logo
Judge agrees to release jailed Sonoma developer Kenneth Mattson

Judge agrees to release jailed Sonoma developer Kenneth Mattson

A federal judge in San Francisco allowed a prominent Sonoma developer facing fraud charges to be released from custody after setting his bail at $4 million Wednesday.
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.
Orange background

Try Our AI Features

Explore what Daily8 AI can do for you:

Comments

No comments yet...

Related Articles

Shupai Yigou Collapse: A Ponzi Scam That Exposed China's Deeper Fault Lines
Shupai Yigou Collapse: A Ponzi Scam That Exposed China's Deeper Fault Lines

Epoch Times

time20 minutes ago

  • Epoch Times

Shupai Yigou Collapse: A Ponzi Scam That Exposed China's Deeper Fault Lines

Shupai Yigou was not just a Ponzi scheme—it was a system-wide failure, where greed, blind trust, and lax oversight created the perfect storm. Commentary Shupai Yigou Digital Store, a Chinese digital investment platform, collapsed suddenly late last month, leaving hundreds of thousands of people across the country reeling. Based in Linyi, in China's eastern Shandong Province, Shupai Yigou marketed itself as an innovative blend of e-commerce and investing, but was ultimately revealed to be a massive Ponzi scheme, defrauding users out of over RMB60 billion ($8 billion). Story continues below advertisement What followed was a wave of chaos—mass protests, police crackdowns, and online censorship. But beyond the immediate financial disaster, the scandal exposed something far more serious: a crisis of trust, regulatory failure, and widespread public anxiety over financial security. A Simple but Devastating Scam Shupai Yigou lured users with a too-good-to-be-true promise: daily returns of up to 3.5 percent , and annual yields as high as 365 percent. Anyone could join with as little as RMB 1,000 ($140) , and early users did see small payouts—just enough to create the illusion that the system worked. But in reality, those returns were simply paid out using new users' money, making it a classic Ponzi scheme. To mask the fraud, Shupai Yigou disguised itself as a legitimate e-commerce platform, offering 'cashback' for shopping and displaying high-priced goods like luxury quilts or overpriced eggs— 30 for over RMB580 (nearly $80). But most of these goods were either fake, severely inflated in price, or simply never delivered. In the final days, users were forced to convert 90 percent of their 'balances' into these overpriced items—a last-ditch move to drain every cent before vanishing. Government Backing—or the Illusion of It What gave Shupai Yigou legitimacy in the eyes of the public wasn't just the slick app or fake products—it was the apparent endorsement from government institutions. In 2024, the Chinese communist regime's mouthpiece CCTV aired a glowing interview with company executives on its financial channel, portraying them as epitomes of the small-to-medium sized digital businesses. For many viewers, CCTV's coverage signaled state approval, and few questioned its credibility. But after the collapse, the network was accused of misleading the public and failing to do any real investigation. Local governments also played a part. The Luozhuang District government in Linyi designated Shupai Yigou as a ' key project ' in 2024, offering land rights, tax breaks, and even partnering with local universities. Wang Shaoqing , the founder of the company, was praised as an 'outstanding Party member of Linyi City' and was a deputy to the 17th Linyi Municipal People's Congress, among other official titles. The company claimed government ownership of 34 percent —though this was never officially confirmed by the government from public sources. What mattered is that many users believed it, and that belief lowered their defenses. In April 2025—just three months before the collapse—an official document from Linyi authorities, including the local district CCP committee, government, and police, stated that there was 'no evidence of the company being involved in illegal fundraising or pyramid schemes.' This statement, posted recently on X, gave investors a false sense of security. The Collapse and the Silence That Followed By July 2025, complaints about withdrawal issues were piling up online. Users couldn't access their funds, but the app kept accepting new deposits. On July 21, the company finally admitted it was under investigation for suspected pyramid activity. It claimed that the large volume of simultaneous withdrawals and limits on bank transfer transactions were the main reasons for delays of users receiving funds. Story continues below advertisement That same day, a large crowd of investors hurried to the company's headquarters, demanding their money back. But the offices were already abandoned. The next day, police moved in, using pepper spray and making arrests . Videos of the clashes were quickly deleted, and online discussion was censored. Some protesters—elderly, pregnant, or deeply in debt—broke down in tears. The tragedy was both physical and psychological. Many victims petitioned local and provincial governments, only to be turned away or ignored. Some were reportedly detained . The Real Problem: A Crisis of Trust and Economic Desperation At its core, Shupai Yigou wasn't just a financial scam. It was a reflection of deeper systemic issues in China today. Public trust was weaponized: Older users, with limited financial knowledge and heavy reliance on government and media endorsements, were the primary victims. They saw Shupai as a safe bet—not just because of its promises, but because they believed the state was behind it. Regulation failed at every level: Whether due to incompetence, corruption, or simple neglect, local officials and regulators missed—or ignored—all the warning signs. In fact, their support helped the scheme grow. When things fell apart, no one took responsibility. Story continues below advertisement People are desperate for financial security: Faced with falling asset values, stagnant wages, and limited upward mobility, many Chinese citizens are hungry for opportunities. Even those who suspected something was off stayed in, hoping to cash out before it collapsed. Final Thoughts Shupai Yigou's collapse shows that financial scams in China aren't going away—they're evolving. From peer-to-peer lending failures to fake blockchain startup s, these schemes now use high-tech packaging and trendy buzzwords like 'digital economy' to appear legitimate. Shupai Yigou was not just a Ponzi scheme—it was a system-wide failure, where greed, blind trust, and lax oversight created the perfect storm. Its victims weren't just investors—they were citizens who believed in a system that ultimately failed to protect them. Until that system changes, this won't be the last tragedy of its kind. Views expressed in this article are opinions of the author and do not necessarily reflect the views of The Epoch Times.

California winery embroiled in fraud scandal has a new owner
California winery embroiled in fraud scandal has a new owner

San Francisco Chronicle​

time3 days ago

  • San Francisco Chronicle​

California winery embroiled in fraud scandal has a new owner

A winery that was embroiled in a high-profile Sonoma County fraud scandal has been acquired by a prominent California wine industry executive. Sojourn Cellars was once part of the portfolio of embattled real estate developer Kenneth Mattson, who was arrested in May on charges including wire fraud and money laundering. The Sonoma winery, which had a reputation for high-quality Pinot Noir, Chardonnay and Cabernet Sauvignon, became a victim of Mattson's fallout. In May, a bankruptcy court judge approved the sale of over 150 assets affiliated with Mattson and his partners. Now, Pat Roney, the former CEO of Vintage Wine Estates, has purchased Sojourn with a small investment group. The deal includes Sojourn's brand and inventory, but no winery or vineyards. Roney did not disclose a purchase price. There are two main reasons why Roney wanted to buy the 10,000-case Sojourn. First, 'I don't do well at retirement,' he said. Second, 'it's a great winery,' and almost 90% of its sales are direct to consumer, 'which is where the trend is going for smaller wineries.' Roney co-founded Vintage Wine Estates after he and the late wine mogul Leslie Rudd purchased Windsor Vineyards in 2007, adding it to Napa Valley's Girard Vineyards, which they had jointly acquired in 2000. In the following years, Roney grew Vintage into one of California's most powerful wine conglomerates, buying 28 additional wineries including B.R. Cohn, Kunde, Cameron Hughes and Layer Cake. Roney stepped down as CEO in 2023, transitioning to board president. Vintage filed for bankruptcy last summer, instantly becoming the most visible sign that California's wine industry was facing a major crisis, and preceding a barrage of other winery closures or sales. When Vintage's assets became available in a bankruptcy auction, Roney and Vintage investor John Sebastiani put in a bid for three of the company's most popular Sonoma wineries, Kunde, B.R. Cohn and Viansa. But they lost the bid to automotive billionaire Jay Adair, who paid $85 million for those properties, as well as Napa Valley's Clos Pegase and Girard. Roney didn't walk away empty handed, however. He managed to buy Windsor Vineyards, the winery that had launched Vintage Wine Estates in the first place, in October from Full Glass Marketing, which had bought it from Vintage out of bankruptcy. In the months since, Roney said he's made changes to Windsor Vineyards including updating the website and 'improving the quality of the wines.' The big draw for Sojourn, he said, is its well trafficked tasting room by the downtown Sonoma plaza. Given the precariousness of the wholesale market for wine right now — behemoth distributor Republic National Distributing Co. is pulling out of California entirely — it's more important than ever for wineries to build up their direct-to-consumer businesses, Roney said. As part of the acquisition, Roney has laid 'a couple of people' off, he said, but most of the staff remains in place, including longtime winemaker Erich Bradley. A renovation of the tasting room is in the works (it will remain open during renovations), and Roney has plans for a packaging makeover. 'They went through a controversial label change,' he said. 'We're going to bring it back closer to what it was before.'

Former CNBC pundit and fugitive sentenced to prison for bilking investors out of millions
Former CNBC pundit and fugitive sentenced to prison for bilking investors out of millions

Yahoo

time6 days ago

  • Yahoo

Former CNBC pundit and fugitive sentenced to prison for bilking investors out of millions

James Arthur McDonald Jr., an investor and financial analyst who frequently appeared on CNBC, was sentenced to five years in prison for defrauding investors in a multimillion-dollar scheme, the United States Attorney's Office said on Monday. McDonald, 53, a former San Gabriel Valley resident, was the CEO and chief investment officer of two Los Angeles-based companies: Hercules Investments LLC and Index Strategy Advisors Inc. In late 2020, McDonald adopted a "risky short position" betting against the U.S. economy following the presidential election, with the idea that the combination of the COVID-19 pandemic and the election would trigger a major sell-off in the stock market, according to the Justice Department. However, when the expected market drop did not happen, Hercules' clients lost between $30 million and $40 million. McDonald "solicited millions of dollars' worth of funds from investors" for the purposes of raising capital for Hercules at the start of 2021 after clients complained to the firm's employees about their losses. However, in doing so, McDonald "misrepresented how the funds would be used" and failed to disclose the firm's massive losses. According to the Justice Department, McDonald obtained $675,000 from "one victim group" and then misappropriated most of the money including spending $174,610 at a Porsche dealership and transferring an additional $109,512 to the landlord of a home he was renting in Arcadia. McDonald also defrauded clients at Index Strategy Advisors, his other firm, said the Justice Department, using less than half of $3.6 million he raised for trading purposes on personal and other expenditures. McDonald commingled clients' funds with his personal bank account and used the money to buy luxury cars, pay his rent, make credit card payments, pay off Hercules operating expenses and "to make Ponzi-like payments" to Index Strategy clients — including paying some of those clients using funds from other clients. Prosecutors claimed that McDonald caused his victims more than $3 million in losses. 'To his victims, [McDonald] seemed to embody the American Dream,' prosecutors argued in a sentencing memorandum. 'But looks can be deceiving, and as [McDonald's] victims learned, their trust had been betrayed.' In November 2021, McDonald failed to appear before the Securities and Exchange Commission to testify about the allegations he had defrauded investors, and remained a fugitive until last June when he was found at a residence in Port Orchard, Wash. At the time of his arrest, law enforcement found a fake Washington, D.C., driver's license with his photograph and the name "Brian Thomas." In April 2024, a U.S. District judge found McDonald and Hercules liable for violating federal securities law and ordered them to pay millions in disgorgement and civil penalties. McDonald pleaded guilty to one count of securities fraud in February. He will be ordered to pay restitution in this case before a United States district judge at a later date. Sign up for our Wide Shot newsletter to get the latest entertainment business news, analysis and insights. This story originally appeared in Los Angeles Times. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data

DOWNLOAD THE APP

Get Started Now: Download the App

Ready to dive into a world of global content with local flavor? Download Daily8 app today from your preferred app store and start exploring.
app-storeplay-store