Accused Petaluma Ponzi schemer pleads not guilty to charges

The Petaluma man charged with bilking investors in a $20 million Ponzi scheme started out as a small-town real estate developer with a knack for putting deals together.

Aldo Baccala got projects rolling with private money rather than bank funding and gained a reputation for turning a profit, said Greg Phillips, an investigator from the Sonoma County district attorney, in a court declaration.

By the 1990s, Baccala had formed partnerships that bought medical office buildings and nursing homes in two southeastern states. He expanded his portfolio to include a Nevada car wash, a Colusa mushroom farm and a mobile home lending firm.

"Over time, as word spread, Baccala cultivated a large number of people who invested with him and made money in his projects," said Phillips in a declaration leading to Baccala's June 5 arrest.

Eventually, Baccala had so many projects and so many investors that he began issuing high-interest promissory notes, often secured by non-existent trust deeds, Phillips said.

Instead of rolling the money over into investments, it went elsewhere, including to pay off other lenders, creating what Phillips described as "a vast Ponzi scheme."

At the same time, Baccala kept up interest payments of 12 percent while making high-risk stock market investments, losing $8 million from 2003-2008.

By November 2008, his money was gone. Baccala sent out notices to investors that he would cease making interest payments.

"Baccala's success also sowed the seeds of his downfall," Phillips wrote.

Baccala, 71, pleaded not guilty Friday to a 164-count felony complaint alleging securities fraud, grand theft and elder financial abuse. He faces a maximum of 148 years in prison if convicted.

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