A Petaluma real estate agent and his wife are being sued by a group of investors who claim the couple defrauded them out of more than $22 million in loans, mostly for East Coast nursing homes and a Northern California mushroom farm.
Aldo and Karen Baccala were named in a lawsuit filed late Tuesday in Sonoma County Superior Court by 71 investors, including some prominent local residents.
The lawsuit claims the Baccalas misrepresented business opportunities and the existence of collateral and sometimes secured multiple loans for the same project, all for their own personal profit.
"We're really not sure what the hell was going on," said Robert Mattei, a former Petaluma department store owner who, with his brother James, invested more than $1 million. "I know it wiped out some people's life savings."
Both Baccala, 67, and his wife, 66, declined to comment Wednesday.
In a letter to investors dated Nov. 5, Aldo Baccala said he was suspending monthly payments on loans, some of which paid as high as 15 percent interest. In the lawsuit, investors claim they can't get interest or principal payments from the company.
He blamed the credit crunch and the economic downturn coupled with the cost of the existing debt service, which he said left him without the liquidity to make payments.
Baccala said he would sell assisted living centers and refinance Premier Mushrooms LP in Colusa County to help pay down the debt within the next two years.
"I recognize this may create a serious hardship for you and I am doing everything in my power to rectify this situation," Baccala said in the letter.
But investors were not satisfied.