A former lending company executive accused of wrongdoing at her now-defunct business, and investigated for possible crimes, has reportedly returned to Paso Robles after fleeing to Costa Rica nearly three years ago.
Linda Kennedy was president of 21st Century Financial Resources, which pooled investors’ money to fund high-interest, high-risk loans that financed real estate development.
When she closed the firm in August 2007, the company held a $100 million real estate portfolio financed by more than 1,000 investors — many from San Luis Obispo County — who lost their money after defaults and foreclosures on properties once held in trust by the company.
“We are not going to arrest her today just because she’s here,” said Deputy District Attorney Steve von Dohlen, who added that prosecutors have not been in contact with Kennedy since her absence. “With all cases as expansive and complicated as this one, it would be shortsighted to run out and arrest someone before the investigation is complete. It would be a disservice to the victims as well,” von Dohlen said.
Kennedy fled the Central Coast because she felt her life and well-being were threatened locally, said Beverly Hills attorney Ken Nathanson, who said he spoke to her in Costa Rica by phone in 2008 in regard to a related case.
How Kennedy will provide restitution to her investors is unknown. She did not return multiple calls from The Tribune to a cell phone number provided by her 21-year-old daughter, Stephanie Randolph, who said she bought her mother’s airplane ticket to return to California in October.
Kennedy told investors and The Tribune in 2007 that the lending firm was no longer able to maintain operations because of a drop in revenue due to the real estate market crisis.
She did not report that her firm had been under investigation by state regulators since at least 2005, when the Department of Real Estate found discrepancies in its accounting, as state records show.
Randolph, who has since estranged herself from her mother, said that she knows from conversations with her four siblings that Kennedy is in the Paso Robles area, possibly residing in hotels.
Kennedy was recently staying in the home of her late father, Robert Burton, who died Jan. 4 of natural causes and was once a broker for 21st Century Financial, Randolph said.
When The Tribune visited the home, which is linked to Burton in public records, a young man who opened the door said that he had heard of Kennedy in the news — but denied knowing her personally.
Kennedy’s company was the fourth North County nonbank lender to come under a criminal probe after allegations were filed by the Department of Real Estate. The other three are Estate Financial, Hurst Financial and Real Property Lenders.
Estate Financial executives Karen Guth and her son, Joshua Yaguda, are now in prison for defrauding hundreds of investors in a Ponzi scheme that collected up to $340 million.
The state Department of Real Estate revoked Kennedy’s license in February of 2009 for “fraud and dishonest dealing, and a continued and flagrant course of misrepresentation,” equivalent to lying, state records indicate. Randolph said that Kennedy gave her three days’ notice before leaving with her four siblings for Costa Rica in late 2007.
Randolph, having recently turned 18 and upset with the idea of moving to Costa Rica so suddenly, decided instead to stay in her mother’s Templeton home, which was in foreclosure at the time.
Randolph said that her siblings had since returned to the United States, leaving Kennedy alone in Costa Rica.
Randolph bought her mother a plane ticket to return to the United States because Kennedy told her that she felt unsafe in Costa Rica.
Randolph said her mother still lives in fear of how the community will react to her presence locally. Randolph said that Kennedy has cut and dyed her hair, is not actively looking for work, and is “trying to stay under the radar.”
“I don’t know how folks are going to react,” von Dohlen said of Kennedy’s return.
Now it is up to the District Attorney’s Office to complete its criminal probe, which has involved the Department of Corporations, Department of Real Estate and the FBI, according to von Dohlen.
Von Dohlen declined to disclose how long the DA’s investigation is expected to take, or provide other specifics about the case.
Randolph, the middle daughter of Kennedy’s five children, estranged herself from Kennedy in recent weeks. She said her mother had asked her to work in the 21st Century Financial Office while still in high school. Since then, she said she has cut and dyed her hair numerous times because she does not want the community to associate her with her mother’s now-defunct business.
“I keep my head down,” she said, adding that she believes that she was denied a job offer because of her association with her mother, who had investors who worked for a potential employer.
“I feel used, cheated, abused and lied to,” said Randolph of her relationship with her mother.
— Julia Hickey