Sat02282015

News

North Bayshore proposals due today

The City of Mountain View is receiving North Bayshore development proposals today. Applications may be made until the deadline at 5 p.m.

All submissions will be available for viewing March 2 at the Community Development Department counter in City Ha...

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Schools

Former NFL player huddles with Blach students about life choices

Former NFL player huddles with Blach students about life choices


Ellie Van HOutte/Town Crier
Former NFL tight end Eason Ramson visited with Blach Intermediate School students, Feb. 13 to share the perils of drug use. Now a motivational speaker, Ramson works with at-risk teens in San Francisco.

Although former ...

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Community

Chi Am Circle, Chef Chu's prove 'golden': Club sets fundraising goal of $200K for March fashion show

Chi Am Circle, Chef Chu's prove 'golden': Club sets fundraising goal of $200K for March fashion show


Courtesy of Bev Harada
Chi Am Circle members, from left, Gerrye Wong, Sylvia Eng, Pearl Lee and Muriel Kao flank Larry Chu Sr. at the Jan. 31 event honoring the club’s 50th and Chef Chu’s 45th anniversaries.

Chef Chu’s restaurant in Los Altos ho...

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Comment

Freedom's just another word: No Shoes, Please

It used to be that the word “freedom” held exclusively positive connotations for me, but now it’s really become a mixed bag. It all started in 2001 when President George W. Bush asked the question he felt was on the minds of most Americans regarding ...

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Special Sections

Filoli in bloom: Historic estate hosts  classes, events and tours

Filoli in bloom: Historic estate hosts classes, events and tours


Ellie Van Houtte/Town Crier
Scenes from Filoli: The historic estate in Woodside is a welcoming sanctuary for visitors. The grounds offer a rotating display of seasonal flowers, a tranquil reflecting pool and paths that wend through the 16-acre Engl...

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Business

Stock volatility still confusing

The market opened down more than 100 points Friday but by noon rose more than 130, the form of volatility that quickly draws investors’ attention. By week’s end, the Standard & Poor’s 500 index and the Dow Jones industrial aver...

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Books

French novel

French novel "Hunting and Gathering" offers character-driven suspense


Anna Gavalda is a well-known author in her native France, where she has published six books, most of which have met with considerable praise and commercial success. Her fourth novel, “Hunting and Gathering” (Riverhead Books, 2007), is filled ...

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People

CHRIS A. KENISON

CHRIS A. KENISON

Feb 13, 1945-Feb 6, 2015

Resident of Los Altos

Chris was born in Georgia and moved to Oklahoma as a young child. He grew up there and moved to California in 1965. He developed a strong work ethic from his grandparents and parents. He attended the...

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Travel

Seoul of the city: Korean capital offers mix of old and new

Seoul of the city: Korean capital offers mix of old and new


Ramya Krishna/Special to the Town Crier
Seoul’s Cheonggyecheon public recreation space, above, features an elevated pedestrian bridge.

Seoul, South Korea, is a study in contrasts. Having grown quickly, the city is a mix of old and new.

Using...

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Stepping Out

'Park' in the hills

'Park' in the hills


courtesy of Foothill Music Theatre
Dot (Katie Nix) imagines her dream job as a follies dancer in the Foothill Music Theatre production of “Sunday in the Park with George.” The play runs through March 8.

Foothill Music Theatre’s production of “Su...

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Spiritual Life

Is your thought life sabotaging your spiritual journey?

My computer started having problems – there seemed to be some sort of malware running in the background. At first it was just annoying, then it began to slow down my computer, interfering with its basic operations. What is it doing? Why can...

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Magazine

Local events serve up family fun

Local events serve up family fun


Courtesy of Peninsula Youth Theatre
Peninsula Youth Theatre’s production of “Pecos Bill: A Tall Tale” is slated to open March 20 in Mountain View.

For families seeking a break from the daily routine, events abound this month and next in Los Alto...

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Seeking answers, local investors remain uncertain whom to trust (2)


Photo By: Town Crier File Photo
Photo Town Crier File Photo SB Capital advertised an “easy to grasp,” “Wall Street-free” opportunity in the Town Crier.

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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