Sonoma properties to be auctioned off after real estate investment company's collapse
A real estate holding company that allowed a group of Sonoma properties to lapse into foreclosure has left investors and the city itself with an uncertain future.
On August 8th, the first dozen properties are scheduled to be auctioned off to the highest bidder.
The property purchases began very quietly, with dozens of homes being bought, often in off-market sales. They were followed by familiar businesses in the heart of downtown, as the Sonoma Cheese Factory, Cottage Inn and Spa and the Sojourn Cellars tasting room were snapped up as well.
"Then it became, quite quickly, a concern about one person buying up lots and lots of property, and controlling the rents and the merchants, and a lot of private property," said Sonoma resident Josette Brose-Eichar.
That "someone" was Ken Mattson, the head of a real estate investment company called LeFever-Mattson. Eventually, a citizens group called "Wake UP Sonoma" formed to investigate what was going on. And president Lisa Storment said they discovered the purchases followed an unusual pattern.
"Buy really high, way over asking price -- like ridiculously over asking price -- and then sell back to one of their own LLC companies at a really depressed rate," said Storment. "It would sit there for long, extended periods of time with no attempt to try to improve the property."
In all, more than 120 properties were bought around town. No one really understands the strategy behind it. Recently, the wheels of the enterprise have fallen off. Mattson's partner, Tim LeFever, has accused him of stealing from the company. The two former friends are suing each other. Many of the properties have fallen into foreclosure, allegedly because Mattson stopped making payments on the loans.
Sonoma resident Rob Earnest owns only one house. He said he wondered how anyone could get so overextended, so fast.
"I don't know what he was thinking, you know? Like...I don't know!" he said, shaking his head. "How could you not see it? Maybe you want to start small instead of buying everything and frickin' falling in a ditch, going, 'Oh damn! What happened?'"
Mattson did not answer CBS News Bay Area's requests for comment, but in a letter responding to his partner's accusations, he wrote, "The investments through LeFever-Mattson were and continue to be my utmost concern. I stand with our investors and business partners to assure these investments remain in good standing."
But Mattson isn't the only one on the hot seat. He reportedly had hundreds of private investors, many of whom he met through his church.
David Eichar -- who did a lot of the research for Wake Up Sonoma -- said if and when the first group of nine homes and businesses go on the auction block in August, the investors may be left with little or nothing to show for it.
"The company that owns the mortgage, they will get their money," said Eichar. "We don't know if there's any money left over for the investors."
And the residents fear the city will also take a hit for Mattson's buying spree.
"When they were bought, they were bought at such a high level over asking price, over value, that it increases the property values in our area," said Storment. "And then, when they're going to get sold, there's going to be a dive in our economy."
Perhaps the biggest mystery is why Sonoma? No one seems to know why the town was chosen, but it's just one more in a sea of questions with very few answers.
