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September 20, 2012
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Update: Arrests, warrants in investor fraud case

Four suspects connected to a real estate company in Grass Valley have been arrested and charged with securities fraud, conspiracy and elder abuse for allegedly operating a Ponzi scheme that bilked dozens of investors of more than $2.3 million, according to California Attorney General Kamala D. Harris.

Phillip Lester, 65, and Ellen Lester, 65, who are married, Susan Laferte, 58, and Jon Blinder, 58, were arrested on Thursday in Nevada County and booked into Nevada County Jail..

The arrest declaration alleges that Gold Country Lenders, a real estate company in Grass Valley, engaged in a pattern of theft and fraud-related crimes for more than eight years, Harris said in a news release. Investor funds were used to make interest payments to earlier investors or for projects in which the company’s owner had a financial interest.

“These defendants exploited their personal relationships with these victims and emptied their bank accounts,” Harris said. “Schemes that target the elderly are especially heinous, which is why prosecuting fraud and elder abuse needs to remain priorities for law enforcement.”

Phillip Lester, CEO of Gold Country Lenders, the organization at the center of the alleged scheme, and Laferte, the firm’s Chief Financial Officer, were charged with 66 felony counts of elder abuse, securities fraud and conspiracy. Laferte is Phillip Lester’s sister.

Ellen Lester was charged with two felony counts of conspiracy and securities fraud. Blinder was charged with four felony counts of securities fraud and was released on bail Thursday.

The Economic Resource Council

Blinder is currently the interim executive director of the Nevada County Economic Resource Council.

In an email to The Union, Blinder professed his innocence while declining to specifically address the allegations.

“As I am discussing my situation with counsel, I have realized that it is not the appropriate time to discuss this matter,” Blinder wrote. “I will answer all these untrue charges in due time. I do want to publicly thank the truly overwhelming support from my friends and associates who have responded to me on Facebook and by email. It is truly heartwarming and gratifying that the work I have done in this community is acknowledged with all the trust and love I have received and have deeply felt. My gratitude has no bounds.”

Blinder has led the ERC since January, said ERC President Kimberly Parker in an email to The Union, who declined to provide any updates regarding Blinder’s current employment status with the organization.

“The executive committee of the Nevada County Economic Resource Council (ERC) learned yesterday afternoon about the arrest of Mr. Blinder,” Parker said in an email to The Union. “At this point we have very little information and need to understand the details before making further comment.”

The ERC “has gained strength and momentum in addressing economic issues in our community,” Parker said.

The ERC was recently awarded a $120,000 contract by the Nevada County Board of Supervisors to manage the county’s effort to attract more tourists to the region.

Chairman of the Board of Supervisors Ted Owens said the board trusts the discretion of the ERC executive committee in making decisions regarding Blinder’s future.

“As with many in our community, the Board of Supervisors was surprised to learn about the arrest of Mr. Jon Blinder,” Owens said. “Because Mr. Blinder serves as a contractor for the Economic Resource Council (ERC), this is a personnel issue between him and the ERC Board of Directors. Going forward, the County will continue to work with the ERC Board of Directors and its Chair, Kimberly Parker, on current and ongoing projects. We are confident that the ERC Board will take the appropriate steps in dealing with this issue.”

Case background

From January 2003 to June 2011, Gold Country Lenders sold securities on specific real estate development projects, promising investors annual returns of 8 to 12 percent, Harris said. These investments were supposedly secured by a first or second deed of trust on the property. In fact, some of the promised deeds of trust were never recorded, while others were recorded but subordinate to other loans, or were diluted by the repackaging and overselling of shares.

In October 2010, the Attorney General’s Office launched an investigation in response to complaints filed by numerous investors.

The arrest affidavit alleges that investors were not told that Philip Lester had a partnership interest in some of the development projects he sold to investors, or that some of the land targeted for development had significant toxic waste issues, Harris said. Many of the victims are elderly and had known and trusted the defendants for many years.

Unbeknownst to investors, their investment funds were used to make interest payments to earlier investors or for purposes other than the development project they had invested in, Harris said. For example, victims’ funds were diverted to purchase and operate the Auburn Valley Country Club, a prestigious golf course and clubhouse where the Lesters resided.

Agencies that assisted in serving today’s arrest warrants include the Grass Valley Police Department, the Nevada County Sheriff’s Office, the Riverside County Sheriff’s Office and the Department of Corporations, Harris said.

“Protecting consumers and investors is at the forefront of the Department of Corporation’s mission,” said California Corporations Commissioner Jan Lynn Owen. “The Department of Corporations works diligently to strongly enforce and uphold California’s financial laws to the fullest extent.”

To contact Staff Writer Matthew Renda, email mrenda@theunion.com or call (530) 477-4239.


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The Union Updated Nov 16, 2012 12:01PM Published Sep 26, 2012 03:53PM Copyright 2012 The Union. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.