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Grass Valley business implicated in Ponzi scheme

Four arrested in $2.3 million plot
By: Staff Report
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Four people have been arrested in connection to a $2.3 million Ponzi scheme that allegedly took advantage of investors, some who were elderly, through a Grass Valley business.

According to a press release by the state Attorney General's office on Friday, the executive officers with Gold Country Lenders in Grass Valley and two others involved with the business were arrested on Thursday.

Philip Lester, 65, is CEO of Gold Country Lenders, a real estate company, and Susan Laferte, 58, is the firm's CFO and Lester's sister. Both Laferte and Lester were arrested and charged with 66 felony counts of elder abuse, securities fraud and conspiracy, according to the release.

Both Lester and Laferte's bonds were set at $600,000. They are both being held at the Nevada County Jail.

Additionally, Ellen Lester, 65, who is married to Philip Lester, was arrested on Thursday on two felony counts of conspiracy and securities fraud. She was also booked at the Nevada County Jail with bail set at $50,000.

Another man, Jonathan Blinder, 58, was arrested on Thursday and charged with four felony counts of securities fraud. He was booked at the Nevada County Jail and released on bail.

The Grass Valley Police Department, Nevada County Sheriff's Office, the Riverside County Sheriff's Office and the Department of Corporations all assisted in the four arrests.

The press release states that Gold Country Lending has been the front for fraud and theft for more than eight years. At the firm, investor funds were used to make interest payments to earlier investors for projects in which the company's owner had a financial interest.

Gold Country Lenders sold securities on real estate development projects from January 2003 to June 2011. The firm promised annual returns of 8 to 12 percent, according to the release.

The firm told these investors their investments were secured by a first or second deed of trust on the property, but some of those deeds of trust were never recorded.

"Others were recorded but subordinate to other loans, or were diluted by the repackaging and overselling of shares," the release states.

After investors began to file complaints, the Attorney General Office's Special Crimes Unit began investigating Gold Country Lenders in Oct. 2010.

It was found that Philip Lester did not tell investors that he had a partnership with some of the developmental projects he sold them, nor did he tell them that the land in question had significant toxic waste issues.

The funds investors handed over to Gold Country Lenders were used to make interest payments to earlier investors for purposes other than the project they wished to invest in. Some funds were used to purchase and run the Auburn Valley Country Club, which is where the Lesters resided, according to the release.

Rob Weizer, director of golf at Auburn Valley Country Club, would not comment on the Lesters or their arrests on Friday.

The release states that many of these investors are elderly and had known the Lesters for years.

The case will be prosecuted by the Attorney General's Mortgage Fraud Strike Force.