An official criminal probe has begun into whether Hollister financial advisor Mitchell Dabo committed a crime when he diverted hundreds of thousands of dollars in private trust fund money earmarked for charity to his own use, BenitoLink has learned.
The investigation, apparently the first of two planned, is in the hands of Hollister police, San Benito County District Attorney Candice Hooper told BenitoLink Thursday.
“Hollister Police Department is reviewing the case and it is my understanding that it will be submitted to my office for review,” she said.
Hooper’s comments came in an emailed response Thursday to questions from BenitoLink, which sought confirmation of information it had indicating a criminal investigation had been opened following a $1.74 million ruling against Dabo last month in a related civil case.
Once her office gets the case and any recommended charges from police investigators, District Attorney Hooper said, “We are hopeful that a forensic accounting review will be able to be accomplished.”
It was unclear at press time what the full scope of the investigation will be. In other words, will it be confined to the issue addressed in the civil case of missing trust fund money, or if it will broaden to include other complaints about Dabo’s business activities.
However, a forensic accounting review could look not only at all aspects of Dabo’s financial dealings but it also would specifically seek evidence that could be used against him in a criminal trial.
In addition, unlike in a civil case, during a criminal probe, investigators have added tools at their disposal, including the ability to subpoena files.
And, if a crime is alleged to have been committed, district attorneys can shut down a business found to have violated the law, and they have ways of getting debts paid fast, for example in lieu of jail time, according to an expert interviewed for this article.
As to when the probe will be completed, “I do not know what timeframe we are looking at,” Hooper added.
Dabo has declined to talk with BenitoLink in the past and could not be reached for comment in this article.
Hollister police Friday confirmed they’ve opened a criminal investigation into Dabo’s financial dealings.
“Yes, there is an open investigation,” Sgt. Don Pershall, the department’s Public Information Officer, told BenitoLink just before 10 a.m. on Friday.
He declined further comment on the Dabo investigation itself.
Dabo, who is President of the San Benito County Board of Education and has been re-elected to the board for more than two decades, has been a Hollister financial advisor for more than 30 years. He’s also a tax preparer and helps with estate planning and trusts.
It is unclear whether, short of conviction of a serious crime, Dabo could be removed from office without a recall election.
According to online descriptions, his financial services are geared to older, retired clients and those near retirement.
His firms are called Dabo Financial Group LLC and Mitch Dabo Associates. They operate out of an office at 801 San Benito St., in a building shared with and right behind Dabo Liquors.
Dabo was hired before her death in 2008 by Barbara Matulich to act as trustee of the Matulich Trust.
She was a long-time family friend whose late husband, like Mr. Matulich, had roots in Croatia.
She and her husband Tony, who preceded her in death, created the trust to provide income in their later years and to help non-profits in San Benito County, where they’d been successful farmers for many years. At one point, the trust had a balance of nearly $1 million.
Upon Mrs. Matulich’s death, all remaining assets of the trust, between $500,000 and $650,000, depending on what document is consulted, were left to the sole beneficiary named by the Matulich family, the Community Foundation for San Benito County.
As the county’s largest non-profit philanthropic organization, the CFFSBC through its board of directors awards grants and other funding each year to dozens of small non-profits that serve the needs of county residents.
According to the civil suit filed against Dabo by the CFFSBC, he not only failed to turn over all trust fund assets to the foundation when Barbara Matulich died, he had already loaned the money without her knowledge to a Hollister business partner for a real estate deal. The deal went sour and everything was lost, according to the suit.
“That is great news,” attorney John Clark said of the criminal investigation.
Clark, of the law firm of Rusconi, Foster and Thomas in Morgan Hill, represented the foundation in the successful civil suit.
He welcomed the criminal investigation because of the added tools available to the district attorney both to protect the community from Dabo and to seek the restitution that is owed, he said.
In trying to recoup money on the civil side, he said, “A guy like Dabo is always a step ahead of us, that is what he does, he moves money around.
“Our position has been that we may never see a dime of this (judgment in the foundation’s favor), but we as the foundation have stepped up and protected our benefactors from (Dabo) and the community from him and we have let our benefactors know that if you are going to gift something to us, we will do all we can to honor your wishes.”
At one point, Dabo offered to repay the foundation at the rate of $50,000 a year for ten years. The foundation board rejected the offer, feeling it had to show the community and future donors that it would fight in court if necessary to protect funds given by benefactors.
After several years of frustration for the foundation and failed court-sponsored mediations to secure what it was owed, the civil case went to trial on Nov. 13 in San Benito County Superior Court.
Dabo did not attend, which he in a later comment posted on BenitoLink called “a big mistake.” (The full text of his Nov. 14 posting on BenitoLink can be found at the end of this article.)
Judge Marjorie Laird Carter ruled in favor of the foundation, at whose request she also invoked a state law that allowed her to double the amount of money Dabo owed the foundation because he willfully violated his position as trustee to enrich himself.
In all, Dabo was found liable for more than $1.74 million, which the foundation now is in the process of trying to collect.
Still unanswered is whether Dabo, in violating state laws about the fiduciary responsibilities of trustees, committed a criminal offense punishable by fines or jail time or both.
When the foundation initially learned about Dabo’s suspect financial behavior, it asked the Hollister Police Department and the county district attorney to investigate, according to CFFSBC Executive Director Gary Byrne.
However, after interviews with foundation officials, and at least one woman who believed she’d been victimized by Dabo when he ended up with her deceased aunt’s assets, both agencies declined to open criminal investigations, Byrne told BenitoLink, which first reported the Dabo case to the community on Oct. 26.
DA Hooper on the eve of the civil trail said, “Last year we met with the foundation on several occasions to discuss the matter. We consulted with a prosecutor well (versed) in this subject matter. After reviewing the documentation provided we declined criminal prosecution.”
She declined at the time to comment further, explaining in an Oct. 12 email, “As the matter is set for trial in November…I believe it would be inappropriate for me to comment as to the merits of the matter. To do so may prejudice the judicial system.”
Hooper and police have come under criticism by some residents commenting on BenitoLink for not conducting a criminal probe early on in the matter.
However, HPD’s Pershall offered some insight Friday in what appears might have been a strategic decision to hold off on the criminal investigation.
Pershall told BenitoLink, “Back when it initially started, it was found that taking a civil route may be the most effective way to go about things at the time, that is my understanding of the situation between both offices,” he explained.
He added, “At this time, (the investigation) is simply being continued now that the civil proceedings are done.”
Here is the full, unedited text of Mitchell Dabo’s Nov. 14 comment posted on BenitoLink, which was submitted one day after the civil trial decision:
“I made a big mistake not being at the trial, but I did not want to be in court without representation. The other side slanted everything their way. I loaned Tyler $490,000 we were not in a partnership at the time. He was going to use the money to finish a custom home that he was building. At the time of the loan there was over 2 million in equity. When he had difficulties paying the interest he was in the process of refinancing the properties, but unfortunately he died before doing that. Even with R/E prices plummeting there would have enough to pay back the loan. The partnership borrowed money from a private lender to buy the other property and one of the partners took it over after Tyler died. Trust money was never used and the partnership never defaulted. With Mrs. Matulich’s permission I did transfer money into my account, but I always promptly put it back. For instance, I transferred $2700 and put it back 2 days later, she was okay with that. When interest came in it was given to Mrs. M, when enough payments came in Mrs. M’s life ins was paid (indirectly). Many times acct balances were close to zero, because everything was paid out. When the Matulich’s set up their Trust SBCCF was not the beneficiary, they had made Monterey CO Comm Foundation the beneficiary, so when Mr. Matulich died the beneficiary was MCCF. When Tyler stopped payments, I used principal to continue to pay Mrs. M’s interest and life ins prem and annual tax exps. Tyler was a good man, but cancer took him quickly. I made a costly mistake in not securing the money and I take full responsibility for that. But all of the false and twisted stmts are exactly that. I am so sorry to everyone that is affected by this.”
Read related stories:
County School Board President Accused of Trust Fund Rip Off
174-million Judgement Against Dabo, Financial Advisor and SBC Board of Education President
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