Bay Area Greed: $10 Million Money Trail

San Jose businessman and car dealer attempting to walk away from $10 million in debt including millions owed to California tax payers, the IRS and Bay Area investors.

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    NEWSLETTERS

    Ron Battistella, a prominent San Jose businessman and a member of the prestigious Santa Clara County Sheriff’s Advisory Board, is attempting to walk away from more than $10 million in debt owed to investors, the federal government and the state of California. Tony Kovaleski reports. This first aired on Nov. 19, 2012. (Published Tuesday, Nov 20, 2012)

    A prominent San Jose businessman and a member of the prestigious Santa Clara County Sheriff’s Advisory Board is attempting to walk away from more than $10 million in debt owed to investors, the federal government and the state of California.

    NBC Bay area has confirmed the California Department of Motor Vehicles and the California Department of Corporations have concluded their investigations into Ron Battistella and have turned over their files to the Santa Clara County District Attorney for possible criminal charges.  The Santa Clara County District Attorney’s Office will not comment or confirm any ongoing investigation per department policy.

    Battistella, the former owner of Stevens Creek Auto Mall and the former president of the Los Gatos Auto Mall, has filed for bankruptcy asking a judge to excuse $10,468,925 in accumulated debt.  Included in the bankruptcy filing is nearly $2 million Battistella collected from 18 Bay Area investors.  He connected with the investors after advertising in the San Jose Mercury News and other local papers promising a 10-percent annual return. 

    Investors Want Justice

    Web Extra: Forensic Accountant's Analysis

    [BAY] Web Extra: Forensic Accountant's Analysis
    NBC Bay Area interviewed Len Lyons, a former FDIC Director of Investigations. Lyons reviewed Battistella's power point presentation, seen in our investigation, the California Department of Corporations orders demanding Battistella cease and refrain, the investor s vehicle titles, investment documents and Battistella s bankruptcy filing. Lyons is a Certified Fraud Examiner (CFE), a Certified Forensic Financial Analyst (CFFA), and a Certified Forensic Accountant (Cr.FA). Lyons was the lead testifying defense expert in the United States v. Robert Allen Stanford criminal trial. Stanford was convicted of defrauding $7 billion from investors worldwide. The U.S. District Court for the Southern District of Texas issued Stanford a 110 year sentence in federal prison. (Published Wednesday, Nov 21, 2012)

    “I could have stayed home today, but I want to do my part and make sure he is brought to justice,” said investor Joe Desanto during a recent interview with Chief Investigative Reporter Tony Kovaleski.  Fighting back tears, Desanto added, “he doesn’t deserve to be out on the streets.”  Desanto and his wife invested $25,000 with Battistella.  The NBC Bay Area Investigative Unit spoke with nearly a dozen of the investors all believing they were getting into a good investment.  Kovaleski asked all if they believed they were the victims of a crime and all raised their hands in frustration.

    After responding to the newspaper advertisement, they all met with Battistella and were shown a Power Point presentation.  Slides in the presentation included: “guarantees a fixed 10% annual return,” “nowhere is your money safer” and “investment is 100% secured.” The investors were told their money would help fund cars for Battistella’s used car dealership in San Jose. All investors were given vehicle pink slips as a form of collateral. 

    “I just think he should not be out walking around,” said Francis Dedoro after investing $25,000.  She added, “he should be behind bars for what he has done.  I am a victim, a big one.”

    Former Employee Offers Inside Perspective

    Frustrated with what he witnessed as an employee of Battistella’s Steven’s Creek Auto Mall, Harry Osborne agreed to talk with Kovaleski at the NBC Bay Area studios.  “They’ve been conned. They’ve been given pink slips to cars that were sold a long time ago.” Osborne added, “I think a lot of this was a scam. I think he was paying the interest from the people who were putting more money in. It looks like a Ponzi.”

    NBC Bay Area also spoke with forensic accountant Len Lyons with CBIZ MHM, LLC.  “There is some funny math in that presentation,” said Lyons. “It has indicia leading me to believe we have a Ponzi scheme here.”

    The 18 investors were all promised 10 percent annual returns on their minimum $25,000 investments.  All 18 are named in Battistella’s bankruptcy filing with the federal government.  None have received their promised regular interest payments in several months and have not been repaid their initial investments.  “There’s something wrong when all these people put up all that money and get nothing back,” Osborne said. “He’s a bad businessman that’s turned out to be a con man. I think somebody’s got to investigate,  the police or something, someone has got to do something.”

    Debt Goes Deeper

    In addition to the nearly $2 million in unpaid debt to that group of investors, Battistella has also asked a bankruptcy judge to discharge more than three-million dollars in unpaid taxes.  According to the bankruptcy filing the San Jose businessman owes $604,682 to the IRS for collected and unpaid payroll taxes dating back to 1993.

    Documents also show he owes the California State Board of Equalization $2,862,046 in collected an unpaid sales taxes between 2006 and 2008. 

    “If they don’t pay them (taxes) to the state of California, is that a crime?” Kovaleski recently asked Jaime Garza with the California State Board of Equalization.

    Garza said, “It is a crime and we have to go after the money.” 

    Recognizing that it has been six years since Battistella started collecting sales taxes that he has yet to pay to California taxpayers, Kovaleski later asked: “Six years and nearly $3 million, how does somebody get away with that?”

    “That’s hypothetical, I am not going to go there” Garza said.

    Kovaleski then pointed to Battistella’s public bankruptcy filing that shows his attempt to avoid repaying California taxpayers and said, “It’s factual, it’s on this document.” 

    Garza said, “I am not going to this document Tony.” 

    Garza claimed law prevents him from discussing the details provided in Battistella’s public bankruptcy filing.   The document clearly shows the unpaid debt and NBC Bay Area’s Investigative Unit has also searched public criminal records and has found the state of California has not charged Battistella with any crime resulting from collecting sales taxes more than six years ago and not paying them to the state.

    Sheriff's Advisory Board Member

    Research by NBC Bay Area also found that despite a questionable financial resume, Battistella holds a prestigious position on the Santa Clara County Sheriff’s Advisory Board. He is one of seven Advisory Board members in the non-profit group that is affiliated with and provides support to the Santa Clara County Sheriff’s Office. “Does this concern you? Kovaleski asked Santa Clara County Sheriff Laurie Smith.  “It does concern me,” Smith said. “I want to make sure we have good people that are affiliate with that organization because they do work with us.” Kovaleski later asked, “you are the Sheriff, will you recommend he be removed from the Advisory Board?” Sheriff Smith answered, “yes.”

    MORE: San Jose Dealership Doesn't Pay 70k Contract (May 1, 2012)

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