Article Courtesy of The Las Vegas
By Jeff German
Published August 29, 2012
Federal prosecutors are making their final push to charge more defendants in the long-running investigation into fraud and corruption at Las Vegas Valley homeowners associations.
"We expect several indictments before the end of the year," Justice Department lawyer Charles La Bella said late last week during a status check in the case before Senior U.S. District Judge Lloyd George.
Prosecutors are looking to charge a dozen or more additional conspirators in the massive scheme to take control of nearly a dozen homeowners associations between 2003 and 2009.
La Bella, a deputy chief of the Justice Department's Washington-based Fraud Section, has been presenting evidence this summer to a federal grand jury in Las Vegas.
He told George, who is presiding over several of the early criminal cases filed in the investigation, that he planned to be back here the weeks of Sept. 10 and Sept. 24.
George set a Sept. 27 hearing to get a better handle on the government's efforts to obtain restitution for the homeowners and their associations victimized in the scheme.
The judge held up a two-inch stack of letters he has received, primarily from homeowners at the Vistana condominium development in southwest Las Vegas, urging him to consider restitution for homeowners when the defendants in his cases are sentenced.
One of those cases involves political consultant Steve Wark, who has agreed to pay $94,000 in restitution to the bank that held a phony mortgage he took out during the scheme. Wark, who pleaded guilty to one count of conspiracy to commit wire fraud, was a straw buyer and former president of the Vistana board when the scheme unfolded.
La Bella told George that prosecutors intended to address the issue of compensation for Vistana homeowners in the next round of charges.
Prosecutors included restitution for Vistana and other homeowners associations in a group plea deal in May before U.S. District Judge James Mahan. A total of 15 defendants agreed to pay a combined $1.5 million to the associations and financial institutions victimized in the scheme.
In all, 26 defendants, including lawyers and former police officers, have pleaded guilty in the high-profile investigation. Another defendant pleaded guilty in a related bank fraud scheme.
Vistana board president Bruce Wallace praised George on Monday for taking an interest in the plight of the homeowners.
"We're pleased that the judge has read the letters and is going to look into it," he said, adding he also is happy prosecutors are taking a stronger interest.
Justice Department lawyers have alleged that more than $8 million was funneled through secret bank accounts to fund the takeover scheme, which allowed the conspirators to land lucrative legal, construction and community management contracts from the homeowners associations.
The conspirators, through election rigging and other dirty campaign tactics, stacked association boards with straw buyers who voted to award them millions of dollars worth of contracts - all at the expense of the homeowners, prosecutors alleged.
Former construction company boss Leon Benzer and the late construction defects attorney Nancy Quon are alleged to have pulled the strings in the takeover conspiracy. Benzer, who has not been charged in the investigation, is alleged to have made down payments for the straw buyers.
Quon, 51, who wasn't charged, was found dead in the bathtub of her Henderson condominium on March 20. The coroner ruled her death a suicide.
Vistana board members have complained that former members, community managers and others involved in the scheme squandered the association's share of a $19 million construction defects settlement won in 2007.
After lawyers fees and expenses were deducted, the homeowners association got about $8.1 million to do repair work, the board members said. Most of that money went to Benzer's Silver Lining Construction Co. and its subcontractors, which did "very limited" repairs and produced little required paperwork documenting its work.
The board members said leaking roofs were repaired and buildings were painted, but significant insulation, electrical and plumbing problems largely were ignored.
In civil litigation with Silver Lining Construction, Vistana lawyers alleged that the homeowners association overpaid the company more than $3 million.