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November 26, 2012
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County budget to feel fraud case hit of $600,000

County officials are worried that the price of defending three people accused of multiple counts of real estate fraud could have adverse effects to the county’s financial health.

Deputy County Executive Officer Joe Christoffel warned the board of supervisors last week that the county expects another decline in property tax revenue to the tune of about $400,000, but a larger problem in the form of the indigent defense fund looms.

Christoffel said preliminary estimates for the defense of Phillip Lester, CEO of Gold Country Lenders, and Susan Laferte, the firm’s chief financial officer, and Ellen Lester may exceed $600,000 annually.

“These costs will be substantial and will potentially draw down heavily on the general fund,” Christoffel said.

Laferte, Philip Lester, his wife, Ellen, and Jonathan Blinder all are facing charges that allege that Gold Country Lenders engaged in a pattern of theft and fraud-related crimes for over eight years, bilking investors of more than $2.3 million.

Philip Lester and Laferte have been charged with 66 felony counts of elder abuse, securities fraud and conspiracy. Ellen Lester has been charged with two felony counts of conspiracy and securities fraud and has been released on her own recognizance. Blinder has been charged with four felony counts of securities fraud.

County Executive Officer said all citizens of the United States have a right to financial assistance to secure legal representation as stipulated in the 6th amendment to the U.S. Constitution, but the question in the present instance is who should provide the financial assistance.

“If our District Attorney’s office was prosecuting the case, then our public defender’s office would naturally provide defense,” Haffey said. “But it is the state Attorney General’s office that has brought the charges, so it seems fair that state resources should foot the bill.”

Kamala Harris, the California Attorney General, filed arrest warrants for the four individuals on Sept. 20. Nevada County Nevada County District Attorney was not in a position to prosecute the case Lester et al, having received a $700,000 loan from Gold Country Lenders to help keep creditors at bay.

In 2004, Newell took out a $1.7 million loan from another hard money lender, Olympic Mortgage and Investment Co., to finance the purchase of Snow Mountain Camp, a youth camp located in the unincorporated part of Nevada County.

By 2007, Newell was having trouble making payments, according to a 2011 article in the Sacramento Bee, and Lester gave him a loan to help stave off foreclosure.

Through, Oct. 31, the direct cost to Nevada County are $26,000, including the costs of setting up a common office for defense at the courthouse, attorney fees and other costs, Haffey said. The total does not include the indirect costs incurred by the county, including staff time by the CEO’s office.

Lester and Laferte both spent about a month and a half in Nevada County Jail before finally posting $150,000 bail in late October, according to previous reports.

The pair was required to prove there was a legitimate source for the funds used to post bail.

Initially, their bail had been set at $600,000, but that was reduced Oct. 25 to $150,000.

Blinder has been charged with four felony counts of securities fraud posted $150,000 bail soon after his September arrest.

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


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The Union Updated Nov 26, 2012 05:35PM Published Nov 28, 2012 07:40AM Copyright 2012 The Union. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.