Feds arrest embattled Sonoma developer suspected of ‘Ponzi scheme' that cost investors millions
Federal authorities Thursday accused embattled Sonoma real estate developer Kenneth Mattson of engaging in 'a classic Ponzi scheme' that stole tens of millions of dollars from hundreds of retirees and others who had entrusted him with their life savings.
In a 22-page indictment, federal prosecutors charged Mattson with seven counts of wire fraud, one count of money laundering, and one count of obstruction of justice for destroying records in a federal investigation.
The arrest comes one year after Mattson's longtime business partner, Timothy LeFever, accused him of bilking their company and clients in a scheme that apparently went undetected for years. Mattson denied those claims.
Using money they solicited from hundreds of investors, Mattson and LeFever amassed a large real estate portfolio in and around the city of Sonoma, and snapped up well-known and historic properties and businesses. Federal prosecutors said that Mattson presented the investments as 'legitimate and safe interests of limited partnerships that owned real estate,' but instead created fake documents and took the money.
According to federal prosecutors, Mattson took at least $28 million from investors for 'off-books' investments in two of his investment companies
'Instead of delivering the investment returns he promised, Mr. Mattson is charged with cheating these investors out of their hard-earned money and, in many cases, out of their life savings,' said Acting U.S. Attorney Patrick D. Robbins in a statement.
'Mr. Mattson will now be held to account on charges of perpetrating a scheme that he kept afloat only by using new investors' money to pay obligations to earlier investors.'
The crimes carry maximum sentences of 20 years in prison for each wire fraud and obstruction charge and 10 years for the charge of money laundering.
Mattson was scheduled to appear in federal court Friday. This is a developing story, check sfchronicle.com for updates.
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