Head of Seized Financial Firm Denies Charges

One day after state regulators staged a surprise takeover of the Covina offices of Financial Dynamics, the company’s founder, Richard E. Donovan, was on hand Wednesday cooperating with a court-appointed receiver whose staff was combing the firm’s books.

On Tuesday, officials of the state Department of Corporations, accompanied by local police and armed with a court order, took over the offices of the investment firm with no advance notice, claiming that Financial Dynamics had broken securities laws and made false promises to individuals who had invested $60 million with it in recent years. The court named attorney Nancy R. Schauer as receiver.

Donovan, who was at the company’s plush offices by 9 a.m. Wednesday, commented for the first time on the allegations. “Everything stated is a lie. Therefore, where else would I be? That’s why I’m here. They’re blaming us for bankruptcy in San Diego that we’re not a part of.”

Insurance Dept. Probe

When asked to elaborate, Donovan refused. He said he had no idea that the state action was coming: “They stormed in here like troopers.”

Officials from the Department of Insurance were called in Wednesday to review Financial Dynamics’ insurance business. “To the extent there are legitimate businesses, we want to minimize the negative impact,” Schauer said. She added that Donovan has “been very cooperative.”

When most of the company’s 30 employees arrived for work on Wednesday, they were greeted by a security guard and a small piece of paper taped to the glass door with a message handwritten in red: “Personnel meeting at 9:30 in seminar room.”

Employees of Financial Dynamics had received their paychecks on Monday but had trouble cashing them because the company’s accounts had been frozen. Schauer said the meeting was held to let employees know that “we’re working with bankers so the paychecks will be cleared.”