Wed04012015

News

Council eyes bond for Hillview center

Council eyes bond for Hillview center


The Los Altos City Council accepted an $87.5 million cost model for its preferred layout for replacing Hillview Community Center. 

Residents could cast their votes as soon as November on a bond measure to partially fund the redevelopment of...

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Schools

Oak students showcase creativity in Destination Imagination competitions

Oak students showcase creativity in Destination Imagination competitions


Courtesy of Jane Lee Choe
The Sharp Cheddars, a team of Oak Avenue School sixth-graders, perform at the Destination Imagination state competition Saturday in Riverside.

A team of seven Oak Avenue School sixth-graders traveled to Riverside last week...

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Community

Heising-Simons Foundation relocates to 400 Main St. property in Los Altos

Heising-Simons Foundation relocates to 400 Main St. property in Los Altos


Bruce Barton/Town Crier
All in the family: Mark Heising, from left, Caitlin Heising and Elizabeth Simons make up the board of the eight-year-old Heising-Simons Foundation, now in its new headquarters at 400 Main St. in downtown Los Altos.

The He...

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Comment

What would Bob do?: Editorial

The recent passing of an extraordinary Los Altos resident, Bob Grimm, has generated a range of heartfelt reaction, from sympathy to fond memories, from all corners. That’s because Bob did not discriminate in his desire to help others with his money, ...

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Special Sections

Cars that are right on track

Cars that are right on track


Courtesy of BMW
The BMW M4 is packed with power, featuring 425 horsepower and 406 pound-feet of torque.

There’s nothing more fun than driving a responsive automobile that feels alive in the curves and eager to go when given more than a touch ...

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Business

First Street's 'Fort Knox' up for sale

First Street's 'Fort Knox' up for sale


Megan V. Winslow/Town Crier
The Los Altos Vault and Safe Deposit Co. is on the market for $4.5 million. Its fortified steel and concrete structure has been compared to the U.S. Federal Reserve’s gold depository.

A downtown Los Altos structure “b...

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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

JOHN BATISTICH

JOHN BATISTICH

John Batistich of Los Altos Hills died peacefully on March 12 surrounded by his family. John is survived by his wife Claire Batistich (Vidovich) of 67 years and children Gary Batistich of Lodi and Gay Batistich Abuel-Saud of Menlo Park. He is also ...

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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

'Fire' ignites in Mtn. View

'Fire' ignites in Mtn. View


Courtesy of Kevin Berne
The cast of “Fire on the Mountain,” includes, from left, Tony Marcus, Harvy Blanks, Molly Andrews and Robert Parsons.

TheatreWorks is slated to present the regional premiere of the musical “Fire on the Mountain” this wee...

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Spiritual Life

Spiritual Life Briefs

Oshman JCC hosts Judaism and Science Symposium

The Oshman Family Jewish Community Center has scheduled its inaugural Judaism and Science Symposium, “An Exploration of the Convergence of Jewish & Scientific Thought,” 5 p.m. April 12 at the JCC’s ...

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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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Both sides move for decision in Ponzi case

In what may prove a last barrage of documents, the Securities and Exchange Commission and Los Altos resident Mark Feathers filed dueling requests for a judge’s final decision last month.

Feathers, accused of misleading investors in the funds he managed, asked U.S. District Judge Edward J. Davila for a summary judgment exonerating him.

His Los Altos-based company, SB Capital Corp., managed two funds that had gathered approximately $42 million from investors over the past five years. When the SEC seized them in June, an appointed receiver assessed the funds’ holdings at approximately 75 percent of their stated value, suggesting that investors lost some but not all of their money.

SEC prosecutor John Bulgozdy seeks more than $12.3 million from Feathers, the amount approximately representing what his 400 investors stand to lose as the business is dismantled, plus a $300,000 additional penalty. Bulgozdy did not suggest that Feathers necessarily had that money among his assets, currently frozen by the court.

In its case, the SEC depicts SB Capital as a company that had lost money on underperforming investments in recent years.

Bulgozdy presented evidence that Feathers had moved money around the business to disguise losses, present investors with the appearance of success and continue to pay himself.

Feathers, in turn, submitted documentation of SB Capital investor correspondence that he believes demonstrates that his company operated transparently and with investor notification and approval.

At the heart of the case lie questions of comprehension: Did investors understand, read and sign documents concurring with SB Capital’s business practices; and did the company break the law even if it had investor support?

Investor approval or deception?

One document, an SB Capital mailing introduced as evidence, illustrates the contending interpretations heard in court. In it, Feathers cheerily stated that fund note investments were “performing as agreed” but requested that investors sign a form allowing the company to make a loan to itself, or, as he defined it, “assume any deficit to the note amount through a receivable to the fund.” He assured them that “this action will not likely have any material bearing on future fund member earnings.”

According to the SEC’s interpretation, Feathers sought to borrow funds so that he could continue to return interest at a rate approaching 7.5 percent and fund his business, even as the investments failed to perform. Feathers alleged that this act of borrowing was explained in writing, but some investors interviewed by the SEC claimed they absolutely did not understand that their investments were not performing as well as returns seemed to indicate.

Campbell resident Robert Morris described investing larger and larger increments of money with Feathers’ company, as his account statements showed a rosy rate of return each month. He reinvested that return, sinking himself deeper into the enterprise.

“At no time did I understand that I was being asked to approve (SB Capital) borrowing money from IPF (Investors Prime Fund) or SPF (SBC Portfolio Fund), nor did I understand that I was being asked to ratify prior borrowing from the two funds,” he wrote in a declaration.

Decoding assets and liabilities

In addition to arguing that he fully met disclosure requirements, Feathers counters in his court filing that the borrowed money was used properly as “reimbursement of expense or for monies to be spent for expenses.”

David Gruebele, a consultant who worked with SB Capital on accounting issues, explained in a declaration that because SB Capital borrowed the money as a “due from” or manager’s note, it was recorded as an “asset” of the funds rather than an expense.

“I advised Mr. Feathers that (the funds) had distributed more to investors than the funds’ income at that point in time,” Gruebele said. “In response, Mr. Feathers usually assured me that additional income was going to be generated in the near future from new transactions that would balance the overdistributions and/or generate net management. From early 2010 through early 2012, the amount owed by (SB Capital) to the funds grew by millions of dollars.”

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