Limited hope for Baccala’s victims

Aldo Baccala is headed to prison after swindling dozens of Petaluma residents out of an estimated $20 million.|

Aldo Baccala is headed to prison after swindling dozens of Petaluma residents out of an estimated $20 million. But despite their successful civil suit, his victims are unlikely to ever see any compensation for his crimes, experts say.

“I’m glad the victims are saying they don’t expect much, because it’s kind of heartbreaking when they do expect compensation,” said Diana Grant, a professor of criminal justice at Sonoma State University who specializes in white collar crime. “I would be pleasantly surprised if some of the victims get a significant portion of their money back.”

Baccala pleaded no contest in March to 141 counts, including charges of fraud and grand theft with enhancements for elder abuse. Many of his victims were seniors who lost their retirement savings in his scheme. In addition to his 20 year sentence, the courts levied a $6.4 million fine against Baccala for his crimes.

In 2009, a group of investors filed a civil lawsuit against Baccala and won a $21 million settlement. But today, they only expect to recover a fraction of their losses.

“I don’t think any one of us ever expected to see anything,” said one victim who asked to remain anonymous.

Grant said payouts after Ponzi schemes usually follow a formula in which initial investors get some, if not most, of their money back, while the victims who came in at the end don’t get anything. She refers to it as the legal system’s “clunky hammer approach.”

“And then there are the ones who get little drips,” Grant said. “It all depends on which stage of the scam they were involved in.”

David Levine, a professor at the University of California Hastings College of Law, agreed that investors late to the scam will only see “pennies on the dollar.”

“A lot of times with Ponzi schemes, the money is gone,” Levine said. “So the fact that there is even the possibility that these people could get some payment is kind of surprising.”

One victim said she and her husband are getting back about 10 percent of their investment over a 10-year period, which comes in the form of small checks every other month.

That money stems from Baccala’s successful investment, a nursing home that is still in operation and turning a profit. Levine said in a situation where the swindler’s main assets are worth more operating than in liquidation, this is a reasonable way for the court to establish a payment schedule.

“Whether it’s a Ponzi scheme or a civil judgment, sometimes it’s better to take your settlement in the form of periodic payments that are generated by a business,” Levine said.

As for the $6.4 million criminal fine, Grant said such funds usually go to the state, which could then deposit the money into a crime victims compensation fund.

“Most of it is going to go back to the paws of the state to defray the costs of prosecution,” Grant said.

That’s assuming Baccala has any money left. Levine said an attempt to liquidate Baccala’s assets, such as the nursing homes, would have yielded only a fraction of the original investment.

For now, Baccala’s victims are left trying to make ends meet with what they have left.

“It really altered our lifestyle tremendously,” said the victim, who lost her home to the scheme. “We’re not in a position to go back and recoup that kind of income. We’re just trying really hard to put it all behind us.”

(Contact Allison Jarrell at allison.jarrell@argus courier.com)

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