Daryl Heller released on bail after debate about flight risk

• By Dan Nephin/LNP | LancasterOnline

After spending two nights in a federal detention center in Philadelphia, Lancaster County businessman Daryl Heller was released Friday on $500,000 bail – but with conditions that restrict his access to his personal and business financial resources.

Heller, who was arrested Wednesday morning at his home in East Hempfield Township, faces federal charges of securities and wire fraud, as well as four civil claims filed by the Securities and Exchange Commission. The cases derive from the collapse of companies Heller created to buy ATMs with investors’ money and pay them returns from fees generated by the machines.

Heller walked out of the federal courthouse wearing gray sweatpants and a sweatshirt with his attorneys at 6:50 p.m. He declined comment.

The federal criminal and civil filings say Heller used money from new investors to repay people who invested earlier – a fraud sometimes referred to as a Ponzi scheme. The cases unsealed Wednesday echo many of the allegations made by Heller’s business partners and investors, who allege the lucrative ATM business Heller boasted of operating was never as robust as he portrayed it. More than 2,700 investors were involved in the network, many from Lancaster County.

Flight risk debated

Assistant U.S. Attorney Francis Weber tried to argue that Heller should be detained because the government believes he is a flight risk. Magistrate Judge Carol Sandra Moore Wells, though, agreed with Heller’s attorneys that he should be subject to less restrictive bail.

Heller‘s bail hearing was recessed several times so that the prosecution and defense attorneys could work out an agreement that would restrict him from having sole access to his finances.

Those details needed to be worked out in such a way as to not impact Heller’s ongoing Chapter 11 case in federal bankruptcy court in New Jersey and that would still allow him to run his businesses. The solution was to require signatures by Heller and Luma Financial Group, a financial services business, on documents, bills or any financial dealings that would require Heller to sign.

In trying to argue for detention, Weber said the weight of the evidence against Heller meant he was a significant flight risk, given he faces significant time in prison and serious financial penalties if convicted.

Guidelines call for a sentence of 20 years in prison and about 15 years in prison if Heller were to take responsibility and plead guilty, Weber said. If convicted and sentenced based on federal sentencing guidelines, each of the five fraud counts could call for a prison term of between 27 years and 33 years. If the maximum sentences were to be served consecutively, it could result in a sentence of 135 to 165 years.

“With a couple clicks of the mouse, he could use that money to flee instead of paying creditors,” Weber said.

Defense attorney Christopher Adams of the McCarter & English law firm argued that Heller was not a flight risk and has known for some time that he would be arrested and did not flee. Adams said Heller also has appeared at all of his other court proceedings.

Other restrictions

Heller does not have to put up any cash; he would owe the money if he fails to appear at any court hearing.

Heller will also be on electronic monitoring and must surrender his passport. However, his attorney is permitted to hold onto it until Heller is able to get a Real ID in case he needs to travel elsewhere and such travel would have to be permitted by pretrial services.

He is not to travel outside the eastern district of Pennsylvania without authorization, except to go to his second home in Westfield, which is in Tioga County near the New York border, and to see his lawyer in New Jersey. The eastern district includes Berks, Bucks, Chester, Delaware, Lancaster, Lehigh, Montgomery, Northampton and Philadelphia counties.