Fri03272015

News

Safeway escalator elicits safety concerns from customers

Safeway escalator elicits safety concerns from customers


MEGAN V. WINSLOW/Town Crier
The escalator at the Safeway on First Street poses a safety hazard, some customers allege.

A Safeway shopper who accidentally placed his cart last month on the customer escalator instead of the shopping cart track next to...

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Schools

Los Altos High hosts 30th Writers Week

Los Altos High hosts 30th Writers Week


Above Photo by Traci Newell/Town Crier;
Author Jack Andraka shares his story with fellow high school seniors during Los Altos High School’s Writers Week last week.

Los Altos High School students learned firsthand last week how professionals ...

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Community

Service dogs bring smiles, comfort to veterans at Foothill College center

Service dogs bring smiles, comfort to veterans at Foothill College center


Photos by Megan V. Winslow/Town Crier
Charles Viajar, student and U.S. Navy veteran, brings his four-legged companion Bruno to the Veterans Resource Center at Foothill College. Bruno, a 2-year-old Imperial Shih Tzu, is trained to assist Viajar with...

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Sports

Improbable run to NorCal semis saves season for St. Francis girls

Improbable run to NorCal semis saves season for St. Francis girls


Megan V. Winslow/Town Crier
St. Francis High’s Daisha Abdelkader goes on a fast break in the CCS Division II final. The senior point guard scored eight points in the Lancers’ NorCal semifinal loss to Dublin last week.

Senior Daisha Abdel...

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Comment

We'll buy it; what is it? Editorial

Would you buy a device on the condition that you are kept in the dark about how it works? Would you feel good about purchasing such a device when the contract even calls for nondisclosure of the nondisclosure form that keeps the device top secret?

T...

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Special Sections

Tuscany meets Waikiki: Los Altos Hills couple build their dream house

Tuscany meets Waikiki: Los Altos Hills couple build their dream house


Megan V. Winslow/Town Crier
Sara Weber and Victor Martina’s Los Altos Hills home features brick from a 100-year-old building in San Jose artistically combined with stucco to evoke a centuries-old feel. The lanai in the backyard adds a touch o...

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Business

Vintage Bath changes hands as new owners add twist to classic offerings

Vintage Bath changes hands as new owners add twist to classic offerings


Alicia Castro/Town Crier
Vintage Bath, the downtown Los Altos showroom, is under new leadership. Taking over are, from left, co-owners Jerry Rudick and Deena Castello and marketing and visual director Alissa McDonald.

Deena Castello – the new cu...

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Books

'Pope Joan' Book weaves tale around legend of female pontiff

'Pope Joan' Book weaves tale around legend of female pontiff


The idea that there may have a female pope at one time in history has generated much speculation throughout the centuries. “Pope Joan” (Crown, 1996) by Donna Woolfolk Cross, does not answer the question; rather, the author has created a detai...

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People

BEVERLEY JEANE (DORSEY) MCCHESNEY

BEVERLEY JEANE (DORSEY) MCCHESNEY

1944-2014

Beverley McChesney passed away at El Camino Hospital in Mountain View, CA on Sunday, Nov. 16. She had been fighting cancer for about 23 years until it went into her lungs.

She is survived by her husband David, of Cloverdale; her sisters...

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Travel

Eat, hike, soak: Cavallo Point Lodge offers Marin experience

Eat, hike, soak: Cavallo Point Lodge offers Marin experience


Eren Göknar/ Town Crier
Cavallo Point Lodge comprises former U.S. Army buildings, like the Mission Blue Chapel, repurposed for guests seeking a luxurious getaway.

It used to be a place where batteries of soldiers lived, with officers’ quarter...

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Stepping Out

Cal Pops performs Sunday at Foothill

Cal Pops performs Sunday at Foothill


Courtesy of Cal Pops
The Cal Pops trumpet section includes Dean Boysen, from left, Bob Runnels and Noel Weidkamp.

The California Pops Orchestra is scheduled to perform “Swing Time!” – a musical tour of Big Band hits from the 1930...

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Spiritual Life

Silicon Valley Prayer breakfast speakers send strong messages about God's calling

Silicon Valley Prayer breakfast speakers send strong messages about God's calling



Kirk Perry, Google Inc. president of brand solutions, discusses his faith at the March 13 Silicon Valley Prayer Breakfast. Alicia Castro/Town Crier

When God calls, you have to listen to reap the benefits.

That was the moral of the story for t...

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Magazine

Food for thought: Hidden Villa programs offer teens training in sustainability on the farm

Food for thought: Hidden Villa programs offer teens training in sustainability on the farm


/Town Crier It’s not all cute and cuddly for teens participating in the eight-week Animal Husbandry Apprenticeship program at Hidden Villa in Los Altos Hills. Mia Mosing of Palo Alto, left, and Sophia Jackson of Los Altos clean the pigpens – one of...

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Seeking answers, local investors remain uncertain whom to trust

Bearing canes and worn leather briefcases, local seniors were among those filing into a San Jose courtroom Friday to watch the Los Altos man they’d entrusted with their savings argue his innocence.

The Securities and Exchange Commission alleges that the investors are victims of a Ponzi-like scheme. But some don’t want to believe they’ve all been hoodwinked. If the government is right, they’ve lost their dream of 7.5 percent annual returns, and a good chunk of their initial investment.

Mark Feathers, founder of the Los Altos-based Small Business Capital Corp., continues to maintain that the investments were safe, performing and could still be salvaged.

Some of those who sank money into SB Capital were seasoned investors, but many were financially inexperienced local residents looking to invest relatively small nest eggs. They faced the question: Do you trust the funds manager who paid you steady returns throughout the recession, or the court-appointed receiver delivering bad news?

The confusion, anger and lingering hope aired outside the courtroom last week demonstrated intriguing loyalty to a man, Feathers, accused of dissipating others’ money while lining his own pockets.

Seeking answers

One couple attended the hearing wondering how to plan, on a fixed income, for frozen investment funds and uncertain losses. They had written the court saying that without access to the principal and interest of the $50,000 they invested with Feathers, they were relying on Social Security and “needed the funds badly” for basic living expenses. The husband, an 88-year-old Los Gatos resident, asked that the Town Crier not reveal his name, as did every investor interviewed. He said watching his remaining savings account tick down filled him with worry, and joked wistfully about finding a job.

The couple found Feathers’ company through an ad in the San Jose Mercury News. SB Capital, which had also advertised in the Los Altos Town Crier, teased an investment opportunity that was “easy to grasp” and “Wall Street-free.”

SB Capital staff included fixtures from the Los Altos banking scene with deep roots in the area. Feathers developed relationships through personal and sometimes fanciful events, including an annual investor dinner he and his wife once hosted in period costume.

“You invest with someone you like, after you meet them,” the wife of the Los Gatos investor told the Town Crier.

Striking courtroom scene

Clutching a worn, green paper folder thick with documents, Feathers sat alone at the front of the courtroom last week, flanked by six representatives of his opposition. As he delivered lengthy explanations of where he believed the SEC had gone wrong, some of his alleged victims laughed along with his jokes and flashed thumbs-up gestures of encouragement.

U.S. District Judge Edward J. Davila denied the majority of Feathers’ motions and took pains to explain to Feathers and onlookers in the courtroom why he was ruling as he did.

The hearing addressed Feathers’ efforts to dismiss the case, discredit the SEC and gain access to $30,000 for six months of living expenses from his frozen assets. He was granted the money but otherwise didn’t prevail.

Feathers referenced letters of support sent to the judge. Davila explained that he couldn’t read any of the approximately 75 letters received regarding the case because they would constitute ex parte communication. Judges are expected to refrain from interacting with third parties in a case, which means investors don’t have much say in the proceedings.

Feathers has written prolifically to investors since the SEC seized his company in June 2012, making dramatic arguments about the SEC’s alleged overstepping, misleading and persecutory actions.

Over the weekend, he wrote another missive sprinkled with dire analysis of the SEC’s intervention and excerpts from court documents, claiming that “YOU ARE NOW AN UNWILLING PARTICIPANT IN A FULL-ON GOVERNMENT SCANDAL” and urged investors to write to local elected officials. Feathers, who describes himself as waging a “David and Goliath” battle for his innocence, wrote to investors that “If SEC wins, you lose.”

The SEC shuttered Los Altos-based SB Capital ostensibly to protect two groups of people: those who had already invested, whose money was allegedly being fraudulently depleted; and those who were considering an investment but had not yet committed their money.

The court receiver managing the seized funds claims that of the $46 million invested, approximately $12 million was “dissipated” through Ponzi-like activities.

The phrase “Ponzi-like” refers to the practice of taking more and more investor money to pay false “returns” to existing investors. In the case of Charles Ponzi, whose scheme first inspired the moniker, no legitimate business underlay the transfers of money.

Use of the phrase caused audible reactions of distress and disgust from some onlookers in the courtroom last week. Some of Feathers’ investors continue to question how a company could be labeled “Ponzi-like” when it maintained a portfolio of more than 60 performing investments. Some wondered if the SEC fully understood the specialty investments SB Capital made in partnership with the Small Business Administration.

The court receiver’s reports provide financial analyses that purport to assess those operations fairly. The SEC maintains that although SB Capital did carry out its stated business purpose – issuing loans using investor money – Feathers’ business spent more money than it generated, meaning that over time investor money was lost.

Stuck between a rock and a hard place

When the hearing recessed, a crowd of investors gathered in the hallway outside Davila’s courtroom, peppering the SEC’s lead prosecutor, John Bulgozdy, with questions that ranged from plaintive to indignant.

Investors already locked into SB Capital stand to lose no matter how the court rules. If Feathers committed the alleged fraud, their money has been at least partially lost. But even if he is innocent, the receiver dismantling the company has still only salvaged a fraction of the money invested, and has drastically changed the way the business operates.

The millions of dollars that remain locked in SB Capital-related accounts may start to change hands by late summer. Investors and creditors must submit claims to the receiver by May 10.

How much of the $42 million in investments may ultimately survive remains unknown, but based on the preliminary forensic accounting, investors like the Los Gatos couple may expect to recover 50 to 75 percent of their money.

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