A former Petaluma real estate agent behind a $20 million Ponzi scheme that brought financial ruin to dozens of retired investors was sentenced Monday to 20 years in prison and ordered to pay a $6.4 million fine.
Aldo Baccala, 73, who conned even some of his closest friends into taking second mortgages on their homes or selling property and giving him the money, received the maximum punishment in a pre-trial agreement with Judge Gary Medvigy.
Under California sentencing laws and with credit for time already served, Baccala could be out of prison in eight years. The judge cited his age and lack of a criminal record in reaching the deal.
"I don't feel good about any sentence the court could possibly render," Medvigy said from the bench. "But because of the people who lost their golden years, I think it's appropriate you spend yours in the Department of Corrections and Rehabilitation."
Prosecutors sought more prison time. Baccala pleaded no contest earlier this year to a 141-count criminal complaint alleging securities fraud and grand theft with enhancements for elder financial abuse and white-collar crime, in a period from 2004 to 2008. Probation Department officials recommended 137 years and four months in prison.
"I'm glad the court sentenced him at the high end of his indicated sentence," prosecutor Robin Hammond said. "It was the highest he could go. But he deserved a life sentence. He devastated so many families."
Many of them came to court Monday to tell their stories and urge a stiff punishment.
Retired teacher Linda Musick of Santa Rosa said she and her husband had nearly paid off their house when they met Baccala and decided to invest their savings.
He convinced them to hand over money from the sale of an office building and take loans against their house in exchange for monthly interest checks.
But in 2008, Baccala sent a letter to Musick and his other investors, saying he could no longer afford to pay them. Musick later found out Baccala gambled her savings on the stock market and used it to pay off other investors.
She lost $2.9 million and was forced into foreclosure.
"My husband and I worked hard for over 40 years to earn the money he frittered away," Musick said. "Mr. Baccala sentenced us to a lifetime of worry and loss."
Another victim, Karen Ashbaugh, said she and her husband lost $1.2 million they had set aside for their children's college educations and their own retirement.
When she got the letter she said it felt like "the world dropped out from under my feet," she said. Her husband has since been working 70-hour weeks to try to catch up and the family has been involved in 15 lawsuits, she said.
"We may have been foolish to invest with him, but the fact is Aldo Baccala is a criminal," Ashbaugh said. "(His) greed and criminal actions will have negative repercussions for years to come."
Another investor, James Mattei of Petaluma, who lost $1 million, said Baccala should remain behind bars until he pays everyone back. Mattei is among a group who won a 2009 civil judgment against Baccala. Members are expected to recoup only about 20 percent of their losses.
"I think he should get what he deserves," Mattei told Medvigy.
Baccala showed little emotion as he listened to the comments from across the courtroom. But he cried as he made a brief apology and insisted he had no intention of ever defrauding anyone. In a letter to the judge, he blamed the losses on the economic downturn.
"I always thought I was trying to do the best I possibly could with the investments to benefit everyone," Baccala said. "But they didn't. I'm very sorry that has happened."
But prosecutors said Baccala knowingly defrauded investors. He issued promissory notes backed by properties he didn't really own and didn't use the money for his stated purpose, said Ron Smetana, a senior prosecutor from the state Attorney General's Office.
Smetana said Baccala handed out 110 bogus notes over the five-year period while taking at least $14 million from his victims. He used some of the money to cover $7 million in stock market losses in 2003, he said.
The rest paid off other investors and funded a lavish lifestyle that at one time included four homes.
"Mr. Baccala lives in an alternate reality," Smetana said.
You can reach Staff Writer Paul Payne at 568-5312 or paul.payne@pressdemocrat.com. On Twitter @ppayne.
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