After a contentious hearing Thursday morning, a Nevada County Superior Court judge denied a request by two suspects in a high-profile fraud case to lower their bail, or allow their release on their own recognizance.
Philip Lester, CEO of Gold Country Lenders, and Susan Laferte, the firm’s chief financial officer, have been charged with 66 felony counts of elder abuse, securities fraud and conspiracy; their bail has been set at $600,000 each.
Laferte’s court-appointed attorney, Greg Klein, took the offensive early, charging that the state Attorney General’s Office was grandstanding when six officers arrested his client with guns drawn.
Klein argued that Laferte has no criminal record and had been entirely cooperative through several years of investigation, and alleged that the state “stacked” the charges when, in reality, there are only 24 sets of victims.
“I use the word ‘victim’ with a fair amount of cynicism,” Klein said, saying they were all long-term investors and claiming the charges of elder abuse were inappropriate.
Klein also expressed concern that he could not competently represent Laferte if she was in jail, citing the approximately 400,000 pages of evidence.
“She is not a flight risk,” he told visiting Judge Ersel Edwards. “If she wanted to leave, she would have done so two years ago.”
Nevada County Public Defender Don Lown argued that his client, Philip Lester, had been willing to surrender and that he was a pillar of the community.
“His ties are all here,” Lown said, calling the arrests an “attempt to glorify” the Attorney General’s office and “turn it into a media event.”
Deputy Attorney General Maggy Krell fired back, “categorically denying” the allegations made by Klein and Lown, and noting that the Lesters currently live in Riverside County.
Krell also pointed out that Judge Jane York previously had ruled that their bail actually should be $740,000, and added that her office had identified out-of-state properties and active accounts with large sums of money belonging to the defendants.
Edwards told Klein and Lown there was no presumption of innocence at this stage of the criminal proceedings, adding that while he had sympathy for their clients, he was denying their request for bail reduction.
Klein tried one more time for a bail reduction to $250,000, but Edwards said that would be a more appropriate request after a preliminary hearing into the evidence.
“I’m not going to have this argument with you,” he told Klein, before sharply refusing a request to discuss the matter in chambers.
After another round of wrangling about the volume of discovery and whether it was being provided to the defense in a timely manner, Edwards admonished all three attorneys.
“You need to talk (amongst yourselves), not rant and rave in court,” he said.
Both Philip Lester and Laferte pleaded not guilty to all charges. They are set to return for a felony conference on Oct. 25 and the preliminary hearing was set for Nov. 6.
There are two other co-defendants; Ellen Lester, Philip’s wife, has been charged with two felony counts of conspiracy and securities fraud, and has been released on her own recognizance. Jonathan Blinder, 58, has been charged with four felony counts of securities fraud, and has posted $150,000 bail. Blinder reportedly has hired private counsel and is set for arraignment Oct. 23.
The charges allege that Gold Country Lenders engaged in a pattern of theft and fraud-related crimes for more than eight years, bilking investors of more than $2.3 million.
Investor funds allegedly were used to make interest payments to earlier investors for projects in which the company’s owner had a financial interest.
From January 2003 to June 2011, Gold Country Lenders allegedly promised investors annual returns of 8 to 12 percent on specific real estate development projects. These investments were supposedly secured by a first or second deed of trust on the property, but some of the promised deeds of trust allegedly were never recorded, while others allegedly were recorded but subordinate to other loans or were diluted by the repackaging and overselling of shares.
Investors allegedly were not told Philip Lester had a partnership interest in some of the development projects or that some of the land targeted for development had significant toxic waste issues. Many of the alleged victims are elderly and had reportedly known and trusted the defendants for many years.
Investment funds allegedly were used to make interest payments to earlier investors or for purposes other than the development project in which they were invested. For example, funds of alleged victims were diverted to purchase and operate the Auburn Valley Country Club.
To contact Staff Writer Liz Kellar, email firstname.lastname@example.org or call (530) 477-4229.