stout demoted both men after transcripts of the conversations were made public.

Lough and Bruins have alleged that the investigation, which they claim was politically motivated, destroyed their careers. They also criticize Stout for refusing to oppose release of the transcripts.

Brulte, a longtime supporter of Stout, said the District Attorney's Office made a mistake, but Stout took the blame for it.

"It's not news when the district attorney does his job well. It is news when the DA makes a mistake," Brulte said. "People in politics understand that one mistake can wipe out 100 huge successes."

In October, Lough and Bruins sued the county, Stout and nine other defendants for defamation and violating their civil rights.

On Thursday, Lough and Bruins said Stout led a successful administration but they criticized his handling of the Eaves case.

"He's come to the realization that the community will not tolerate that kind of behavior," Scott said.

Stout's administration also has been excluded from the corruption task force because of information leaks before the scandal over the District Attorney's Office's involvement with Scott.

Those leaks led authorities to question whether the District Attorney's Office should participate.

Ramos said he plans to make the office more involved with the ongoing federal and local corruption investigation in San Bernardino County.

"We're going to work together," Ramos said.

Staff Writers Andrew Silva and Felisa Cardona contributed to this report.District attorney ends bid for reelection.