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City Manager Sends Biz to Son

By   /   December 16, 2012  /   1 Comment

Within minutes of city manager Rick Daniels receiving the email soliciting investment in a city business project the city manager forwarded it to his son, Benjamin Daniels using his city computer while working on city time.

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“Think About a Role in This”

Rick Daniels

Rick Daniels

Desert Hot Springs, CA – An Email of October 19, 2012 was forwarded from City Manager Rick Daniels to his son, Benjamin R. Daniels, requesting he “think about a role in this” referring to a multimillion dollar scheme soliciting investors for a development involving the city.

The investment offerings and strategies for raising development capital for the Desert Dunes project was first provided to Rick Daniels along with a 16 page fund raising syndicate agreement by investment group VLP.

Within minutes of receiving that email, Rick Daniels forwarded details to his son. The details are contained in a deleted email of the city manager.

The city that is continuously suffering a public relations black eye is socked with another blow with their #1 city employee seemingly engaged in questionable practices of steering business to his thirty-five year old son.

Ultimately, its up to government agencies to decide.

Ponzi Scheme

Ben Daniels

Ben Daniels

Recent press accounts reveal Benjamin Daniels was cited by the Securities and Exchange Commission for his part in a Ponzi scheme that bilked investors of millions of dollars in a bogus hedge fund. He was fined $286,683 and barred by the SEC from future association with any broker, dealer, investment adviser, municipal adviser, transfer agent, or nationally recognized statistical rating organization.

The hand-off of the VLP investment opportunity deal from father to son raises a few eyebrows especially since the project involving a new housing development at Desert Dunes golf course is within the sphere if influence of the city of Desert Hot Springs.

Email Obtained Legitimately

Rick Daniels’ email to his son was no accident but hidden as after sending it Rick Daniels secreted the email to the deleted email folder of the city manager’s city email account. He likely did not know it would be examined at the time he deleted it.

This smoking gun email was discovered as a result of a public document request thanks to the California Public Records Act supporting open government.

The city manager’s entire email for the month of October 2012 was made public after vetting by city’s law firm, Meyers Nave, that first removed privileged matters involving city litigation and personnel before authorizing the public release. After that the city manager’s email account was made public by City Clerk Jerryl Sorrieno.

The release of his emails so perturbed Daniels that he added a warning to his email automatic out of office reply to discourage people from writing to him with information they did not want to be seen. He instead encouraged people to telephone him on his personal cell phone. Daniels apparently believes his personal cell phone use for city business is not discoverable.

The city manager’s warning was a curious note picked up by The Desert Sun which published an article about Rick Daniels odd out of office reply. The city manager commented on the article with a complaint about his 6,000 emails being exposed to public review.

The Daniels Endorsement

Desert Dunes

Desert Dunes

The 16 page “Syndication Package” attached to the email from father to son warned it was “confidential and proprietary information” that  “could not be disclosed without the written consent of VLP Capital, Inc.”

Inside that package is a letter on city letterhead explaining the city’s role in the Desert Dunes development. In that letter Daniels says the city will act as lead agency in a developer sponsored annexation that will bring VLP’s Desert Dunes development into city limits.

Daniels offered this letter of city support without complete fore knowledge or imprimatur of the city council or public engagement debating the idea. Neither is there in the public record city council approval for “creating an Infrastructure Finance District, Community Facilities District or any such financing mechanisms to help fund large investment of infrastructure” of the VLP deal professed by Daniels in his endorsement letter to VLP investors.

Even though this Desert Dunes project has never come before the council for their approval or endorsement Daniels provided a letter to the developer stating the city has a “desire and willingness” to annex the property to support the VLP deal.

There is nothing in the public record indicating the city manager was authorized by the city council to write this letter endorsing the Canadian syndicate and this article is the first to inform the public of this and many other matters contained herein.

Daniels Family Big Money Problem

To make matters worse than this appearance of conflict of interest with the father secretly funneling business to his son there is another family problem. Benjamin Daniels was cited on December 6, 2012 by the Securities and Exchange Commission for operating as an unlicensed broker selling investments the SEC described as a “Ponzi scheme” which had “bilked investors” of $37 million in collaboration with Yusaf Jawed and associates of Grifphon Asset Management and Grifphon Holdings of Portland, Oregon.

According to the SEC, Benjamin Daniels of Indio says he is now broke and unable to repay the $286,683 earned as commissions from 20 investors.

The SEC findings also states Daniels family lost $1.2 million but does not attribute which family members were affected. Benjamin Daniels admitted responsibility to the SEC but stated to The Desert Sun that this problem was due to bad legal advice.

The senior Daniels bragged about his being a “wise investor” according to The Desert Sun. The city manager’s three-year contract with the city of Desert Hot Springs pays him nearly $1 million, an amount greater than the governor of the state.

Caught in Trap

Dick Oliphant

Dick Oliphant

Noted Coachella Valley civic leader and developer Richard Oliphant of Indian Wells was caught in Daniels’ investment trap according to first reporting by Nicole C. Brambila on December 12 in The Desert Sun.

Other newspapers in Oregon and Washington have also reported on the story so far with little or no mention of involvement of the city manager.

The Canadian syndicate mentioned in their October 19 email to Daniels that the city manager offered his ability to assist locating investors. There is nothing in the Rick Daniels’ emails suggesting he shared the Canadian syndicate’s investment solicitation with other investment brokers licensed or otherwise but sent this “opportunity” exclusively to Benjamin Daniels.

It also appears Rick Daniels communicated this information by email to his son while working on city time while operating city equipment.

Only one month of the city manager’s email has been examined at this time. That city manager Rick Daniels steered business to Benjamin Daniels is clear. It must be stated there is no indication if any other investments and investors were and are now being steered to Benjamin Daniels by his father.

SUPPORTING DOCUMENTS FOR THIS STORY (PDF)

First Desert Dunes Project Email

Forwarded email from Rick Daniels to his son Benjamin Daniels

SEC Complaint with Cease and Desist Proceedings Against Benjamin Daniels

 

top photo credit Bruce Montgomery

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About the author

Dean M Gray

Writer, Artist & Publisher. Dean started in the newspaper business at the age of nine earning 90 cents a week walking 3 miles delivering a newspaper door to door. 500 miles later he graduated to a bicycle route. Delivering news evolved into reporting news when he started publishing his first independent newspapers in high school. He served as editor for college newspaper has been published in newspapers and magazines. Dean has been writing his way out of a paper bag and traveling uphill ever since. He is a member of the Society of Professional Journalists and Investigative Reporters and Editors. His publication is Desert Vortex News - http://www.desertvortex.com

1 Comment

  1. LINDAG LINDAG says:

    Seems that Oliphant's name crops up too often in association with these guys. "Birds of a feather flock together"..."If you sleep with dogs, you wake up with fleas", etc.... There seem to be a group out here in the desert who hang out with one another....I didn't lose millions to Daniels, did you? My son would never do this to me, or my "friends", nor would my friends do anything like this...how does that other saying go?..."no honor among......".

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