Enforcement News: Ponzi-Like Scheme, Elder Financial Exploitation and Affinity Fraud

• Posted on: May 28 2025

By: Jeffrey M. Haber

On many occasions, we have written about Ponzi schemes that have been the subject of enforcement actions brought by, and/or settlements with, the Securities and Exchange Commission (“SEC” or the “Commission”). We remain unsurprised by the frequency with which people operate a Ponzi scheme and do so by exploiting the trust and friendship that exist in groups of people who have something in common, such as a religious group, an ethnic group, or a community – also known as affinity fraud.[1]

Today, we examine an enforcement action brought by the SEC involving a Ponzi-like scheme that targeted retired senior citizens that the defendant met through his church community.[2]

S.E.C. v. Mattson

On May 22, 2025, the SEC announced (here) that it charged the former CEO of LeFever Mattson (“defendant”), a real estate investment firm, with defrauding approximately 200 investors of at least $46 million by selling them fake interests in real estate investment limited partnerships. Many of these investors were retired senior citizens that defendant met through his church community.

According to the SEC, from approximately 2007 through April 2024, defendant orchestrated a Ponzi-like scheme that involved offering and selling fake interests in various legitimate limited partnerships created and managed by his company LeFever Mattson, a California corporation (“LeFever Mattson”).

The limited partnerships in which defendant purported to sell interests (the “affiliated limited partnerships”) were real and invested in residential and commercial real estate. The affiliated limited partnerships were managed and partly owned by LeFever Mattson, a Citrus Heights, California-based company, which defendant co-founded and ran as both the entity’s chief executive officer and chief financial officer. LeFever Mattson has been in business since 1989 and boasted an approximately $400 million portfolio of real estate investments, most of which consisted of ownership interests in 50 limited partnerships.

While the affiliated limited partnerships were real, and were in fact owned by a defined set of real investors, the SEC alleged that defendant fraudulently raised funds from another set of investors by falsely purporting to sell them ownership stakes in those same affiliated limited partnerships. Defendant allegedly told the investors that their investments would buy them a portion of LeFever Mattson’s ownership interests in specific affiliated limited partnerships and would entitle them to proportional distributions of the income generated by the underlying properties. According to the SEC, these representations were materially false.

The SEC alleged that defendant took steps to hide his alleged fraudulent scheme from people associated with LeFever Mattson, including by using a personal post office box to receive documents from investors, receiving investor funds and sending purported distributions from a bank account in the name of LeFever Mattson that only defendant could fully access, and instructing his personal assistant not to discuss the investors with anyone else at LeFever Mattson.

According to the SEC, defendant kept documents related to his alleged fraudulent scheme, including commercial bookkeeping records, on his laptop, which the SEC alleged he deleted after receiving an investigative subpoena from the staff of the Commission’s Division of Enforcement that required him to produce certain records concerning, among other things, the affiliated limited partnerships.

Because defendant allegedly concealed his fake limited partnership sales from people associated with LeFever Mattson, said the SEC, the fake sales were not reflected in the legitimate records demonstrating ownership percentages of the affiliated limited partnerships.

As a result, the SEC alleged that the investors who purchased interests in the affiliated limited partnerships from defendant never became actual limited partners or acquired any actual ownership interests, and they never received legitimate distributions from the limited partnerships in which they thought they invested.

Instead, alleged the SEC, defendant commingled new investor funds with other personal and business funds in a bank account that he controlled and allegedly used the commingled funds to make Ponzi-like payments to existing investors. The SEC also alleged that defendant misappropriated investor money to fund certain real estate transactions through his personal partnership, relief defendant KS Mattson Partners LP (“KS Mattson Partners”), pay expenses of KS Mattson Partners, and pay for personal expenses.

According to the SEC, defendant concealed from investors the fact that he was orchestrating a Ponzi-like scheme by, among other things, using some new investor funds to make payments to deceive existing investors, and providing investors with altered limited partnership documents.  Defendant also allegedly prepared a separate set of false tax records for the defrauded investors, which contradicted the legitimate annual tax filings for the affiliated limited partnerships that he signed and submitted to the Internal Revenue Service.

The SEC maintained that LeFever Mattson discovered defendant’s alleged misconduct in late 2023. In around April 2024, following an internal investigation, defendant resigned from his positions as chief executive officer and chief financial officer. In September 2024 and October 2024, LeFever Mattson and all of its affiliated limited partnerships filed for Chapter 11 bankruptcy protection.

As a result of the conduct alleged in the SEC’s complaint (here),[3] the SEC charged defendant with violating the antifraud provisions of the Securities Act of 1933 (“Securities Act”) and the Securities Exchange Act of 1934 (“Exchange Act”) as well as the securities registration provisions of the Securities Act. The SEC claimed that KS Mattson Partners was unjustly enriched by defendant’s violations. The SEC seeks a permanent injunction against defendant, disgorgement of ill-gotten gains with prejudgment interest, and civil monetary penalties. The Commission also seeks an order prohibiting defendant from serving as an officer or director of a public company as well as from participating in the issuance, purchase, offer, or sale of any security.  Finally, the SEC seeks disgorgement of ill-gotten gains with prejudgment interest from KS Mattson Partners.  

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Jeffrey M. Haber is a partner and co-founder of Freiberger Haber LLP. This article is for informational purposes and is not intended to be and should not be taken as legal advice.

[1] This Blog has examined Ponzi schemes and affinity fraud on numerous occasions. To find the articles related to Ponzi schemes and affinity fraud, visit the “Blog” tile on our website and enter “Ponzi scheme” or “affinity fraud” in the “search” box.

[2] This Blog has examined financial elder abuse on numerous occasions. To find the articles related to financial elder abuse or financial exploitation of seniors, visit the “Blog” tile on our website and enter “financial elder abuse” in the “search” box.

[3] The SEC filed its complaint in the U.S. District Court for the Northern District of California. It is important to remember that a complaint merely contains allegations. Until the claims in the complaint are fully adjudicated, readers should not interpret the allegations as anything more than statements of claimed facts made by the SEC against the defendant.