Ken Mattson Asks Judge to Release Properties to Fund Defense

Indicted Sonoma developer Kenneth Mattson needs to scrape together more cash to put up a defense against federal charges that he perpetrated a $46 million Ponzi scheme targeting dozens of retirees.

The former president of Citrus Heights-based LeFever Mattson asked a federal judge to allow him to sell two residential properties — a six-bedroom East Bay home that was briefly listed for $9.9 million last year and a duplex abutting an idyllic strip of sandy shoreline in Del Mar that he bought for $8.4 million more than two decades ago.

But the homes, along with one more at 1716 Ocean Front in Del Mar, are tied up in forfeiture allegations prosecutors lodged months ago, and the government’s lawyers balk at the idea of removing those protections now.

Mattson’s claims that the homes are disconnected from his web of alleged fraud are “threadbare” and not even worth wasting time on, government lawyers argued in a motion filed last Wednesday in federal court in the Northern District of California.

Besides, Mattson and his wife, Stacy Mattson, seem to have plenty of expendable assets to turn to before they consider selling off real estate, prosecutors claim.

Stacy Mattson paid nearly $200,000 in cash to purchase two cars last September, “one of which the defendant was driving on the day of his arrest,” the filing states.

Mattson’s lawyers should explain why the cars can’t be sold to fund his defense, prosecutors suggested.

In fact, the government claims there’s evidence the Mattsons sold off “large tranches of assets” in the year leading up to his arrest May 22, including $2.9 million worth of proceeds from the sale of 40 classic cars.

Witnesses allegedly told federal agents that the couple sold jewelry and even set up a secret bank account “so that Stacy could have money ‘stashed away’ in case the defendant went ‘away forever,’” the filing states.

Mattson’s lawyers did not respond to a request for comment on the government’s rebuttal to their motion filed June 25.

In court filings, defense attorneys argue the two properties in question are irrelevant to the criminal charges against Mattson, and claim holding them in forfeiture violates his constitutional right to counsel.

At any rate, the 63-year-old developer’s legal woes have left him hamstrung and in desperate need of cash.

The homes at 62 Farragut Avenue in Piedmont and 1834-36 Ocean Front in Del Mar were named as forfeiture properties in an indictment handed down by a federal grand jury earlier this year, leading to Mattson’s arrest in a Napa parking lot.

He was released about a week later on a $4 million bond backed by a home he owns with his wife at 210 LaSalle Avenue in Piedmont and another family property in Nevada, according to the proceedings.

While Mattson is preparing to mount a defense against nine counts of wire fraud, money laundering and obstruction of justice, LeFever Mattson, the company he founded in the 1990s with former partner Tim LeFever and grew to a $400 million residential portfolio, is trying to resist being sucked into bankruptcy.

KS Mattson Partners, a separate but possibly intertwined company Mattson and his wife control, suffered that fate in June, when a federal judge granted an involuntary Chapter 11 petition against the firm. That kicked off bankruptcy proceedings aimed at preserving the firm’s assets to protect the interests of dozens of mom ‘n’ pop investors he’s accused of defrauding to pay off other investors in a classic pyramid scheme.

The Chapter 11 protections cast further doubt on the validity of Mattson’s request to reclaim the homes in Piedmont and Del Mar, since the bankrupt firm appears to be at least a partial owner of the properties, federal prosecutors claim.

All of this would be a lot easier if the couple agreed to disclose their current financial resources in more detail, the government argues.

So far, the suggestion has not persuaded the Mattsons to become more forthcoming.

For now, prosecutors are only able to attempt to size up the couple’s real estate portfolio based on public records.

A pretrial analysis concluded Mattson is “associated” with 64 properties in total, 24 of which are “possibly owned” by him, amounting to an estimated value of $34 million.

He’s also linked to 23 property sales totalling $28 million, plus 11 loans tied to the portfolio, according to the analysis.