New details revealed in HOA fraud case

Article Courtesy of The Las Vegas Review-Journal

By Jeff German

Published September 21, 2014


After months of maneuvering behind the scenes, losing a $7 million contract to fix defects at the Vistana condominium complex was not an option for construction company boss Leon Benzer.

As the critical homeowners association vote loomed in September 2007, federal prosecutors say, Benzer took no chances when one of the three majority board members on his payroll, Jose Luis Alvarez, balked at supporting the contract and darted off to Mexico.

Benzer recruited someone to pose as Alvarez over the telephone at the meeting and vote for the contract, along with $1 million in upfront money that Benzer needed to keep alive a massive scheme to take over Las Vegas-area homeowners associations, prosecutors say.

It’s thought to be the final act of corruption in Benzer’s campaign to ensure that his company, Silver Lining Construction, landed the lucrative Vistana contract.

The revelation is one of several that shed new light on the high-profile HOA case in more than 300 pages of documents filed recently by trial attorneys with the Justice Department’s Fraud Section in Washington, D.C.

Benzer, who has denied wrongdoing, and five co-defendants are awaiting trial on conspiracy and fraud charges. Justice Department lawyers are not opposing another defense push to delay the October trial until March.

Over the past three years, 36 co-conspirators have pleaded guilty in the valleywide takeover scheme, which occurred between 2003 and 2009. One of the cooperating defendants, attorney David Amesbury, committed suicide, and 33 others await sentencing after the trial.

“Through this network of conspirators, Benzer was able to compromise the integrity of at least 10 Las Vegas HOAs,” the Justice Department lawyers wrote in court papers. “This was accomplished through a pattern of bribery, intimidation, rigged elections, secret meetings and payoffs.”

Early on, the late construction defect attorney Nancy Quon funded the scheme with Benzer, according to the court papers. At the time, the two were romantically involved.

Benzer planned to pack HOA boards and award construction defect litigation contracts to Quon’s firm. Once a legal judgment or settlement occurred, the Benzer-controlled boards would hire Silver Lining Construction to do the repairs. Quon, who committed suicide in 2012 and was not charged, agreed to give Benzer 10 percent of her fees for steering the legal contracts to her.

Prosecutors allege the scheme went the furthest at Vistana, where Benzer controlled three of the five HOA board members. They approved the $7 million for construction defect work that was either poorly done or not done at all. The $7 million came from a $19 million legal award Quon had won for Vistana.

Days before the Vistana board was to vote on the Silver Lining Construction contract, Benzer ordered his loyal board members to fire Mary Ann Watts, the HOA community manager he had installed, after she couldn’t keep the two honest members at bay, according to prosecutors.

Watts’ company was replaced with a management company run by Lisa Kim, who also was backed by Benzer.

But Watts didn’t go quietly.

Prosecutors say she met with Keith Gregory, the Benzer-planted Vistana lawyer, and threatened to report the takeover scheme to state authorities if she didn’t get a generous severance package.

That package included $50,000 in cash and paying off a condominium she had purchased as a straw buyer at another Benzer-controlled development, Chateau Nouveau.

In an email to her lawyer explaining her demands, Watts said she also told Gregory, “This is the big one. Guarantee no harm to me or my son or any of my family.”

Watts said she knew that the son of another co-conspirator, Maria Limon, had been beaten up, and Watts was afraid.

Benzer was known to move around town with bodyguards and use private security officers and former cops as muscle to intimate HOA boards. Rumors that Benzer also had mob connections swirled around the long-running investigation from its inception.

Limon worked for a community management company funded by Benzer that ran the HOA at Chateau Nouveau.

In 2006, Limon and her company partner, Denise Keser, had a falling out with Benzer. A month later, Limon exposed his operation in a meeting with lawyer Scott Canepa, who represented Jasmine, another HOA that Benzer was trying to control.

Canepa secretly recorded the meeting and, after conducting his own inquiry, provided FBI agents and Las Vegas police with what he had learned about the takeover scheme. That prompted the criminal investigation.

Watts, who never got her severance package from Benzer, ended up pleading guilty to a conspiracy charge and co­operating with prosecutors. So did Kim, Limon and Alvarez.

A large portion of the new court filings deals with Gregory, the Vistana lawyer.

His lawyers filed court papers insisting he was unaware of the massive takeover conspiracy. They want Gregory to be tried separately from Benzer and plan to make their case at a hearing Tuesday before U.S. District Judge James Mahan.

Prosecutors contend Gregory was far from ignorant of the scheme. They filed copies of his billing records that showed his firm was paid tens of thousands of dollars by the HOAs and Benzer at the same time.

The records show that Gregory withheld his true allegiance to Benzer from the HOAs.

Prosecutors alleged that Gregory was Benzer’s “go-to lawyer,” who played instrumental roles in planning HOA takeovers at Vistana, Jasmine and Sunset Cliffs.

Gregory regularly communicated with Benzer, Benzer’s right-hand man and other members of the takeover conspiracy before key votes favorable to Benzer were taken at Vistana and other HOAs, the billing records show.

“The facts make clear that (Gregory) was all-in in this conspiracy,” prosecutors wrote.