A judicial hearing on the terms of Ken Mattson’s bail got boisterous Wednesday in San Francisco when a U.S. District Court judge began talking about renewed jail time.
The two sides were discussing the value of a house on La Salle Avenue in Piedmont — owned by Mattson’s wife, Stacy — and whether there were alternative properties the Sonoma-based couple might offer as part of Ken Mattson’s criminal bond agreement, when Magistrate Judge Alex G. Tse said, “I could remand into custody.”
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About 20 people were seated in the courtroom, and some began clapping and urging, “Yes!”
The gallery was mostly filled by people who had invested in Mattson-related ventures, and they had gathered at the Phillip Burton Federal Building as a show of strength, and to encourage Tse to throw the book at the man they accuse of defrauding them.
The judge admonished those who clapped and spoke aloud. A bailiff warned them that additional outbursts might get them booted from the courtroom.
Mattson has been free on bail since the first hearing following his arrest and indictment in May on nine felony counts of wire fraud, money laundering and obstruction of justice. He stands accused by prosecutors of running a Ponzi scheme that bilked potentially hundreds of investor clients out of tens of millions of dollars over a period of at least 15 years.
Groups of his investor clients have attended some of his appearances in the criminal case, where he has pleaded not guilty. Many of those attendees left the federal building Wednesday frustrated.
More than 70 people had submitted written victim statements to Tse, according to one of the organizers, and at least four of them had been scheduled to read their statements aloud. But the judge wasn’t inclined to hear those messages, he told observers at the beginning of the hearing, because they weren’t relevant to the legal issues at hand.
Mattson, who appeared next to his attorney in a dark suit — Stacy, along with her sister and brother-in-law, were seated in the front row in the gallery — was not carted off to jail.
Federal prosecutors did prevail, though, and Mattson was ordered to place the La Salle Avenue estate, with equity valued at $2 million, in bond — an action he has been fighting for weeks.
“I’m glad we finally have that lien,” investor Risa Meyer told The Press Democrat after the hearing. “It has been a bone of contention, and a point of fear. People have been afraid that (Mattson) would be able to remain free without ever posting bail.”
Meyer, who lives in San Francisco, began investing with Mattson in 2021. Some investors have relationships that go back much longer.
After FBI agents arrested Mattson in May, the Northern District of California’s pretrial services division set his bail at $4 million, calling him a flight risk because of his past actions and access to resources. Most of that amount was secured by a pair of real estate properties.
One was a house in Reno owned by Ken Mattsons’ in-laws.
The second was the La Salle Avenue house. Until this week, that deed has never been entered into bond, as agitated investors — many of whom are struggling to get by on fixed incomes — have repeatedly pointed out.
Mattsons’ legal team, meanwhile, has contested the move, saying he needed the freedom to sell the Piedmont home to fund his defense, citing his right to do so as a 6th Amendment issue.
The first question Wednesday was whether the La Salle Avenue parcel was viable to be included as bail.
Assistant U.S. attorney Nikhil Bhagat argued that it was. Randy Sue Pollock, Mattson’s criminal defense attorney, suggested it wasn’t, because of a looming foreclosure order set to take effect Dec. 30.
“You can’t even agree on that,” Tse rebuked the opposing lawyers. “How am I supposed to agree on the amount (of the house’s worth)?”
If La Salle isn’t viable, or if the two parties couldn’t come to a consensus on the home’s equity, the judge continued, he would be tempted to send Mattson back into federal custody.
Pollock urged Tse, whose only role in Mattson’s criminal case is overseeing the bail agreement, to wait until the trial judge, Jon S. Tigar, ruled on related issues. Tigar is handling the bulk of the government’s case against Mattson.
Tse rejected that proposal along with Mattson’s 6th Amendment argument.
Pollock agreed to hand over the La Salle Avenue deed to the court by the end of Friday. If the property is sold out of foreclosure, the equity will go to the court clerk.
It may eventually contribute to restitution for the Mattson investors who have submitted tens of millions of dollars in claims against him and his former businesses. But as the protracted fight over the La Salle Avenue house demonstrates, any sort of clear resolution is likely to be months away.
Pollock then diverted the courtroom discussion to another topic — her own compensation.
If Mattson is prevented from filing any documents that might impede the bond agreement, she asked, “How would it affect my ability to file an attorney lien?”
Pollock has been working on a $500,000 retainer, and has been paid roughly $200,000 out of that amount. But she hasn’t cashed a check since June, she said, because attorneys that have taken over management of KS Mattson Partners — Ken and Stacy’s now-bankrupt company — are threatening to claw back the retainer.
Pollock requested that the court appoint her as Mattson’s lawyer under the Criminal Justice Act, the federal equivalent of public defenders. Bhagat objected to that plan.
“It’s not restricted,” he told Tse, referring to the retainer money. “She has chosen not to touch it.”
“On advice of counsel!” Pollock shot back.
Her needs should not take priority over securing the bond, Tse advised, and Pollock has eaten into her own retainer by filing the 6th Amendment petitions. But he was sympathetic to her situation overall, and he granted the Criminal Justice Act request.
Pollock will make $175 an hour in that role, but her fee will be capped at $13,600.
When Tse adjourned his courtroom, bailiffs asked spectators to remain in their seats while the Mattson party exited. And moments after the room had fully cleared, investors and their advocates returned for a briefing from Bhagat.
“I want to make it clear, the bond is to secure his appearance at trial. It’s not property for restitution,” he told them. “I know that’s difficult to manage.”
He then noticed the reporter sitting in the gallery, and politely asked him to leave.
Sources later said the mood in the room was a bit tense, with some investors questioning why it was taking so much time — and money — to bring Mattson to justice.
You can reach Phil Barber at 707-521-5263 or phil.barber@pressdemocrat.com. On X (Twitter) @Skinny_Post.