Thu12182014

News

Council seeks more options for community center

Council seeks more options for community center


Town Crier File Photo
The Los Altos City Council approved an appropriation to examine options for a new community center to replace the aging Hillview facility.

The Los Altos City Council last week voted narrowly in favor of examining further opti...

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Schools

Local schools participate in  national Hour of Code activities

Local schools participate in national Hour of Code activities


Ellie Van HOutte/Town Crier
Himan Shu Raj, a volunteer from Microsoft, advises Los Altos High ninth-graders, from left, Serhat Suzer, Jamie Bennett and Chris Yang as they participate in the school’s Hour of Code Showcase.

Local schools participa...

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Community

Rotary marks 25th anniversary of AIDS project

Rotary marks 25th anniversary of AIDS project


John Hammerschmidt/Special to the Town Crier
Celebrating the anniversary of the Los Altos Rotary AIDS Project are, from left, front row: Greg Hoblit, Dude Angius, Mary Prochnow and Robin Young. Back: Greg Betts, Joe Renati, Roy Lave, Bob Berka, Dic...

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Sports

Pinewood poised for another title run

Pinewood poised for another title run


Ellie Van Houtte/Town Crier
Pinewood’s girls basketball team is receiving contributions from several new players, including freshman Stella Kailahi, above.

Complacency shouldn’t be a problem for the defending Division V state champion Pinewood S...

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Comment

Letters to the Editor

Ticket motorists for U-turns on Main Street

As I was walking downtown on Main Street recently, something came to me out of the blue. The town of Los Altos is missing out on a huge revenue stream. I realized that if all the cars – there were th...

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Special Sections

Looking Ahead

Looking Ahead


s in line to be mayor of Mountain View in 2015.

Mountain View anticipates the following changes in 2015:

• Beginning Jan. 1, Mountain View City Councilmembers will receive a raise to $1,000 per month as a result of the passage of Measure A in...

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Business

Your 2015 stock market game plan

It’s been a maddening month because of oil and gas, especially in stocks and bonds. Then, consumer spending pushed stocks higher Thursday, easing investors’ jitters about the global economy and prompting them to consider how to invest in ...

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Books

Gawande's

Gawande's "Being Mortal" proves an important book on aging


Books about death and dying are usually not on my list of “must reads.”

I couldn’t resist, however, the best-selling “Being Mortal: Medicine and What Matters in the End” (Metropolitan Books, 2014) by Atul Gawande.

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People

SANGEETA SACHDEVA

SANGEETA SACHDEVA

Sangeeta Sachdeva, 55, wife of Subhash Sachdeva and mother to Natasha and Tanya, died at 8:54pm, Sunday, December 7, 2014 from respiratory failure.

Sangeeta was born on October 18, 1959 in Delhi, India. She was born to Moti Sagar and Raj Kapoor an...

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Travel

South Tahoe renovations enhance off-mountain seasonal fun

As any enthusiast knows well, there is more to the enjoyment of winter sports than skiing or snowboarding.

While many winter resorts make minor upgrades each season, the off-mountain attractions and amenities can be as enticing as the activities on ...

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Stepping Out

Aurora Singers to emit 'Musical Glow' Friday

Aurora Singers to emit 'Musical Glow' Friday


courtesy of Aurora Singers
The Aurora Singers are scheduled to perform a seasonal concert Friday night in Palo Alto.

The Aurora Singers’ “Winter’s Musical Glow” holiday concert is set for 7 p.m. Friday at the Unitarian Universalist Church of Pal...

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Spiritual Life

Enter the superhero: Finding the God who loves you

In my life-coaching practice, I see a lot of pain. Much of it stems from fear and guilt, often expressed as low self-esteem, anxiety, a lack of forgiveness both for oneself and others, anger – and so on.

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Magazine

Christmas At Our House home tour celebrates 26 years

Christmas At Our House home tour celebrates 26 years


Courtesy of Christopher Stark
Homes on the St. Francis High School Women’s Club’s Christmas at Our House Holiday Home Tour showcase a variety of architectural styles.

The days grow short on sunshine but long on nostalgia as the holidays approach...

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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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