Real estate developer Ken Mattson had met the elderly couple through a Bible study in Sonoma before convincing them to sell him their longtime family home for investment income.
Now Elizabeth and Scott Walker, plus five other clients, are suing the embattled developer and his business partner, Timothy LeFever, for losing their life savings, the San Francisco Chronicle reported.
The lawsuit, filed in federal court in San Francisco, adds to a rising tide of complaints against Mattson and LeFever, who are tied up in lawsuits with each other and other investors and under a spotlight from the FBI, the Securities and Exchange Commission and the Internal Revenue Service.
While other investors have filed their own lawsuits, most have not sued LeFever.
The Walker lawsuit names both developers — while seeking approval from the court for class action status, meaning it could include all of Mattson’s and LeFever’s clients for the past 24 years.
Investors ranged from schoolteachers to attorneys, according to the lawsuit, with savings that ranged from “high five figures up to several million dollars.”
LeFever and Mattson used investor money to build a real estate portfolio across California worth more than $400 million, according to public records cited by the Chronicle.
The Walkers and five other clients sued the Sonoma real estate developers and several of their businesses, accusing the men of fraud, elder abuse and other financial misconduct.
The suit describes Mattson selling clients on a pitch of regular monthly payments from real estate investments, and additional payouts after property sales, driven by appreciating property values.
Those payments, attorneys wrote, “sustained a façade that masked growing disarray and overextension, until the scheme collapsed” earlier this year.
When the dust cleared, the Walkers were out more than $4 million, including the home in Manhattan Beach bought by Elizabeth Walker’s grandfather in 1939, and used as a summer gathering spot for five-generations.
“This is like a friend stabbing you in the back,” Walker, 68, who now lives in Colorado with her husband, told the Chronicle. “It just keeps getting worse.”
Mattson’s attorney was not available for comment and LeFever’s attorney did not respond to a request for comment from the newspaper.
Plaintiffs attorneys have already identified “hundreds” of potential victims, said Blair Kittle, an attorney with Burlingame-based Cotchett, Pitre and McCarthy, one of three law firms suing Mattson and LeFever.
Part of the problem, he said, is that Mattson failed to properly document many of his transactions with clients.
“We’re still uncovering it,” Kittle told the Chronicle. “Records were not kept correctly. So the people we know about are only those people who have self-organized to get together (sue the developers). … That’s already in the hundreds. So we expect it to be more than that.”
Last month, Mattson and LeFever, owners of LeFever Mattson Property Management, exchanged lawsuits on the same day, each accusing the other of financial misconduct. The two men were friends in elementary school and served as best men in each other’s weddings.
In May, Mattson listed his Julia Morgan-designed mansion at 62 Farragut Avenue in Oakland’s Piedmont for $9.9 million after an FBI raid on his Sonoma County house and allegations he defrauded investors.
— Dana Bartholomew