HOW DO YOU UNSCRAMBLE AN EGG?
By: Josette Brose-Eichar, VP Wake UP Sonoma.
Ken Mattson’s appearance of wealth and expertise in business and financial investment, is just a house of cards and a smoke and mirrors illusion. His wealth came from exploiting hundreds of people to entrust their life savings to him, with the promise of hearty returns on their investments. We all now know the story. Phil Barber of the Press Democrat has detailed the sickening rise and fall of Ken Mattson’s empire in detail.
There are two aspects of this fall. First is the multi-level bankruptcies, and second is the federal criminal charges of defrauding investors with a Ponzi scheme, (not to even mention wire fraud and money laundering). Ken and Stacy Mattson used the money they took from those who trusted them to support their lavish life-style and to acquire over 120 properties in the Sonoma Valley. The investors in this scheme have lost their life savings, and the Sonoma Valley is left with decaying and neglected property and an unstable real estate situation, as all of the properties must now be sold quickly in the bankruptcy proceedings.
But what of the criminal charges? Will justice be served? Will Ken Mattson serve any jail time? Will Tim LeFever and Stacy Mattson ever face any charges for their involvement? And will those that lost their financial security ever recoup any funds in the bankruptcy proceedings?
All of us want to see justice served. In talking with investors, it is very clear that they want Ken Mattson to serve jail time. At this point, only Ken Mattson is charged with a crime, and only at the federal level. It is time for Sonoma County DAs and the California Attorney General to file state charges. For example, elder financial abuse can be filed with the state, as Mattson is not charged with this at the federal level. This is something that Wake UP Sonoma fully supports and have taken steps to bring to the attention of Congressman Thompson and encourage investors to pursue this avenue.
There are two fronts to work on to assure transparency and accountability to investors. Financial restitution for those that have been exploited and justice for the crimes Ken and Stacy Mattson and Tim LeFever allegedly committed.
I have listened to recordings of town halls held for the investors by the bankruptcy committee and attorneys. They are available for anyone to watch here: https://veritaglobal.net/lm/info/14065 . In simple terms, all the property and assets of LeFever Mattson and KS Mattson will be sold to create a pool of money to pay creditors. Secured creditors are those that have indisputable legal documentation, such as a mortgage or legal fees for the bankruptcy. Whatever is left over will be shared by the investors. The wrinkles in this process are many. It is such a shell game run by Mattson that the attorneys and financial experts handling the bankruptcy cannot untangle it. They liken it to “unscrambling an egg”. If they were to try to unscramble this egg, it would take years and eat up all the profits from the sale of the properties. So the decision was made to consider it all one pot in the proceeding. In addition, both Ken Mattson and Tim LeFever have documented claims to funds which would put them ahead of the investors in the process. The investors must file a lawsuit to keep this from happening. And rightly so! Why should those that carried out what the bankruptcy attorneys and the FBI consider a Ponzi Scheme be entitled to any of the money?
The Chapter 11 bankruptcy is at the stage where a detailed plan of reorganization is being created. This plan and a full disclosure statement will be submitted to the court for approval. The creditors will then vote to approve the plan. This process will most likely be completed by the end of the year. Those handling the bankruptcy want to complete this as soon as possible, as the longer it goes on, the more money is spent. But, in the end those like Socotra Capital, the hard money lender Mattson used, will be assured of repayment as they hold secured debt, with documented proof. Legal fees must be paid, and then what is left will be split by the investors in proportion to the dollar amounts they each gave to Mattson.
Many ask why the investors trusted him. They trusted him and considered him their friend. As the attorneys pointed out, this was also not a typical Ponzi scheme or pyramid scheme. There were properties and businesses used as a front to hide what was really going on. Another cautionary tale for the Sonoma Valley community. Beware of shiny things that seem too good to be true, because they usually are.