
Judge agrees to release jailed Sonoma developer Kenneth Mattson
Kenneth Mattson was arrested last week after prosecutors accused him of orchestrating a protracted Ponzi scheme in which he allegedly siphoned millions of dollars from investors in his real estate companies.
After a five-hour hearing in which multiple people who said they were defrauded described the desperation, grief and shame of losing their life savings after investing with Mattson, Magistrate Judge Alex Tse agreed to release the embattled developer on the condition that he avoid unnecessary travel, wear a GPS monitor and avoid any large financial transactions, among other conditions.
Many of Mattson's former clients had hoped that Tse would order Mattson held in custody until his trial. At the beginning of the hearing, they described the fear and pain they had gone through learning that their retirement savings had essentially disappeared.
More than 70 people attended the hearing — forcing courthouse officials to move the proceeding to a larger courtroom on the 19th floor of the Phillip Burton Federal Building in San Francisco.
One woman said she and her relatives, including her husband's family and her sister, had invested with Mattson for almost three decades.
The stress of the past year had been so severe, she said, in tears, that her sister tried to take her own life.
'My sister almost died over this,' she said, addressing Mattson directly. 'For that I will never forgive you.'
Mattson, dressed in a black T-Shirt over a green jumpsuit, showed no emotion as she or others spoke.
Others described having to visit food banks to be able to eat, and the shame and anxiety of discovering their life savings, their retirements, their IRAs, were all gone.
'The lives we planned for and diligently worked toward were taken away by Ken Mattson,' said Mike Morse, an investment banker who told the court he invested $2.6 million with Mattson. He described Mattson's behavior as a kind of 'financial murder.'
Another woman, Gwen Piercy, spoke about meeting Mattson more than 40 years ago, when her parents introduced her to him. Last year, as Mattson's alleged fraud came to light, the monthly checks she received vaporized. The physical strain of the ordeal caused her hair to fall out, she said, and friends deserted her, worrying she would ask them for money. Now, she goes to a local food bank so that she has enough to eat.
'This is not only financial abuse but senior abuse,' she said, drawing applause from those in the audience.
Another woman, who identified herself only by her first name, Denise, said she and her family loved Mattson 'with all our hearts.'
He had been so close to their family that after her father died last year, Mattson served as a pallbearer at his funeral.
They'd stood by him even after the fraud allegations emerged last year. But their support soon turned to a sense of betrayal when, one month after the funeral, Mattson stopped sending regular investment checks to her mother, who was struggling with a serious autoimmune disease.
'Thank God my dad had already passed away,' the woman said. 'If this hadn't killed him, it would have broken his heart.'
The detention hearing on Wednesday came after Mattson's stunning arrest last week at a Napa gym. Prosecutors and his defense attorneys sparred for hours over many basic facts of the case, before Judge Tse agreed to allow Mattson to be released into the custody of his wife, Stacy Mattson, to live in their home in Sonoma on Castle Road.
Prosecutors believe that Mattson committed widespread fraud; but during the hearing, Mattson's attorneys presented a hint of their likely defense — arguing that Mattson's clients were still receiving payments last year until Mattson's business partner, Timothy LeFever, shut him out of the real estate development business they owned, LeFever Mattson.
Mattson attorney William Frentzen predicted that Mattson's clients' 'mistrust and anger are going to find a different target as this case plays out.'
Mattson attorney William Frentzen also argued that government prosecutors had charged the developer with obstruction of justice, without evidence, and in an unguarded moment in court, acknowledged that federal investigators had also targeted — but ultimately did not indict — KSMP, another business entity that Mattson owns with his wife, Stacy Mattson.
The admission startled Tse, who asked 'Did you really want that out in public?'
Prosecutors had asked Tse not to release Mattson from custody.
Ultimately, Tse agreed to allow Mattson to be released after he and his relatives posted $4 million bail, secured with $200,000 in cash, and two homes as collateral — one owned by Stacy Mattson in Piedmont, and another by her sister in Nevada.
The judge also ordered Mattson to submit to GPS monitoring, to transfer ownership of three firearms he owned (but no longer held in his possession) to a relative, to report all financial transactions of more than $5,000 to pretrial services, and not to solicit or make any new investments of any kind. Tse also ordered him to surrender his passports and not to harass any witnesses, jurors, victims or other court officers related to the case.
Over decades, Mattson and LeFever amassed a real estate investment portfolio worth an estimated $413 million, including a $146 million stronghold of businesses and residential properties in the Wine Country town of Sonoma.
Mattson split his time between several multimillion dollar houses — a nearly $10 million mansion in Piedmont and a Sonoma estate — and drove classic cars including a Rolls Royce.
Just over one year ago, Mattson's real estate empire began to crumble.
LeFever accused Mattson of stealing money from clients and their businesses in an email to their clients and said he had informed the U.S. Attorney's Office and Securities and Exchange Commission of his suspicions.
Federal officials said Mattson took at least $28 million from investors for 'off-books' investments in two of his investment companies and breached his fiduciary responsibility to LeFever Mattson, the company he and LeFever ran together.
Mattson's scheme 'collapsed' when Mattson 'was no longer able to raise new investor money to pay existing investors,' prosecutors said.
Mattson's attorneys, in a court filing ahead of Wednesday's hearing, pushed back against the government's claims that 'his alleged substantial financial means' made him a flight risk.
They argued that Mattson had remained in Sonoma once the investigation began and had been cooperative. They claimed that some of the $9,000 in cash federal agents seized during Mattson's arrest had come from monthly rent he'd collected from tenants.
Mattson's attorneys pointed to tax documents and business records that reportedly show that more money 'flowing' into business accounts 'than flowing out,' which would make it 'the first Ponzi scheme in history to cost the perpetrator far more than he stole from others.'
Prosecutors' effort to keep Mattson in custody was based on 'the thinnest of pretexts and predicated on misunderstandings of fact,' the attorneys said.
In response, the government challenged many of Mattson's assertions, arguing that the evidence Mattson presented was misleading and that their investigation revealed he was taking millions of dollars from a key business account 'to pay for mortgages on his personal properties and other personal expenses.'
Prosecutors told the judge they were 'deeply concerned' that Mattson and his wife had refused 'to provide any financial information' to the court, which is a standard requirement.
The charges included seven counts of wire fraud, one count of money laundering, and one count of obstruction of justice for destroying records in a federal investigation.
If Mattson is convicted, he faces a likely prison sentence of more than 15 years in prison. Mattson also faces additional sanctions from the Securities and Exchange Commission, which filed a related civil enforcement action against Mattson and one of his companies, and several lawsuits from investors.

Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles


Business Journals
6 hours ago
- Business Journals
Tampa investor accused of $170M Ponzi scheme sentenced to federal prison
Tax fraud charges are the only criminal charges brought forth against the EquiAlt founder since regulators accused him of a Ponzi scheme in 2020.


Axios
19 hours ago
- Axios
Trump's BLS nominee suggests suspending jobs report
President Trump's nominee to head the Bureau of Labor Statistics, E.J. Antoni, suggested the possibility of suspending the bureau's flagship monthly jobs report. Why it matters: It's one of the world's most fundamental pieces of data, crucial for investors to understand the health of the U.S. economy. Catch up quick: Antoni made the suggestion in an interview with Fox News Digital on August 4 in response to concerns over the report's accuracy. What they're saying:"How on Earth are businesses supposed to plan — or how is the Fed supposed to conduct monetary policy — when they don't know how many jobs are being added or lost in our economy? It's a serious problem that needs to be fixed immediately," Antoni told Fox. The other side: Economists were quick to slam Antoni's suggestion. "That would (be) a serious mistake in my estimation. It would only fuel critiques of a politicization of job market data and likely result in volatility across asset classes," RSM US chief economist Joe Brusuelas tells Axios. "One gets the sense that comments like that will cause US Senators to question his wisdom, qualifications and suitability for the job." The intrigue: The jobs report isn't the only major government program facing Antoni's scrutiny. In a 2024 interview he called Social Security a "Ponzi scheme" that would eventually collapse. "Eventually, you need to sunset the program," he said, while emphasizing that there is still money to pay for folks who are already retired. But for people retiring decades from now, "the program is not going to be viable." As the Urban Institute points out, Social Security isn't a Ponzi scheme — it's not based on a lie, and the pool of contributors will never run dry. By the numbers: Markets mostly looked past Antoni's suggestion on the jobs data, staying broadly higher in early afternoon trading on the back of an earlier report indicating inflation was not heating up quite as badly as feared.


New York Post
a day ago
- New York Post
NYC's Lipstick Building to bring Soho restaurant MAMO to Midtown
New York City's famed Lipstick Building in Midtown has had its ups and downs over the decades — most notably as the headquarters of Ponzi king Bernie Madoff — but the revitalized tower's dining scene is getting a fresh makeover. Well-regarded Soho Italian restaurant MAMO will replace buttoned-down Wolfgang's steakhouse at the iconic property, Realty Check has learned. The new restaurant on Lipstick's East 53rd Street side is expected to open early next year, sources said. 3 The Lipstick Building at 885 Third Ave. The revitalized tower's dining scene is getting a fresh makeover. Lois Weiss 'MAMO belongs at the center of where design and distinction matter most — nestled in one of Manhattan's most architecturally bold addresses,' said CBRE's Spencer Levy, who repped the tenant. SL Green, which rescued the troubled, Philip Johnson- and John Burgee-designed tower at 885 Third Ave. five years ago, signed a 7,000 square-foot lease with the Italian Riviera-inspired eatery on West Broadway. MAMO's space includes 5,000 square feet on the ground floor and 2,000 square feet on the lower level. Wolfgang's, which has closed, was at the building for 15 years. 'It was critical for the ownership to curate a tenant that not only activated the space, but enhanced the overall experience of the building,' said Newmark's Adam Weinblatt, the tower's s retail leasing agent. The deal marks the latest surprising twist at the 34-story Lipstick, which opened in 1986 as a prime symbol of the Postmodernist trend in architecture that also included Johnson and Burgee's 'Chippendale'-topped 550 Madison Ave., originally the headquarters of AT&T. SL Green, the city's largest commercial landlord, took control of the Lipstick Building after a previous owner defaulted on a mortgage. 3 MAMO is expected to open early next year on Lipstick's East 53rd Street side. Stephen Yang The developer quickly bolstered the sagging Third Avenue scene, and electrified the investment-sale market, by selling about two-thirds of the 580,000 square-foot tower to Memorial Sloan-Kettering for $300 million three years ago. The medical institution's arrival marked a dramatic return to glory for the property, which had seen foreclosures, bankruptcy filings and a revolving door of previous owners. Madoff added another layer of infamy, leasing three floors at the building for years before his scheme finally unraveled in 2008. 3 SL Green, the city's largest commercial landlord, took control of the Lipstick Building after a previous owner defaulted on a mortgage. William Farrington SL Green recently spent $16 million to renovate, redesign and brighten the lobby, which is home to a Daniel Boulud coffee bar. Major office tenants include EuroConsult, Inc., and law firm Reitler Kailas & Rosenblatt. Previous owners of the Lipstick included Hines, the tower's developer, as well as Tishman Speyer, Royal Canadian Bank, Marciano Investment Group and Ceruzzi Properties.