A developer and real estate investor in Sonoma County has been indicted on nine felony counts stemming from what federal prosecutors described as a “Ponzi scheme” to defraud investors stretching back at least 16 years.

Ken Mattson had his first appearance in federal court in San Franciscoon Friday after being arrested Thursday.

Before the hearing started, a group of about 10 of Mattson’s alleged victims gathered in front of the courtroom doors. Several stood with bowed heads in a semicircle and said a short prayer before entering what quickly became a packed courtroom.

Mattson appeared before U.S. District Court Judge Alex Tse in a tight, blue workout T-shirt and shorts — he was arrested outside of a Napa gym — and looked ahead, stone faced, through the hour-plus-long hearing. He pleaded not guilty on all counts, including wire fraud, money laundering and obstruction of justice.

The new criminal case joins a half dozen lawsuits already filed against Mattson and his former business partner Tim LeFever and their bankrupt partnership, LeFever Matson Inc., on behalf of scores of investors whose money allegedly bankrolled property purchases without the promised ownership stake in return.

The Securities and Exchange Commission also filed its own civil enforcement action Thursday against Mattson and KS Mattson Partners LP, a company he and his wife, Stacy, control.

Most of Friday’s proceeding focused on whether federal prosecutors were entitled to a hearing on whether to hold Mattson in custody based on obstruction or flight risk. After hearing arguments from both sides, Judge Tse granted that hearing, set for Wednesday. He will be held in custody in the meantime.

Prosecutors pointed to Mattson’s alleged history of moving property and money around, and especially his alleged deletion of 10,000 relevant computer files last year — weeks after receiving instructions from federal authorities to preserve documents and communications related to his business.

After executing a federal search warrant at Mattson’s Sonoma home last May, federal authorities discovered the missing documents had all been deleted during a five-minute span, prosecutors said. They also found the opened subpoena, according to U.S. Attorney Christoffer Lee with the Northern District of California.

Prosecutors also pointed to Mattson’s transfer of property titles to third parties last summer as evidence of “trying to move assets out of the reach of government” and highlighted money moving back and forth between accounts controlled by Mattson and his family members. They cited high-value purchases, including $200,000 spent in September by a family member on two luxury GMC vehicles, one of which Mattson was driving at the time of his arrest. Prosecutors noted $9,000 in cash found in envelopes in that vehicle.

“The fact that he has access on what seems to be a random day, the day he was arrested, to almost $10,000 in cash is significant,” Lee said. He made the argument that Mattson likely has easy access to wealth, money and luxury goods that “could be parted with to enable him to flee” by pointing to over $700,000 in observed retail purchases, $13,000 for jewelry and $20,000 in cash withdrawals from bank records since 2019.

Mattson’s attorneys said the cash found in his car during his arrest was simply rental payments he’d collected and cast doubt on the allegation of deleted files in the indictment.

Moreover, “it would be inappropriate for the government to say ‘Well, there’s other transactions that we don’t fully understand that are being conducted by Mr. Mattson which we therefore call into question,” attorney William Frentzen said. “The fact that they don’t fully understand certain transactions does not make them nefarious and is not an indication of any sort of intent to flee.”

Frentzen argued Mattson has lived his whole life in Northern California, where his family and long-standing businesses, now under scrutiny, are rooted.