Case Overview
Defendant: Kenneth W. Mattson, 63, President of LeFever Mattson
Timeline: 2009 - 2024 (15-year operation)
Victims: Hundreds of investors, primarily retirees
Total Fraud: $28+ million in verified losses
Case Status: Federal indictment filed May 2025, criminal trial pending
Recovery: Asset freeze and forfeiture proceedings ongoing
The Scheme Anatomy
Business Structure
Kenneth Mattson operated through LeFever Mattson, a corporation based in Citrus Heights, California, that controlled several limited partnerships managing commercial and residential properties. The legitimate business facade provided perfect cover for fraudulent activities.
The “Off-Books” Strategy
Mattson’s scheme centered on what prosecutors call “off-books investors” - victims who believed they were purchasing legitimate partnership interests but were never actually registered as partners in company records.
Key Properties Used as Bait:
- Divi Divi Tree, LP: Riverside County apartment complex
- Heacock Park Apartments, LP: Multi-million dollar property
- KS Mattson Partners, LP: Additional real estate holdings
Targeting Vulnerable Victims
Primary Demographics
- Age: Near retirement or already retired
- Investment Profile: Conservative, seeking safe returns
- Financial Status: Substantial retirement savings to invest
- Psychology: Trusted real estate as “safe” investment
The Marketing Approach
Mattson leveraged his legitimate business reputation to gain trust:
- Established Track Record: 15+ years of legitimate property management
- Word-of-Mouth: Existing clients referred friends and family
- Conservative Promises: Reasonable returns backed by “real” properties
- Retirement Focus: Marketed specifically to retirement fund investors
Fraud Mechanics
Phase 1: Building Trust (2009-2015)
Initial Success Strategy:
- Allowed early investments to generate modest, real profits
- Used legitimate rental income to pay initial investors
- Built reputation through satisfied early customers
- Established pattern of reliable payments
Phase 2: Expansion (2015-2020)
Scaling the Fraud:
- Increased solicitation of new “off-books” investors
- Used new investor money to pay existing investors (classic Ponzi)
- Commingled funds from multiple properties
- Concealed true financial state from legitimate partnerships
Phase 3: Desperation (2020-2024)
Concealing Asset Sales:
- 2021 Heacock Park Sale: Mattson sold the property for $8+ million in net proceeds
- Victim Deception: Never notified “off-books” investors of the sale
- Continued Solicitation: Recruited new investors even after selling underlying asset
- Fund Diversion: Used sale proceeds for personal expenses and earlier investor payments
The Unraveling
Red Flags Emerge
Warning Signs That Should Have Alerted Investors:
- No Official Documentation: Investors never received formal partnership agreements
- Cash-Only Structure: All transactions handled through single business account
- Lack of Transparency: No access to property management records
- Inconsistent Returns: Payments not correlated with actual property performance
SEC Investigation Triggers
April 2024: SEC begins formal investigation
Discovery: Subpoena for documents reveals scope of fraud
Obstruction: Mattson deletes thousands of relevant files
Result: Additional federal obstruction charges filed
Law Enforcement Response
Federal Charges Filed
Wire Fraud (7 counts): Maximum 20 years per count
Money Laundering: Maximum 10 years
Obstruction of Justice: Maximum 20 years
Total Potential Sentence: 150+ years in federal prison
Asset Recovery Efforts
Frozen Assets Include:
- Real estate holdings across California
- Business bank accounts
- Personal property and investments
- Partnership interests in legitimate ventures
Victim Compensation Process:
- FBI victim reporting system established
- Asset liquidation proceedings initiated
- Partial restitution expected through asset sales
Lessons for Investors
Red Flags Missed
Due Diligence Failures
- No Independent Verification: Investors never verified partnership registrations
- Lack of Legal Review: No attorney review of investment documents
- Over-Reliance on Reputation: Trusted personal recommendations over documentation
- Insufficient Questioning: Failed to ask hard questions about returns and structure
Regulatory Oversights
- No SEC Registration: Investment advisor not properly registered
- Lack of Third-Party Audits: No independent accounting verification
- Missing Insurance: No investor protection insurance in place
- Regulatory Gaps: Real estate investments often escape SEC oversight
Protection Strategies
Before Investing
- Verify Registration: Check SEC and state regulatory databases
- Independent Legal Review: Have attorney review all documents
- Third-Party Validation: Require independent audit of financial statements
- Background Checks: Research operator’s complete regulatory history
During Investment
- Regular Reporting: Demand quarterly financial statements
- Access Rights: Ensure right to inspect property and books
- Exit Strategy: Maintain ability to withdraw investment
- Documentation: Keep copies of all communications and statements
Current Status and Outlook
Legal Proceedings
- Criminal Trial: Scheduled for Spring 2026
- Civil Recovery: Ongoing asset liquidation
- Victim Support: FBI assistance program active
- Additional Charges: Investigation continues for potential co-conspirators
Recovery Prospects
Based on similar cases, investors may recover 20-40% of losses through:
- Asset liquidation proceeds
- Insurance claims where applicable
- Restitution orders
- Civil lawsuit settlements
Systemic Implications
This case highlights vulnerabilities in real estate investment oversight and demonstrates need for:
- Enhanced regulatory framework for real estate partnerships
- Better investor education about verification requirements
- Improved coordination between state and federal oversight
- Stronger penalties for obstruction of justice
Victim Resources
Immediate Steps for Victims
- Report to FBI: Use established victim portal
- Preserve Documentation: Gather all investment records
- Legal Consultation: Seek attorney specializing in investment fraud
- Join Victim Group: Connect with other victims for coordinated action
Support Organizations
- FBI Victim Services: Direct assistance with federal case
- FINRA Investor Education: Free resources and guidance
- National Center for Victims of Crime: Emotional support and advocacy
- Legal Aid Societies: Low-cost legal assistance
Conclusion
The Mattson case demonstrates how legitimate business operations can provide perfect cover for sophisticated fraud schemes. The 15-year duration and hundreds of victims show how trust, combined with inadequate oversight, can enable massive investor losses.
Key Takeaways:
- Business reputation alone is insufficient protection against fraud
- Proper documentation and verification are essential for all investments
- Regulatory gaps in real estate investing need immediate attention
- Quick action by victims and law enforcement can improve recovery chances
For current investors in questionable real estate ventures, this case serves as a critical reminder: when returns seem too good, documentation is lacking, or transparency is limited, immediate professional consultation is essential.
If you suspect similar fraud, contact the FBI immediately at 1-800-CALL-FBI or visit ic3.gov to file a complaint.
This analysis is based on public court documents and DOJ press releases. Victims should consult with qualified legal counsel for specific advice regarding their situations.