Attorney General Kamala D. Harris Announces Arrests of Four Individuals in Northern California Real Estate Scheme

Friday, September 21, 2012
Contact: (916) 210-6000,

SACRAMENTO -- Attorney General Kamala D. Harris announced the arrest Thursday of four suspects who have been charged with securities fraud, conspiracy and elder abuse for operating a Ponzi scheme that bilked dozens of investors of over $2.3 million.

The arrest declaration alleges that Gold Country Lenders, a real estate company in Grass Valley, engaged in a pattern of theft and fraud-related crimes for more than eight years. Investor funds were used to make interest payments to earlier investors or for projects in which the company’s owner had a financial interest.

"These defendants exploited their personal relationships with these victims and emptied their bank accounts," Attorney General Harris said. "Schemes that target the elderly are especially heinous, which is why prosecuting fraud and elder abuse needs to remain priorities for law enforcement."

Philip Lester, 65, and Ellen Lester, 65, who are married, surrendered to custody, and Susan Laferte, 58, and Jonathan Blinder, 58, were arrested on Thursday in Nevada County.

Philip Lester, CEO of Gold Country Lenders, and Laferte, the firm’s CFO, are being charged with 66 felony counts of elder abuse, securities fraud and conspiracy. Laferte is Philip Lester’s sister. They were booked at the the Nevada County Jail, with bail set at $600,000 each.

Ellen Lester is being charged with two felony counts of conspiracy and securities fraud and was booked at the Nevada County Jail with bail set at $50,000. Blinder is charged with four felony counts of securities fraud and was booked at the Nevada County Jail and released on bail.

From January 2003 to June 2011, Gold Country Lenders sold securities on specific real estate development projects, promising investors annual returns of 8 to 12 percent. These investments were supposedly secured by a first or second deed of trust on the property. In fact, some of the promised deeds of trust were never recorded, while others were recorded but subordinate to other loans, or were diluted by the repackaging and overselling of shares.

In October 2010, the Attorney General’s Office launched an investigation in response to complaints filed by numerous investors.

The arrest affidavit alleges that investors were not told that Philip Lester had a partnership interest in some of the development projects he sold to investors, or that some of the land targeted for development had significant toxic waste issues. Many of the victims are elderly and had known and trusted the defendants for many years.

Unbeknownst to investors, their investment funds were used to make interest payments to earlier investors or for purposes other than the development project they had invested in. For example, victims’ funds were diverted to purchase and operate the Auburn Valley Country Club, a prestigious golf course and clubhouse where the Lesters resided.

Agencies that assisted in serving today’s arrest warrants include the Grass Valley Police Department, the Nevada County Sheriff’s Office, the Riverside County Sheriff’s Office and the Department of Corporations.

"Protecting consumers and investors is at the forefront of the Department of Corporation’s mission," said California Corporations Commissioner Jan Lynn Owen. "The Department of Corporations works diligently to strongly enforce and uphold California’s financial laws to the fullest extent."

The Attorney General Office’s Special Crimes Unit conducted the investigation. The case will be prosecuted by the Attorney General’s Mortgage Fraud Strike Force, which was formed in May 2011 to investigate and prosecute crimes related to mortgage, foreclosure and real estate fraud.

Copies of the complaint and arrest declaration are attached to the electronic version of this release at

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