The former CEO of a San Francisco Bay area real estate investment business defrauded about 200 investors out of at least $46 million through sales of fake interests in real estate investment limited partnerships, the Security and Exchange Commission alleges.
Many of the investors were retired senior citizens that the suspect, Kenneth Mattson, met through his church community, the SEC said in a statement.
Mattson’s firm, LeFever Mattson, managed legitimate limited partnerships owned by real investors that invested in residential and commercial real estate, the SEC said. Mattson allegedly sold fake ownership interests in these limited partnerships from 2007 to April 2024, the SEC alleged. The bogus sales were not recorded in the legitimate ownership records, and investors who paid for the fake interests did not become limited partners or receive ownership rights, authorities said.
Mattson instead mixed new investor funds with personal and business funds, used the funds to make Ponzi-like payments, and gave the duped investors false tax records, the SEC alleges. Additionally, he used investor funds to pay for personal expenses and real estate transactions and expenses related to his personal partnership, KS Mattson Partners LP.
Mattson solicited investors to transfer funds from their individual retirement accounts to so-called self-directed IRAs, allowing them to invest in the bogus limited partnership. These sales were not included in LeFever Mattson’s records, and these individuals did not become limited partners, the complaint said.
“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,” Sam Waldon, Acting Director of the SEC’s Division of Enforcement, said in the statement. “The SEC is firmly committed to pursuing those who prey on retail investors and retirees, such as the individuals we allege that Mattson targeted.”
The SEC’s complaint charges Mattson with violating the antifraud and registration provisions of federal securities laws. The commission seeks permanent injunctions, disgorgement with interest, civil penalties, and an officer and director bar. The complaint also names KS Mattson Partners LP and seeks disgorgement of ill-gotten gains with interest.
In a related action, the U.S. Attorney’s Office for the Northern District of California has filed criminal charges against Mattson.
To help investors identify and avoid frauds related to self-directed IRAs, the SEC’s Office of Investor Education and Advocacy has issued an educational Investor Alert.
