Overleveraged, Overconfident

Quick Take: The Sonoma Scandal

• Cherise Lloyd • Season 2 • Episode 2

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Meet Kenneth Mattson is the central figure in the implosion of an alleged $400 million real estate empire that prosecutors describe as a decade-long Ponzi scheme. He faces a raft of serious federal charges, including seven counts of wire fraud, one count of money laundering, and one count of obstruction of justice, to which he has pleaded not guilty.

This episode was researched and written by Cherise Lloyd. Some music was created by using UDO. You can find show notes, transcripts, and sources at www.overleveragedoverconfident.com. Follow us on Instagram at Overleveraged Overconfident. Support the show on Patreon and help us keep deep-diving into those spectacular financial fails.. Overleveraged Overconfident is part of Seven Seven Spider, which specializes in deep dive research and financial storytelling. All research uses publicly available sources, so no confidential or regulatory information, just my keen sense of spotting nonsense.

Joshua:

Okay, so let’s start with a crazy incident that well, it sounds less like high finance and maybe more like a movie scene. Kenneth Mattson, the Sonoma real estate developer.

Libby:

Yeah, it was September 2025. Mattson's involved in what the reports called a violent crash. He's in a brand new uh 2025 GMC Sierra, big truck,

Joshua:

Right?

Libby:

And he just plows it straight through a fence across a horse pasture and smack into a tree. Total the vehicle.

Joshua:

Whoa.And Mattson,he ok? Anyone else hurt?

Libby:

Well, that's the thing. He apparently walked away with uh virtually no injuries. But look, the crash itself isn't the big news here.

Joshua:

ok

Libby:

It's why it's news. At the exact moment he crashed that truck, Mattson was out on$4 million bail.

Joshua:

What?!

Libby:

Oh yeah He's facing this huge raft of federal charges, alleging he ran one of the biggest financial frauds Sonoma County has ever seen.

Joshua:

Wow. Okay. So, that's our mission today, then to really unpack this this whole implosion. Let's do a quick take on How the Lefever Mattson real estate empire grew so fast and then collapsed so dramatically

Libby:

and Mattson's legal troubles.

Joshua:

Yeah.

Libby:

Wire fraud, money laundering, even obstruction of justice, plus the fallout for well, hundreds of investors and really the whole Sonoma community.

Joshua:

It's a huge story. And the charges themselves?

Libby:

He's pleaded not guilty to 22 charges overall, nine of them federal counts. And the prosecutors, they're calling it a classic Ponzi scheme, possibly going back as far as uh 2009.

Joshua:

All right, let's get right into that core allegation, then. Mattson was CEO and CFO of Le Fever Mattson LM.

Libby:

Ummmmm

Joshua:

What was the actual mechanism here? How did this alleged scheme work for so long?

Libby:

Fundamentally, it was deception aimed at people who trusted him. Many were older, near retirement, investing their life savings. Mattson allegedly sold them shares or what looked like shares in specific property holding companies. Think Divvy, Divytree LP, Peacock Park Apartments LP. They believed they were legitimate partners,

Joshua:

but they weren't actually on the company's real books.

Libby:

Exactly! They were offbooks investors. The official accounting done by a separate entity called home tax didn't list them. And here's the Ponzi part, the crucial bit. The money he paid them back. Those distributions.

Joshua:

Yeah.

Libby:

They weren't from rent money or property profits. Uh-uh. They came from new cash flowing in from the next investor. Or from huge, often short-term loans he was taking out.

Joshua:

Just churning money.

Libby:

Precisely. Between just 2019 and 2024, sources say he pulled in at least$28 million from just those two partnerships we mentioned. from people who thought they were buying into real estate.

Joshua:

That outlines the the basic fraud. But then there's this obstruction charge, which sounds pretty blatant, like trying to hide the evidence when things got hot.

Libby:

Yeah. The obstruction charge is well, it's pretty stark. Separate from the fraud itself.

Joshua:

So, April 2024, Mattson personally gets a legal preservation letter and a subpoena from the SEC. Standard procedure, basically saying,"Don't delete anything relevant."

Libby:

Okay. Standard legal warning,

Joshua:

right? But less than a month later, May 22nd, 2024. And this is just 2 days before the FBI is set to raid his house and grab his computer.

Libby:

Yeah.

Joshua:

Mattson personally allegedly deletes over 10,000 files from his personal computer.

Libby:

10,000 files specifically about the scheme.

Joshua:

Yeah

Libby:

That's what they allege. Files detailing the names of those offbooks investors, the fake partnerships, the money trails, all wiped just as law enforcement was closing in. It's....

Joshua:

well, it looks like a direct attempt to cover his tracks.

Libby:

That is quite something. Okay, so that really sets the scene. He's currently out on that$4 million bond, GPS monitor, the whole deal. Now, let's talk about the scale of the operation that even made this possible. Mattson and his former partner Tim Le Fever, they built a huge portfolio, right? Something like$400 million.

Joshua:

Yeah. Estimated at around$400 million. Over 200 properties across Sonoma County. We're talking well-known places. Ravenswood Winery, Cornerstone Sonoma, the Sonoma Cheese Factory, big local names.

Libby:

So, how did he keep the alleged fraud hidden within such a large visible operation? Even from his own executives.

Joshua:

That comes down to financial secrecy, a really deep level of it, which leads us to this shadow account,

Libby:

the 1059 account,right?

Joshua:

Exactly. Federal investigators found this account at Bank of the West, number 1059. Mattson, and only Mattson, controlled it. And get this, over 7 years, they say he pushed more than$250 million through this single account.

Libby:

Quarter of a billion dollars, hidden from his own company.

Joshua:

Completely hidden from LM executives. Yeah. This was the engine room for the scheme. It's where the money came from to pay off the earlier offbooks investors, you know, the Ponzi payments, and it's also where he paid for his own uh very expensive lifestyle, mortgages on a Piedmont mansion, a Delmare duplex.

Libby:

So mixing alleged stolen funds with maybe legitimate business cash, all completely off the official radar. Okay, that explains how he hid the payments. But how did he get all the cash needed for such rapid buying?

Joshua:

Yeah, that leads us to the hard money lender, right,socotra capital

Libby:

Socotra is absolutely critical here. The indictment calls them lending and Entity 1. They're based in Sacramento, a hard money lender. And they loaned Mattson's personal company, KSMattson Partners, or KSMP, over$180 million between 2011 and 2024.

Joshua:

Okay, hold on. If Mattson had access to all this property, all this collateral, why go for hard money? The interest rates are astronomical compared to banks. Earlier You said up to what, nearly 14%.

Libby:

Exactly. Rates ranging from 9.35% up to 13.75%. Typical bank rates at the time might have been, say, 5% to 6.5%. this is So much higher.

Joshua:

So why pay that premium?

Libby:

Well, look, hard money loans are fast. They're assetbacked. If you've got the property to secure it, you can get cash quickly. But it wasn't just about speed here. It was arguably about secrecy.

Joshua:

Makes sense. Think about it. Regular banks, institutional lenders, they do deep dives.

Libby:

They want full disclosure. They want to see all related accounts, all business partners.

Joshua:

And Mattson needed to keep that 1059 shadow account secret. He needed to keep the offbooks investors hidden.

Libby:

So the high interest rate was a price of avoiding scrutiny.

Joshua:

You could definitely see it that way. He was willing to pay maybe millions extra in interest to bypass the transparency, the checks and balances that a traditional bank would have absolutely insisted on. It was effectively a fee for opacity.

Libby:

That's a fascinating and frankly quite chilling insight into how this was structured. And so, the lender is now deeply tangled up in this whole bankruptcy mess.

Joshua:

Oh, completely. They hold deeds of trust on 75 different properties worth over$102 million on paper and Investigators traced over$20 million in payments going to Sakotra directly from that secret account

Libby:

Wow.

Joshua:

Yeah. That's more than double what all other lenders combined got from that account. socotra as a secured creditor, they are a huge player in what happens next.

Libby:

Okay. Let's connect this high-flying finance back down to the ground level to the community in Sonoma.

Joshua:

Hmm

Libby:

Because even before these fraud charges hit, Mattson's way of operating was causing a lot of anger locally, wasn't it?

Joshua:

Absolutely. Years before he bought up what, over 120 properties and the pattern became notorious. Buy it, finance it often with that expensive hard money and then just let it sit often for years. Unfinished projects, vacant buildings. People started calling them see-through buildings.

Libby:

Right. I read about that. Like those huge half-built houses on Moon Mountain Road just sitting there behind fences.

Joshua:

Exactly. Or the old Cocoa Planet building downtown, empty for nearly 3 years. Even small things like the famous Sonoma Cheese Factory sign

Libby:

Yeah, missing its E for ages

Joshua:

I know, It just screamed neglect.

Libby:

And people got organized.

Joshua:

They did. A grassroots group called Wake Up Sonoma formed specifically to track Mattson and Lefever's activities. There was real resentment building.

Libby:

Boy, I read that one organizer, Veronica Napole, well she summed it up saying something like,"They are not developers, they are investors, meaning they bought and leveraged but didn't actually build or finish things for the community."

Joshua:

And this local anger eventually spilled over into politics, too.

Libby:

Yep, It absolutely did.

Joshua:

There was a big fight over a proposed public private partnership for a project called Spring this plaza. Mattson wanted in and he had some initial backing from a county supervisor at the time, Susan Goran.

Libby:

But the community pushed back hard

Joshua:

vehemently. It wasn't just Mattson's track record of, you know, blight and unfinished work. His business partner, Tim LeFever, also had very public documented ties to some pretty powerful national conservative groups like the Council for National Policy

Libby:

and in a generally liberal place like Sonoma County.

Joshua:

Exactly. That combination, Mattson's visible failures as a developer plus LeFever's conservative political connections created this perfect storm of local opposition. They fought the Springs Plaza project tooth and nail and by 2023 it was dead in the water.

Libby:

Oh

Joshua:

So the cracks were showing long before the financial dam actually broke.

Libby:

And the final break came in April 2024. That's when his partner his childhood friend apparently, finally figured out the extent of the secretive scheme, pushed Matson out as CEO CFO and then went to the feds.

Joshua:

Yeah, that was the catalyst. After that, the bankruptcy started falling. like dominoes. First LM itself and dozens like over 60 related companies filed for chapter 11 bankruptcy late in 2024

Libby:

and then Mattson personally

Joshua:

then Mattson and his personal entity KSMON partners they filed for bankruptcy too in mid 2025.

Libby:

So now for the hundreds of investors who lost money the goal isn't to try and fix the company it's just liquidation sell everything off.

Joshua:

That's the plan. They're not aiming for reorganization. They want to set up what's called a liquidation trust. This trust would basically inherit all the remaining assets, properties, cash, whatever's left. And crucially, it also gets the causes of action,

Libby:

meaning the legal right to sue Mattson and Lefever.

Joshua:

Exactly. To try and claw back money. But because of how Mattson structured everything, especially with those offbooks investors, figuring out who gets paid is incredibly complex. It's a huge fight.

Libby:

And the regular investors, the ones who gave them their savings, they're pretty far down the list. right behind secured creditors like Socotra.

Joshua:

That's the problem. They're often described as being on the third rung of the bankruptcy ladder. Secured creditors like Socotra with its$100 million plus in property deeds get first dibs. So the investors through the official creditors committee are trying some really aggressive legal tactics.

Libby:

Okay, what are they trying?

Joshua:

Two main things. First, something called substantive consolidation. Basically asking the judge to ignore all the separate company structures Mattson created and just pull everything, all 60 plus entities into one big pot of assets

Libby:

makes sense given how tangled it all seems. And the second thing,

Joshua:

the second one is the real bombshell. They're pushing the bankruptcy judge to make an official finding that this entire operation was a Ponzi scheme, a formal Ponzi finding.

Libby:

Why is that specific label so important legally?

Joshua:

Because if the judge agrees it was a Ponzi scheme, it triggers something called the Ponzi presumption. And this is aimed squarely at lenders like Socotra capital

Libby:

Okay, break that down. What is the Ponzi presumption actually do?

Joshua:

Well, essentially it allows the court to argue that because the entire enterprise was fraudulent from the start, Mattson never truly had legitimate ownership of the assets he used as collateral. The money used to make loan payments wasn't real profit. It was stolen investor funds.

Libby:

Got it.

Joshua:

So, if the presumption applies, the court could potentially claw back money already paid to lenders like Socotra. Remember that$20 million they got from the 1059 account? That could theoretically be pulled back. into the pot for all creditors.

Libby:

Wow. So, it could even challenge Socotra's position as a secured creditor, arguing the security itself was based on fraud.

Joshua:

That's the heart of the argument. It's a fundamental challenge, saying the bad faith was so deep that even supposedly secure loans might be unwound. It really questions the lender's uh due diligence or lack thereof.

Libby:

This is highstakes legal strategy. Meanwhile, Mattson himself is claiming he's broke.

Joshua:

That must be tough for investors to hear.

Libby:

Yeah, that's a lot of anger. He claimed in court recently that he's gone from multi-millionaire to being near broke. Says he only has access to about$16,000 in cash.

Joshua:

16,000?

Libby:

Yeah. And that he's relying on his wife's$72,000 annual income. At the same time, he's saying he needs to sell his$21 million Piedmont mansion and other properties urgently

Joshua:

to pay for what? Living expenses

Libby:

to cover his legal fees, which, get this, his own filings estimate could be somewhere between$3 million and$8 million.

Joshua:

Wait, he needs potentially$8 million for lawyers, but claims he's living off his wife's 72 thousanddollar salary and has only 16 thousand liquid I'm at a loss. How does that even compute?

Libby:

That's the massive disconnect that investors are pointing to. It's incredibly frustrating for them. As one victim put it,"We financed his houses and his expensive cars. The very wealth they feel he stole from them is now potentially being liquidated to fund his defense against them."

Joshua:

It really brings us back to that opening image, doesn't it? Mattson walking away basically unharmed from wrecking that huge expensive truck. It's almost a metaphor for the whole affair.

Libby:

It kind of is.

Joshua:

A violent crash involving immense wealth, alleged deep-seated crime, devastating community impact, and now this incredibly messy legal battle where hundreds of people, many retirees, are just fighting to get some of their life savings back from this incredible complex, deliberately obscured financial wreckage.

Libby:

And that fight in the bankruptcy court, especially the attempt to use the Ponzi presumption against a major hard money lender like Socotra It's pretty unprecedented.

Joshua:

The outcome could send shock waves through the whole world of high-risk real estate finance. It's not just about Mattson anymore. It's about the accountability of the system that well enabled him.

Libby:

He deliberately sidestepped traditional banks, use hard money, leveraged complexity, ignored local concerns, left physical scars on the community. So for you listening, maybe the question to ponder is what lessons are there here for local governments, for communities about oversight and due diligence when a developer comes in moving fast, highly leveraged, avoiding normal bank checks. What safeguards are needed? How do you prevent someone else from operating so deep in the shadows?

Joshua:

What are those checks and balances needed when money moves, you know, maybe faster than oversight can keep up? But that's the question Sonoma is grappling with right now. And the bankruptcy court, too.

Libby:

A critical question indeed.

Joshua:

Thank you for joining us at a Quick Take on Overleveraged Overconfident A short reading of yesterdays and today's con men and scams.

Libby:

if you want more up to date coverage Look to Phil Barber's work at the The Press Democrat and the San Francisco Chronicle's work by reporters.

Joshua:

You can listen to more Overleveraged Overconfident at Amazon, Apple and Spotify podcasts.

Libby:

You can also read our companion newsletter The Unspoken Deal, on substack. Where we give the rules of Confidence, Power and Persuasion culled from watching some of the biggest financial blowups. Learn how you can get ahead without the jail time or disgrace. Stay Wary.