A detention hearing at a federal courthouse Wednesday offered Ken Mattson’s investors a rare opportunity to face the man they say defrauded them of tens of millions of dollars. So many showed up, they had to move the hearing to a bigger venue.
After that, around 70 of Mattson’s alleged victims packed a courtroom on the 19th floor of the Phillip Burton Federal Building in San Francisco. Nine of them read victim statements, some of them sticking to straight forward arguments for Matton’s continued detention, others offering heart-wrenching accounts of personal harm.
Mattson, unshaven and wearing a dark-hued jail jumpsuit, watched them stone-faced, mouth turned down.
The chance to see their former investment adviser in a state of powerlessness may have provided some vindication for the investors.
“It has been a year of holding things in,” Gail Hines, 78, of Lincoln, told The Press Democrat. “When he was arrested Thursday, we exploded. To meet here today was amazing. I think a lot of people came just to meet one another.”
But the investors left the courtroom disappointed after four hours of verbal back and forth by federal prosecutors and Mattson’s attorneys before U.S. District Court Judge Alex Tse.
Tse set a number of conditions, negotiated by the two sides in the case, and cleared Mattson for release after five days behind bars to the custody of his wife, Stacy, in their home on Castle Road outside Sonoma.
Bond was set at $4 million, secured by $200,000 in cash and two properties — a home in Piedmont owned by Stacy Mattson, and a property in Reno owned by family associates Jennifer and Michael McCarthy.
Ken Mattson agreed to GPS monitoring during his release, with his travel restricted to within the Northern and Eastern Districts of Northern California. He must surrender all passports and notify the court of any transactions over $5,000. He can’t possess any firearms, or harass, intimidate or retaliate against any victims, witnesses or jurors.
The only words Mattson spoke audibly at the hearing came when he assented to the conditions.
Mattson’s first trial appearance is set for June 6.
Indicted on nine counts of wire fraud, money laundering and obstruction of justice, he was arrested by FBI agents outside a Napa gym May 22, following a yearlong investigation by multiple federal agencies.
Prosecutors allege Mattson accepted money from people who believed they were investing in legitimate assets under his main real estate holding company, LeFever Mattson, though they never actually held those interests. Mattson then falsified records to mask the deception, the government alleges, using funds from new investors to pay existing investors the rents they were owed — “in the manner of a Ponzi scheme,” as one legal motion asserts.
Mattson and his former business partner, Tim LeFever, used investments to fund a vast real estate portfolio worth more than $400 million, with at least 120 properties in the Sonoma area.
Before Tse opened his courtroom at 10:30 a.m. Wednesday, Mattson investors were ushered into a conference room in the building and addressed by a pair of victims’ advocates.
The investors had been under the impression that anyone who wanted to offer a statement of any kind would get their chance during the hearing. But the advocates suggested limiting the testimony to 10 speakers, and narrowing their discourse to the subject at hand: whether Mattson should continue to be detained before the trial.
Several agreed to speak.
Janice didn’t, at least not at first. But she relented when other alleged victims urged her to speak up. She used only her first name in Tse’s courtroom, as many of the victims did.
“We’ve had Ken for over 29 years as our financial adviser,” Janice began. She noted that much of her husband’s family also wound up investing, as did her sister. Two months ago, the sister attempted suicide, “because she couldn’t see a way out” of the financial ruin her disappearing dividends caused, Janice said.
She continued to Tse, “I’m begging you. Please detain him so that he can’t do any more harm.”
Mattson had begun the hearing standing with his back to investors, who lined the seating. But when Tse learned around 30 people were waiting in the hallway, unable to enter the at-capacity room, he had invited them in to pack the juror seats and other chairs in front portion of the chambers.
Janice was sitting in a juror seat. So she was able to look directly at Mattson. Sobbing, she told him, “You would come to our house. And my sister almost died over this. For that I will never forgive you.”
Other victim statements detailed the trust they placed in Ken Mattson, the web of friends and relatives who became involved in the investments scheme, and the hardships they have faced since the monthly dividends they’d been receiving dried up.
One woman, Edie, said her family had invested $3.8 million with Mattson — “our savings, our retirement accounts, the home we lived, the business we built over 30 years.”
She said the pain and shame she now felt was comparable only to losing both her parents in a plane accident and going through a divorce. She personally recommended Mattson to five other investors. One of them is now selling their home and moving out of state to stay afloat. One has no income and can’t afford to fix her roof, she said.
Another alleged victim, Steve E., looked at his former adviser and said, “Ken, you knew what you were doing when our daughter got a settlement because she was dying. Her kids are now with a single dad because you were controlling the money. You should be ashamed of yourself.”
All of the speakers pleaded with Tse to deny Mattson’s release.
But the judge had made it clear from the start that he couldn’t do that unless it was impossible to set conditions that might mitigate the risk of flight, or of moving money around. In the end, after many rounds of wrangling, he found a resolution.
You can reach Phil Barber at 707-521-5263 or phil.barber@pressdemocrat.com. On X (Twitter) @Skinny_Post.