Investment Manager Charged with Stealing More Than $20 Million in Ponzi Scheme

A Petaluma man is charged with stealing more than $20 million from dozens of investors in a Ponzi scheme that went on for more than two decades, the Sonoma County District Attorney announced Tuesday.

Aldo Joseph Baccala, 71, faces 167 felony counts of grand theft, securities fraud and elder abuse in a three-year long investigation involving the California Attorney General Kamala Harris.

Authorities say Baccala engaged in a pattern of theft and fraud by promising returns of 12 percent to 27 percent but failed to deliver. 

“This Ponzi scheme caused dozens of investors to lose the money they thought they would be securing and investing,” Harris said in a statement Tuesday. “It is important to protect investors from being duped by false representations from criminal actors.”

Read the full indictment here

According to the indictment, Baccala used his Petaluma-based company, Baccala Realty, Inc., located at 204 G Street, to raise millions of dollars from more than 50 investors for ventures in California and other states, such as assisted living facilities, a car wash and other businesses.

Investors, many of whom are elderly and who had known Baccala and his family for many years, were promised annual returns of 12 percent or more to invest in a specific project to be secured by a first or second deed of trust on the property. None of the promised deeds of trust were ever recorded, however, and the funds raised were not used as promised.

Baccala also reportedly used money obtained by investors to invest in the stock market and to cover margin calls and stock trading losses. From 2003-08, he lost approximately $8 million in the stock market. As his debts grew, he began promising new investors annual returns of up to 27.5 percent to cover interest payments to earlier investors.

In November 2008, Baccala issued letters to investors saying that he would no longer make promised monthly payments. He was sued by a group of investors in 2008 and the following year, the Sonoma County District Attorney’s Office launched an investigation.

This was not the first time Baccala failed to deliver to his investors. In 1989, he and his wife Karen recruited people to invest $3.2 million to convert an old bourbon distillery into an ethonol production plant. Investors never collected a dime, however, and sued the couple in 1994.

Baccala is being held at the Sonoma County Adult Detention Facility where his bail has been set at $2 million.

Do you know Aldo Baccala or ever have business dealings with him? Share your thoughts in the comments below.