The former CEO of a real estate investment firm defrauded investors by selling fake interests in the legitimate limited partnerships operated by his firm, U.S. authorities are alleging.
The U.S. Securities and Exchange Commission (SEC) charged Kenneth Mattson — the former CEO of real estate investment business, LeFever Mattson — with defrauding approximately 200 investors of at least US$46 million by selling fake investments in genuine LPs that the firm managed.
According to the SEC’s complaint, while LeFever Mattson managed legitimate LPs that invested in residential and commercial real estate — that certain investors had real ownership stakes in — at the same time, Mattson also sold fake interests in these vehicles to another set of investors, whose purchases weren’t recorded on the LPs’ books, and never actually became limited partners, or received any genuine stake in the investments.
“While the LeFever Mattson-affiliated limited partnerships were real, and were in fact owned by a defined set of real investors, Mattson fraudulently raised funds from another set of investors by falsely purporting to sell them ownership stakes in those same LeFever Mattson affiliated limited partnerships,” the complaint alleged.
Instead of putting the victims’ money into the LPs, the SEC alleged that Mattson commingled their money with other personal and business funds, and used it to make Ponzi-like payments to certain investors. The regulator also alleged that he misappropriated investors’ money, and gave the defrauded investors false tax records.
Many of the victims of these fake sales were retirees that Mattson met through his church community, the SEC alleged.
“As our complaint alleges, Mattson lied to hundreds of individual investors, many of whom were retirees investing their hard-earned savings, and did not actually sell them the ownership interests that he promised,” said Sam Waldon, acting director of the SEC’s division of enforcement, in a release.
The SEC said that the firm discovered Mattson’s alleged misconduct in late 2023, and in April 2024, he resigned as the firm’s CEO and CFO. By the fall of 2024, the firm and all of its LPs filed for bankruptcy protection.
In a parallel action, the U.S. attorney’s office for the Northern District of California also announced criminal charges against Mattson, after a federal grand jury returned a nine count indictment that included seven counts of wire fraud, and one count each of money laundering and obstruction of justice.
The SEC’s complaint, which was filed in the U.S. district court for the Northern District of California, seeks permanent injunctions, disgorgement with interest, civil penalties, and an officer and director ban.
The allegations have not been proven, and Mattson is presumed innocent of the criminal charges.