Ponzi Suspect’s Bail Revoked After Emailed Threat

SAN JOSE, Calif. (CN) – A defendant in a high-profile financial fraud case had his bail revoked during a hearing Thursday because he sent a threatening email to officers of the court involved in his case.

U.S. Magistrate Judge Howard Lloyd revoked the $250,000 bail for Mark Feathers, who is accused of bilking investors of approximately $50 million between 2009 and 2014.

Lloyd said the threatening email Feathers sent to at least six officers of the court, including his own lawyer, violated the terms of his release.

“I do so with sadness and regret, but I feel it is the proper decision,” Lloyd said.

On March 7, Feathers sent an email to his lawyer, lawyers for the Securities Exchange Commission and some of the officials in charge of unwinding his business affairs. The email contained physical threats.

“I am putting you on notice now that if the word Ponzi is used at trial, or the word swindler, or similar, I will rise out of my seat and attempt to bring injury to any party that uses the word,” Feathers wrote to eight people.

The subject line of Feathers’ email said, “You will need to ask the court for extra marshals to my jury trial.”

According to the declaration by FBI Agent Christine White, at least five of the six persons interviewed who had received the email felt threatened, and some balked at testifying at trial.

“Certain victims expressed manifest concern about their ability to testify, if called as witnesses in this criminal case,” U.S. Attorney Timothy Lucey wrote in the motion to revoke.

Federal public defender Rita Bosworth acknowledged her client’s email was “inappropriate,” while trying to avoid acknowledging any wrongdoing by her client in the event criminal charges are brought because of the email.

“I am trying to convey how this has taken over his whole life,” Bosworth said. “It’s hard to understand what he has been through. His house has been foreclosed upon, his family is precariously cobbled together, he’s lost his job and his career.”

Bosworth also noted Feathers isn’t scheduled to go to trial until January 2018, meaning he will spend at least the next 10 months in prison while awaiting trial.

He is currently employed as an auto mechanic, according to Bosworth.

Judge Lloyd seemed somewhat swayed by the proportionality-of-punishment argument, but ultimately ruled the violation of the terms of release – which explicitly barred Feathers from harassing or making threatening statements to those involved in the trial – was egregious enough to merit the jail time.

Feathers was arrested in 2014 and charged with 29 felony counts, including mail fraud and other financial crimes. Prosecutors say he essentially ran a Ponzi scheme through his Los Altos-based investment firm called Small Business Capital.

According to the federal indictment, Feathers took investors’ money with the promise of high returns – 7.5 percent – but used the money of new investors rather than investment profits to keep his customers happy.

Feathers also faces a federal civil lawsuit, which is being presided over by U.S. District Judge Edward Davila.

Bosworth said Feathers is being forced to represent himself in the civil case because the government has frozen his personal assets, leaving him without the means to hire a lawyer. Defendants are not entitled to legal representation in civil court.

Nevertheless, Feathers encountered a legal defeat when his motion to stay the criminal proceedings until his civil trial concluded was denied by U.S. District Judge Lucy Koh, who also denied the release of funds.

Lucey, the U.S. Attorney, said this setback prompted Feathers to lash out and threaten violence and said it is “only the beginning.”

Bosworth said her client has abided by almost all the orders of the court and temporarily lost his temper and is contrite. She added Feathers has been subjected to unprofessional conduct on the civil side of his legal battles, which spilled over into his criminal woes.

She asked that Feathers receive an official admonishment, counseling and anger management.

Lloyd declined, finding Feathers issued a threat, violated his release terms and deserved to be jailed.

Feathers, who was in court, handled legal defeat stoically.

The judge gave Feathers one day to get his personal affairs in order and ordered him to report to federal court on Friday to be remanded to the custody of the U.S. Marshals.

Lucey said Feathers is a flight risk and asked that he be taken into custody immediately.

“He’ll be here tomorrow,” Lloyd responded.

 

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