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News

Campaign finance reports show lots of loans, few outliers

Campaign finance reports show lots of loans, few outliers


Ellie Van Houtte/ Town Crier
Campaign yard signs are just one expenditure for candidates during election season.

Election finance filings are in, and Los Altos appears to be hosting a few financially lopsided races.

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Schools

Three Los Altos schools earn National Blue Ribbon designation

Three Los Altos schools earn National Blue Ribbon designation


Ellie Van Houtte/Town Crier
Bullis Charter School students wear their school spirit clothing to greet their mascot Oct. 3 in celebration of being named a National Blue Ribbon School.

Blach Intermediate, Egan Junior High and Bullis Charter schools ea...

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Community

Sports

Spartans run wild(cat) on Eagles

Spartans run wild(cat) on Eagles


Ellie Van Houtte/Town Crier
Mountain View High running back Austin Johnson goes for a big gain after evading Los Altos High defensive tackle Phil Alameda in Friday’s game. Johnson scored two touchdowns for the Spartans.

After unveiling its wildc...

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Comment

Logan, McClatchie, Peruri for LASD board: Editorial

This is a crucial time for the Los Altos School District. Its leadership faces the challenge of balancing enrollment growth versus maintaining the small, neighborhood schools that make it a very popular district to attend. The district must also adap...

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Special Sections

City's minimum-wage hike earns mixed reviews: Raise to $10.30 an hour meets with approval – and concern

City's minimum-wage hike earns mixed reviews: Raise to $10.30 an hour meets with approval – and concern


Ellie Van Houtte/Town Crier
Tandava Waldon, left, manager of East West Bookstore on Castro Street in Mountain View, works with a customer. Waldon said the recently approved minimum-wage hike will have little impact on his business. “It’s not such a...

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Business

Delay Social Security? An easy way to decide

One of the most heatedly debated questions regarding Social Security is when to start.

You have the option of initiating benefits as early as age 62 or as late as age 70. The longer you wait, the larger the monthly payment you will receive over your...

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Books

Helping kids catch a few Zs: Local dental hygienist pens meditative bedtime book

Helping kids catch a few Zs: Local dental hygienist pens meditative bedtime book


Ellie Van Houtte/Town Crier
Mimi Sommers, who works at a Los Altos dentist’s office, recently wrote a children’s book.

A local dental hygienist recently published a book that aims to ease parents and children during a sometimes anxious e...

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People

SUZANNE MONICA DIMM SPECHT

SUZANNE MONICA DIMM SPECHT

Suzanne Monica Dimm Specht passed Tuesday, Sept. 9th at the age of 84. Sue was born on April 21, 1930 in Portland, Oregon. After graduating from the University of Oregon in with a degree in Music, Sue taught in a little town called Clatskanie, Oreg...

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Travel

Los Altos resident's visit to North Korea proves enlightening

Los Altos resident's visit to North Korea proves enlightening


Courtesy of Sally Brew
North Korea is home to many monuments honoring its “Dear Leaders,” left.

In August, I traveled for 11 days with MIR Corp. to North Korea, a fascinating country that is almost completely cut off from the rest of the world. ...

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Stepping Out

'Trovatore' takes the stage in Palo Alto

'Trovatore' takes the stage in Palo Alto


Courtesy of José Luis Moscovich
West Bay Opera’s production of “Il Trovatore” is slated to open Friday night in Palo Alto and run through Oct. 26.

West Bay Opera’s production of “Il Trovatore” (“The Troubadour”) is scheduled to open this weekend...

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Spiritual Life

Magazine

Local events add color to autumn calendar

Local events add color to autumn calendar


Van Houtte/town crier Visitors make their way through the Children’s Alley.

As Los Altos’ signature Chinese Pistache trees exchange their summer green for vibrant hues of yellow, orange and red in the fall, an abundance of local events also ad...

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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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