August 25, 2017
By Bob Coleman
Editor, Fraud Friday
Fraud Friday — Mark Feathers Apologizes, Asks Court for Release from Jail
On Monday, August 28th, Judge Howard Lloyd will determine if Mark Feathers should be released from county jail on bail.
Incarcerated since his bail was revoked last March, Mark’s new court-appointed attorney argues Mark made a mistake due to five years of frustration and anger.
The mistake was sending a 5 am email to SEC attorneys and CPAs, the receiver, the receiver’s counsel informing everyone extra marshals would be needed at his trial as anybody who used the “ponzi” would be subject to physical attack.
FBI affidavits reveal serious concerns by some of the recipients of Mark’s behavior.
His attorney says, “While there may be no excuse for the email, there is some context. Mr. Feathers had spent the last several years defending, with literally everything he has, his company and himself against allegations by the SEC that he violated securities laws.
“At the very beginning of those proceedings, Mr. Feathers’ assets were seized, preventing him from retaining counsel. He represented himself, with all too predictable results. He watched as his professional and personal lives have imploded: he lost his company, which he had built from scratch, his professional reputation, his life savings, and the ability to provide for his family. His marriage crumbled as a result, making it even harder for him and his soon-to-be ex-wife to care for their twin fourteen-year-old boys, one of whom suffers from severe developmental disabilities.
“Mr. Feathers deeply regrets sending the March 7 email. He has expressed that remorse in a letter of apology, attached as Exhibit 1, in which he acknowledges that he acted ‘impulsively’ and ‘lost his composure.’
”Over the last four months, Mr. Feathers has taken upon himself to enroll in anger management classes in jail, which he attends every Thursday from 1 p.m. to 2:30 p.m. He intends to continue that work by enrolling in mental-health services at the VA, should the Court order him released.
“Almost five months in jail for sending one email is sufficient. Mr. Feathers is not a threat to the community or to anyone involved in his cases. He willing to agree to any combination of conditions of release that may satisfy the Court, including GPS monitoring, home confinement, and an order preventing him from any contact whatsoever with the individuals who received the email.”
“Mr. Feathers grew up a Navy brat. His father had joined the Navy for a career after a childhood without plumbing or electricity in the Appalachian hills of Northeast Tennessee. Mr. Feathers’ family moved constantly as his father was stationed at one base and then another. As a result, he was the outsider at school, picked on mercilessly, both because he was new and because he was short in stature. He became a proxy target for the abuse aimed at his gay older brother and a direct target of rampant anti-Semitism (he and his family were greeted with swastikas upon moving to the small town of Pine Grove Mills, PA).
“Despite this difficult childhood, Mr. Feathers put himself through college and graduate school. He served his country for four years as a Naval officer and received an honorable discharge.
“After that, he devoted himself to creating a career and having a family. By the early 2000s, he had risen in the banking world to the point where he helped turn around a troubled bank in San Francisco.
“He then joined a bank in San Mateo and helped it grow its revenues and assets and double its stock price. Soon after, he and his wife used their life savings to start the Small Business Capital
“During this time, he also began a family. He and his wife had twin boys, who are now fourteen years old. One of his sons was born with spinal meningitis and hydrocephalus and now
suffers from cerebral palsy and severe learning disabilities. Needless to say, his father’s absence for the last four months has been especially difficult on him.”
“Mr. Feathers founded and became CEO of SB Capital in about 2004. In or around 2007, he
established investment funds, including Investors Prime Fund, LLC (“IPF”) and SBC Portfolio Fund, LLC (“SPF”) (hereinafter “the Funds”). SB Capital was the “Manager” of the funds. The Funds were engaged in the business of originating, selling, and investing in various Small Business Administration (“SBA”) loans, including those secured by first deeds of trust encumbering commercial and income-producing residential real estate. Mr. Feathers’ business became one of only 14 licensed SBA lenders in the country.
“The Funds’ operation was governed by various documents, drafted by respected attorneys, that were filed with and approved by the California Department of Corporations. Investors in IPF
received an Offering Circular, and investors in SPF received a Private Placement Memorandum.
Additional terms were set forth in an Operating Agreement. Portions of the offering documents were periodically amended, upon written approval by voting investors. The Funds were audited each year by an independent, outside auditor. The audited financial statements were available to all investors for inspection, and the offering documents for IPF indicated that copies of the audited financial statements were distributed with the offering documents themselves. The offering materials advised investors they could inspect the Fund’s books and records.”
In June 2012, the SEC seized Mark’s companies and assets alleged ponzi scheme. The court appointed a receiver.
The United States Attorneys disagree with the motion to release Mark.
“The government opposes this request. Rather than presenting any new evidence, the defendant merely repeats the same set of facts that the Court considered and rejected earlier this year, save one. He now apologizes for his conduct. His apology does not, however, rebut the presumption that he remains a danger to others in the community. There continues to be no condition or combination of conditions that will reasonably assure the safety of the community if he is released. The United States therefore believes his continued detention is appropriate.
Mark’s trial on 29 counts of securities and mail fraud is scheduled for January 2018.