First defendant to be sentenced in HOA case faces 15 months in prison

Article Courtesy of The Las Vegas Review-Journal

By Jeff German

Published June 18, 2014


Justice Department lawyers are pushing for substantial time behind bars this week for the first defendant sentenced in the long-running investigation into the massive scheme to take over homeowners associations.

Kenneth Allen — who got elected to an HOA board with the help of former construction company boss Leon Benzer, the scheme’s accused mastermind — is to be sentenced Friday before Chief U.S. District Judge Gloria Navarro.

Prosecutors want Allen, 68, a Navy veteran and former Los Angeles County sheriff’s deputy, to spend 15 months in prison.

Allen, who never before had been in trouble with the law, pleaded guilty in January to one felony count of wire fraud. He is the only one of 36 defendants charged in the high-profile case who doesn’t have an agreement with the government to cooperate.

One defendant, former Las Vegas police Lt. Ben Kim, was sentenced to three years probation last year for his role in a related $1 million bank fraud scheme involving the old Courthouse Cafe, once a popular restaurant at the Regional Justice Center. He was not charged in the homeowners association conspiracy but is considered part of the overall prosecution effort in the case.

Kim’s former wife, Lisa Kim, pleaded guilty in both the bank fraud and HOA takeover schemes and is among the 33 cooperating defendants waiting to be sentenced in January after the fraud trial of Benzer and five others.

Attorney David Amesbury, who also was a cooperating defendant, killed himself in March 2012, five days after the suicide of an uncharged key target of the investigation, construction defect attorney Nancy Quon.

In court papers last week, lawyers with the Justice Department’s Fraud Section in Washington said the 15-month prison term for Allen was necessary to avoid “sentencing disparities” when the defendants who cooperated with prosecutors learn their fates in January. Prosecutors have moved to give those defendants a break in prison time because of their assistance.

The time behind bars for Allen also was needed to send a strong message to the community, prosecutors said.

“The HOA takeover scheme in particular has consumed disproportionate law enforcement and prosecutorial resources given its intricate nature and vast cast of supporting players,” prosecutors wrote. “Given these considerations, substantial prison sentences in wire fraud cases of this nature meet general deterrence objectives by indicating that such crimes will not be tolerated.”

Allen admitted in his plea agreement that he bought a condominium in 2007 with Benzer’s money at Sunset Cliffs and submitted a false loan application that hid Benzer’s involvement in the $177,000 purchase.

Then, Allen got elected to the HOA board and, with two other board members “planted” by Benzer, he was in a position to help Benzer land lucrative construction defect contracts, prosecutors alleged.

Allen contends he never voted to help Benzer’s company, Silver Lining Construction, during his tenure on the Sunset Cliffs board, and originally he balked at entering his guilty plea in court in November.

In a letter to Navarro last week, however, Allen said he takes “full responsibility” for his actions.

“I have embarrassed and disrespected my family, myself and my life,” he wrote. “I am deeply sorry and ashamed of what I did and I apologize to the court.”

Prosecutors said last week that Allen was “poised to accommodate” any of Benzer’s voting requests at Sunset Cliffs.

“The fact that defendant Allen did not fully participate in the conspiracy had less to do with his virtue and more to do with chance and timing,” they wrote.

The HOA at Sunset Cliffs was one of 11 homeowners organizations prosecutors allege were defrauded of millions of dollars in the takeover scheme. Prosecutors want roughly $25 million in restitution in the case.

Benzer, 47, has pleaded not guilty to conspiracy and fraud charges leveled against him and 10 others in a January 2013 federal indictment. Four of his co-defendants have pleaded guilty and have joined those cooperating with prosecutors, leaving Benzer and the remaining defendants to stand trial Oct. 14 before U.S. District Judge James Mahan.

Besides conspiring to commit mortgage fraud, the defendants also are accused of getting straw buyers elected to the boards through bribery, ballot stuffing, intimidation and dirty tricks.

The investigation into the scheme, which occurred between 2003 and 2009, is considered the biggest public corruption case ever brought by the Justice Department in Nevada. The investigation became public in September 2008, when FBI agents and Las Vegas police conducted raids across the valley.