Sat07262014

News

Downtown green park pops up again in August

Downtown green park pops up again in August


Ellie Van Houtte/Town Crier
The Third Street Green debuts Aug. 3 on the 300 block of State Street in downtown Los Altos.

Another temporary park is poised to pop up in downtown Los Altos this summer.

According to Brooke Ray Smith, community devel...

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Schools

MVLA rolls out laptop integration this fall

MVLA rolls out laptop integration this fall


Town Crier File Photo
Starting in the fall, daily use of laptops in the classroom will be standard operating procedure for students at Los Altos and Mountain View high schools as the Mountain View Los Altos Union High School District launches a pil...

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Community

Generations blend behind the scenes at 'Wizard of Oz'

Generations blend behind the scenes at 'Wizard of Oz'


Altos Youth Theatre and Los Altos Stage Company rehearse a scene from “The Wizard of Oz.” ELIZA RIDGEWAY/ TOWN CRIER

A massive troupe of young people and grownups gathered in Los Altos this summer to stage the latest iteration of a childhood sta...

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Sports

Football in July

Football in July


Town Crier file photo
Mountain View High’s Anthony Avery is among the nine local players slated to play in tonight’s Silicon Valley Youth Classic.

Tonight’s 40th annual Silicon Valley Youth Classic – also known as the Charlie...

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Comment

Pools should be included: Editorial

Los Altos residents should be receiving calls this week from city representatives conducting a survey to determine priorities for a revamped Hillview Community Center.

Notice that we did not say “civic center” – chastened by a lack of public support...

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Special Sections

Looking for life without lows, local diabetic tests artificial pancreas

Looking for life without lows, local diabetic tests artificial pancreas


Photo by Ellie Van Houtte/Town Crier
Dr. Trang Ly, left, reviews blood sugar readings on a smartphone with Los Altos resident Tia Geri, right, and fellow participant Noa Simon during a closed-loop artificial pancreas study for Type 1 diabetics.
...

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Business

Palo Alto law firm coming to 400 Main

Palo Alto law firm coming to 400 Main


Ellie Van Houtte/ Town Crier
Longtime Palo Alto law firm Thoits, Love, Hershberger & McClean plans to open an office at 400 Main St. in Los Altos after construction is complete in November.

A longtime Palo Alto law firm plans to expand int...

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Books

"Frozen in Time" chronicles harrowing WWII rescue attempts


Many readers can’t resist a true-life adventure story, especially those that shine a spotlight on people who exhibit supreme courage in the face of adversity and end up surviving – or not – against the odds.

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People

RICHARD PATRICK BRENNAN

RICHARD PATRICK BRENNAN

Resident of Palo Alto

Richard Patrick Brennan, journalist, editor, author, adventurer, died at his Palo Alto home on July 4, 2014 at age 92. He led a full life, professionally and personally. He was born and raised in San Francisco, joined the Arm...

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Travel

Travel Tidbit: Ritz-Carlton, Lake Tahoe offers spa getaway

Travel Tidbit: Ritz-Carlton, Lake Tahoe offers spa getaway


Courtesy of Ritz-Carlton
The Ritz-Carlton in Lake Tahoe offers fall getaway packages that include spa treatments and yoga classes.

Fall in North Lake Tahoe boasts crisp mornings and opportunities to spend quality time in the mountains. Specially ...

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Stepping Out

PYT stages 'Shrek'

PYT stages 'Shrek'


Lyn Healy/Spotlight Moments Photography
Dana Cullinane plays Fiona in Peninsula Youth Theatre’s “Shrek The Musical.”

Peninsula Youth Theatre presents “Shrek The Musical” Saturday through Aug. 3 at the Mountain View Center for the Performing Arts...

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Spiritual Life

Foothills Congregational: 100 years and counting

Foothills Congregational: 100 years and counting


Courtesy of Carolyn Barnes
The newly built Los Altos church in 1914 featured a bell tower and an arched front window. Both continue as elements of the building as it stands today.

Foothills Congregational Church – the oldest church building in L...

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Magazine

Festival features fun for everyone

Festival features fun for everyone


TOWN CRIER FILE PHOTO
The Los Altos Arts & Wine Festival boasts more than 375 craft and arts booths.

This weekend’s 35th annual Los Altos Arts & Wine Festival promises to be jam-packed with fun activities for just about everyone. The eve...

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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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