4 days ago
Sonoma properties being sold off after alleged Ponzi scheme falls apart
A Sonoma man is suspected of running a real estate Ponzi scheme in the North Bay, and the properties he allegedly bought with other people's money are now going on the bankruptcy auction block.
In about 2021, people began noticing that a real estate investment company was buying all kinds of properties in the town of Sonoma, often leaving them vacant. It turns out the company was a house of cards, and now that it's collapsed and the bankruptcy sales have begun, it's leaving both the city and the investors wondering what the future holds for them.
His name is Ken Mattson, and the U.S. Attorney's Office said he was arrested in May on suspicion of defrauding hundreds of investors. He and his business partner Tim LeFever began buying up dozens and dozens of homes and commercial properties in and around the town of Sonoma.
"His plan was to tear it down and rebuild something, promising that everyone could come back after it was rebuilt," said Sonoma resident David Eichar, as he flipped through pictures of small houses. "But it's just been sitting vacant."
And he said Mattson didn't seem to mind paying above market rate for a lot of them. Eicher and friend Lisa Storment said they got suspicious and started a group called "Wake Up Sonoma" to investigate the matter.
"So, he's buying property over value," said Eichar. "Then, we're like, how can you be making money off these things when he's paying so much for them?"
It turns out he wasn't. His investors, many who were elderly and recruited through churches, were sending LeFever and Mattson money that they may never get back. When the company collapsed, Maria Crane lost virtually everything she and her husband had saved for their retirement.
"We got statements saying our increases, and he was making up that information. But we thought we were safe, we're getting statements," she said. "They were our financial advisors, and we thought we were planning well. And now, we are scrambling to make ends meet."
Now, at 65, Crane has gone back to teaching and her husband, at age 70, will have to keep working, as well. The town has also paid a price. Many of the properties sit empty, their fates tied up in the courts. One familiar business, the Sonoma Cheese Factory has since reopened under a new buyer.
But when it was owned by Mattson, the once-popular specialty deli was hit with a boycott from the community.
"Looks more like the beloved Cheese Factory that we used to know and love," said Storment, as she walked through the store. "I mean, if the right person takes ownership of some of these beloved historic buildings, they can, they'll get a lot of community support."
Mattson was arrested after his own partner accused him of defrauding investors. He faces nine counts of wire fraud, money laundering and obstruction of justice and is currently free on $4 million bail. Crane said she actually prayed for him to be arrested, but now that the prayer has been answered, there is also a bitter irony. Because Mattson, too, is a co-investor in some of the properties, he stands to get a portion of whatever is generated through the bankruptcy property sales.
"Whatever Ken uses for his own legal defense comes out of whatever pot is left. That could go back to investors and creditors," said Crane. "So, of course, we don't want to pay for the defense of the man that has committed a crime against us and stolen our livelihood."
So far, six LeFever-Mattson properties have now been sold out of bankruptcy with dozens more to follow. And just as their initial purchases artificially raised the price of real estate in town, now their deflated sales prices are likely to bring down the value of their neighbors' homes.
