Here’s one we haven’t worried about before–fraudulent takeovers of condominium boards.
In Las Vegas, prosecutors alleged a complex fraud targeted condominiums thought to be considering construction defect lawsuits, then used shill buyers and paid confederates to take control of the condominium association boards in order to steer the legal work and repair contracts to companies controlled by the alleged ringleaders.
Ten people have pleaded guilty so far, the Las Vegas Review-Journal has reported. The newspaper said the investigation has involved a dozen condo associations.
The latest to enter a guilty plea was Denise Keser, formerly a condo property manager.
Keser told Navarro that she was asked to help Benzer find homeowners associations looking to pursue construction defect litigation.
Eventually, she said, she left her job at RMI Management, to open her own company with Benzer to manage homeowners associations at the southwest valley’s Chateau Nouveau and other condominium complexes.
Benzer, who bankrolled the company, Crystal Management, was stacking association boards around the valley so that Quon could win support to file construction defect lawsuits and Benzer and his construction company could win approval to do the repairs, Keser alleged.
At Chateau Nouveau, Benzer had three board members on his payroll, she alleged.
Ultimately, Keser said, she decided that she didn’t like what was going on, especially efforts to rig board elections with forged ballots and smear campaigns against candidates not backed by her co-conspirators. So she said she quit and went back to work for RMI Management.
Another participant, Daniel Solomon, pleaded guilty earlier this month, as reported by the Review-Journal.
Solomon admitted that he became a “straw purchaser” of a Vistana condominium so that he could get elected to the board and steer business to his co-conspirators. His participation in the scheme took place from January 2006 through February 2009.
Solomon also admitted that, while a member of the Vistana board, he participated in several votes that benefited his co-conspirators.
In one of those votes, the board approved a $19 million construction defect settlement, and in another one it awarded the repair work. The $19 million settlement was obtained by construction defects lawyer Nancy Quon, who is believed to be one of the unnamed co-conspirators described in court documents in the case. The repairs were done by Silver Lining Construction and its former owner, Leon Benzer, two of the other unnamed co-conspirators.
Neither Quon nor Benzer have been charged in the investigation, but are key targets. Quon is facing an array of local criminal charges, including arson and insurance fraud, stemming from a suspicious fire last year at her Rhodes Ranch home. Prosecutors have alleged she set the fire in a botched suicide plot to escape the pressure of the federal investigation. She has denied the allegations.
According to a Justice Department press release:
According to plea documents, once elected to the board of directors, co-conspirator board members would meet with other co-conspirators in order to manipulate board votes, including the selection of property managers, contractors and general counsel for the HOA and attorneys to represent the HOA. Solomon either attended these meetings or took direction from co-conspirators who attended these meetings instructing him to vote in furtherance of the conspiracy. Solomon admitted that he used his position on the board to vote in a manner directed by and favorable to certain co-conspirators. Specifically, Solomon participated in the following votes, among others: on or about July 20, 2007, a vote to agree to settle a construction defect lawsuit for $19 million; on or about Sept. 7, 2007, a vote to award a construction defect remediation contract to the co-conspirator construction company; and on or about Nov. 16, 2007, a vote to pay $1.5 million to the co-conspirator construction company, which was followed by several other votes for payment to the same co-conspirator, related to construction defect remediation work.
And in a play right out of Hollywood, David Amesbury, an attorney who previously pleaded guilty in the case and is expected to be a key witness for the prosecution, was found badly beaten in his gated community. He reportedly said he had been attacked by three men who knew who he was.
“The FBI says the beating was not related to a federal probe into homeowners associations,” according to 8NewNow.com.
From a Review-Journal columnn by John L. Smith:
But it doesn’t take much of a courthouse handicapper to speculate that whatever happened to Amesbury might have an impact on his future as a star government witness. In late October, he pleaded guilty to charges he conspired to commit mail fraud and bank fraud.
There are over 7,000 condominiums registered with Hawaii’s Department of Commerce and Consumer Affairs. Now, in addition to all the normal worries of condo boards, they’ll have to be on the lookout for creative conspiracies like this one.