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.