Holland & Knight is excited to announce the third season of its SECond Opinions Blog Summer Series featuring posts written and researched by the associates from our Securities Enforcement Defense Team. The first blog in this series comes from Tysons Litigation Associates Bailey McHale, who focuses her practice on a variety of government contracts matters including bid protests, claims and prime-sub disputes, and Laura Supple, who focuses her practice on white collar defense and investigations, as well as national security, defense and intelligence, and complex commercial litigation.
On May 22, 2025, the SEC brought a case of affinity fraud before the U.S. District Court for the Northern District of California against Bay Area real estate investor Kenneth Mattson alleging more than $46 million in fraudulent investments.1 According to the SEC, Mattson allegedly operated a Ponzi-like scheme for approximately 15 years, primarily targeting a group of elderly, retired congregants in his church community, to allegedly defraud approximately 200 investors. Mattson allegedly told the investors that they would receive an interest in his real estate investment firm but, after paying Mattson, they were never officially recorded as limited partners. The SEC claims that Mattson comingled the funds received from these investors with his legitimate business accounts and allegedly used the funds to furnish his lifestyle and for other purposes. This case follows a criminal action filed by the U.S. Attorney's Office earlier in the month2 and civil actions filed in 2024 by some of the alleged fraud victims.3
Background
Mattson is a former registered financial advisor, broker and tax preparer operating out of Northern California. Mattson is the 50 percent owner and former CEO and CFO of LeFever Mattson, a real estate management company. LeFever Mattson created, managed and held ownership interests in 50 limited partnerships (LPs) that owned and invested in residential and commercial real estate. LeFever Mattson was also a 66.67 percent owner in Home Tax Service of America d/b/a LeFever Mattson Property Management (Home Tax), which employed 40 people who managed the LeFever Mattson partnerships and properties.
When purchasing a new property, LeFever Mattson often partnered with investors to form an LP to own the property. These LeFever Mattson LPs, per California state law, were required to use separate trust accounts to collect rent and issue distributions to their partners. Home Tax was responsible for opening these accounts and distributing funds.
According to the SEC's Complaint, Mattson allegedly engaged in a fraudulent scheme to sell fake interests in the real estate LPs, partially owned by LeFever Mattson. Through his church community, Mattson primarily targeted a group of elderly retirees or those close to retirement. Some investors transferred money out of their individual retirement accounts (IRAs), in which they did not have discretion to self-direct investments, to "self-directed" IRAs, where they were able to invest in the LPs. Mattson allegedly hid these false sales from Home Tax, so Home Tax did not add any of these investors to partnership records. The SEC further claims that Mattson allegedly sent the investors fabricated tax documents and fake distributions.
The SEC's complaint alleges that the fraud extended to the custodians of the self-directed IRAs. Typically, an IRA is managed by a major financial institution and limited to holding stocks, mutual funds and bonds. However, self-directed IRAs allow retirees to invest in other assets such as real estate.4 Mattson allegedly directed investors to IRA custodians he knew and then instructed the custodians to wire the money to a bank account held in the name of LeFever Mattson, but over which he had exclusive control.
Instead of investing the funds into LeFever Mattson, the SEC claims, Mattson allegedly used the money to pay his personal expenses or the expenses of his personal entity, KS Mattson Partners.5 Mattson allegedly put millions of dollars from this account toward paying off his own credit card bills and personal loans and paying loans and buying real estate in the name of KS Mattson Partners. The Complaint alleges that Mattson commingled the funds from these investors into LeFever Mattson's legitimate accounts.
Further complicating matters, after issuing Mattson an investigative subpoena in May 2024, the SEC determined, through a forensic analysis conducted by federal criminal authorities, that Mattson had deleted hundreds of files and commercial bookkeeping software related to these investments.
Violations
In the Complaint, the SEC charged Mattson with fraud for making material misrepresentations in an attempt to sell securities in violation of the federal securities laws. The SEC alleged violations of Section 10(b) of the Exchange Act, 15 U.S.C. § 78j(b), and Rule 10b-5, 17 C.F.R. § 240.10b-5, specifically, that Mattson employed schemes to defraud, made untrue statements of material facts and engaged in a business that operated as a fraud. The SEC also alleged violations of Section 17(a) of the Securities Act, 15 U.S.C. § 77q(a), that Mattson obtained money or property by means of untrue material facts.
The SEC further alleged Mattson violated registration requirements for the sale of securities under Sections 5(a) and 5(c) of the Securities Act, 15 U.S.C. §§ 77e(a) and 77e(c). According to the SEC's Complaint, Mattson failed to file registration statements with the Commission for the LeFever Mattson LP interests, and none of the exceptions to the registration requirements applied to the offering.
Conclusion
This case reflects an ongoing trend of the SEC targeting affinity fraud and seems emblematic of the sort of standard-issue securities fraud cases the SEC will likely focus on moving forward in the near term. In the Complaint, the SEC is seeking a permanent injunction from future violations of the federal securities laws and a permanent director and officer bar against Mattson, as well as disgorgement of all ill-gotten gains and civil monetary penalties. The SEC also seeks disgorgement from KS Mattson Partners, which is included in the Complaint as a relief defendant (a nominal party sued only to recover ill-gotten gains it received that it is not entitled to retain over the interests of allegedly defrauded investors). The case has been reassigned to Northern District of California Judge Jon S. Tigar and, as of July 1, 2025, no dispositive motions have been filed. The court scheduled a status conference for Aug. 26, 2025.
The SECond Opinions Blog will continue to monitor this case and related cases and provide updates. If you need additional information on this topic – or any topic related to securities enforcement or investigations – please contact the authors or other members of Holland & Knight's Securities Enforcement Defense Team.
Footnotes
1. SEC v. Mattson, No. 25-4387 (N.D. Cal. May 22, 2025).
2. Hultman v. Mattson, No. 24-3381 (N.D. Cal. Jun. 5, 2024). On Oct. 21, 2024, the court stayed the case as to defendants LeFever Mattson Inc. and Divi Divi Tree LP pending involuntary bankruptcy petitions filed against them. The court dismissed without leave to amend the Section 10(b) claim against defendants Mattson and KS Mattson Partners LP as outside the five-year statute of limitations and declined to exercise supplemental jurisdiction as to the state law claims and dismissed them without prejudice. Id., ECF No. 86 (Oct. 21, 2024). A related case was filed by different investors in July 2024 and also stayed pending the involuntary bankruptcy petitions filed against some of the defendants. See Claridge v. LeFever, No. 24-04093 (N.D. Cal. July 8, 2024).
3. USA v. Mattson, No. 25-126 (N.D. Cal. May 13, 2025). As of July 1, 2025, this case remains pending.
4. See also "Investor Alert: Self-Directed IRAs and the Risk of Fraud," SEC (Feb. 7, 2023).
5. KS Mattson Partners LP was owned 49 percent by Mattson and 49 percent by his spouse.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
