24-05-2025
- Business
- San Francisco Chronicle
Sonoma developer to remain jailed as details of alleged massive Ponzi scheme emerge
Kenneth Mattson stood impassive Friday as prosecutors urged a federal judge to keep the real estate developer behind bars at least through the Memorial Day weekend.
He was on the 15th floor of the U.S. District Court in San Francisco, but he'd fallen far. Mattson, 63, spent years running a seemingly prosperous real estate investment business centered in his Wine Country town of Sonoma, where he snapped up dozens of properties. Along the way, he purchased a multimillion-dollar mansion in Piedmont and a luxury car business.
Now, prosecutors were arguing that Mattson had funded a lavish lifestyle by orchestrating a massive Ponzi scheme involving scores of people who entrusted him with their life savings. He pleaded not guilty to nine counts of wire fraud, money laundering and obstruction of justice.
'Objectively he has every reason to flee,' Assistant U.S. Attorney Christopher Lee told Magistrate Judge Alex Tse, arguing that Mattson had access to ample cash and property he had hidden since his alleged crimes were discovered.
Defense attorneys sought Mattson's release, disputing some of the government's assertions — including that their client was a flight risk. Judge Tse pushed back on the government's argument several times, but as the hearing drew to a close acknowledged he was 'deeply troubled' by the 'egregious facts' of the case and the files allegedly deleted from Mattson's laptop.
'The government is entitled to a detention hearing,' the judge said, ordering Mattson to remain jailed until arguments can be made Wednesday.
This was the moment that Maria Crane and hundreds of other victims had been waiting for since last year when they learned that savings they'd handed to Mattson had likely vanished. Tens of millions of dollars lost, prosecutors said, in a Bernie Madoff-style scam.
Before last year, Crane and her husband believed themselves to be on solid financial footing. Then she discovered their nest egg was gone. She and her husband took in a renter, the retired teacher went back to work, and her husband reactivated his medical license.
Once-routine expenses became sources of worry — even Friday's court hearing: the gas to drive to San Francisco; ten dollars for the Golden Gate bridge fare; another $28 for parking.
'I haven't seen him experience any consequences for his choices,' Crane said. 'The least he can do is sit in jail six nights to contemplate his fraud and greed.'
She had once admired the defendant. The soft-spoken, Rolls Royce-driving Mattson met Crane and other investors with a pitch and a promise: Forgo the stock market. Your money will grow even faster in my California real estate companies.
Mattson and his longtime friend Timothy LeFever had been on a stunning, decades-long buying spree. Apartment buildings, commercial strips, homes and businesses bought by a web of their limited liability companies, according to a Chronicle review of public records, were worth at least $413 million in 14 counties across California, mostly in Sonoma, Solano, Sacramento and Placer counties.
Their investors came from working-class cities like Vacaville and Santa Rosa. They met Mattson or LeFever in church or were introduced through acquaintances. They liquidated savings and retirement accounts.
The full extent of their losses is yet unknown. In addition to the criminal charges, Mattson could face civil penalties imposed by the Securities and Exchange Commission. He has been sued by numerous former investors and forced into bankruptcy proceedings.
According to an SEC filing supporting the criminal charges, Mattson 'fraudulently raised more than $46 million from approximately 200 investors' in the last five years alone. Most of his investors 'were retired senior citizens that Mattson met through his church community.'
Some investors said they received steady returns for many years — until 2024, when many deposits suddenly stopped.
That April, LeFever stunned investors in a widely distributed email accusing Mattson of engaging in a 'secretive scheme' to siphon investors' money into his own accounts. LeFever told them he'd alerted the SEC and the U.S. Attorney's Office.
'I still don't know the extent of the mess that has been created,' wrote LeFever, who has to date not been accused of any crimes.
But inklings that something was amiss had been growing for about a decade, especially in Wine Country.
Around 2005, Mattson and LeFever began grabbing dozens of properties on and around Sonoma's historic square. They would in time purchase an estimated $146 million worth of real estate in a town of 10,000 people.
Mattson and LeFever formed a hospitality company and set up office in the back of a charming clapboard deli with a sommelier. Their holdings would come to include Cornerstone Sonoma, a major Wine Country event center and wedding venue complete with tasting rooms and a restaurant.
But their business activities drew growing suspicion from locals. Rumors flew about rocky relationships and strange financial dealings. And, many asked, why were their properties and businesses falling into disrepair?
Residents formed a group, Wake Up Sonoma, to seek answers. Skeptics became amateur public records sleuths, tracking Mattson's dealings, and boycotted his businesses.
Ratcheting up tensions, Mattson and LeFever had brought a conservative, evangelical Christian ethos to a mostly left-leaning, LGTBQ-friendly community. They removed Pride flags that once hung from businesses. Mattson's wife, Stacy Mattson, once wrote on Facebook about her "disgust" that the 2013 Rose Bowl had been 'high-jacked by the gay agenda.'
Sonoma resident Lisa Storment, who helped found Wake Up Sonoma, recalled that some people thought their members were 'just conspiracy theorists.'
'We always felt like there was some sort of financial crime going on,' Storment said.
In the end, nothing seemed to thrive under the investors' ownership. They deserted Sonoma's Ravenswood Winery, once a premier producer of California Zinfandel where Mattson and LeFever announced a new winery venture they called Harrow Cellars. Workers boarded up doors and windows as weeds took over the manicured landscape.
Storefronts at Cornerstone gradually went dark as tenant businesses fled.
Several Bay Areaclassic car dealerships — which Mattson bought and stocked with coveted vintage models of Corvettes, Cadillacs and Mustangs — faltered badly. When the showrooms shuttered last year, they left a string of disgruntled customers and employees, lawsuits and Better Business Bureau complaints.
Even so, Mattson's spending seemed to have few limits. Until the money stopped coming in.
Now investigators say it was all a 'shell game.' According to a prosecution memo, Mattson used at least $11 million from a bank account he shared with his business partner to make personal mortgage payments on properties he owned in Sonoma and Piedmont as well as Del Mar in San Diego County.
Mattson created false records to conceal 'from investors the fact that he was orchestrating a scheme by, among other things, using some new investor funds to make payments to deceive existing investors,' according to the federal complaint.
The government said it didn't yet have a full picture of Mattson's current finances, claiming he 'has access to significant amounts of cash and property and has taken steps to secret those assets from creditors and law enforcement since his scheme was initially discovered.'
Mattson's ability to access that cash was central to Friday's hearing. Prosecutors said investigators found $9,000 inside envelopes in his car when he was arrested along with keys to safes. Mattson's attorneys said the cash was from rent payments he'd picked up recently.
'His financial shenanigans suggest a means of flight,' a prosecutor said.
Mattson had apparently purchased a pair of GMC luxury vehicles worth $200,000 in the name of a relative, prosecutors said.
They also said they were concerned by actions they believe Mattson took to thwart the pending prosecution, alleging the destruction of thousands of digital files from Mattson's laptop days after he received a subpoena ordering him to keep documents related to his companies and investors.
Mattson's attorneys argued that the prosecution failed to prove Mattson had destroyed any files, and that the alleged deletion occurred at his lawyer's office, when they were conducting a forensic imaging of his laptop.
After Friday's court hearing, dozens of victims filed out of the courtroom. Many had met Mattson through their faith community, invited him into their homes, even prayed with him.
They declined to speak on the record to the Chronicle, with some saying they were ashamed of having entrusted their money to a man now accused of betraying them and leaving them with virtually nothing.
They chatted quietly amongst themselves as they waited for an elevator. All were relieved to learn Mattson wouldn't be able to leave custody.
One uttered: 'No Memorial Day for him.'
