Witnesses testify on roles in scheme to defraud homeowners associations

Article Courtesy of The Las Vegas Review-Journal

By Jeff German  

Published March 6, 2015


A key player in the scheme to take over and defraud homeowners associations testified Friday how he helped rig elections to further the massive conspiracy directed by his cousin, former construction company boss Leon Benzer.

Edward Lugo, a cooperating government witness who pleaded guilty in the scheme, focused his testimony on an election at the five-member Park Avenue HOA board in 2008, when he provided fake ballots from California at Benzer’s request to win races for Benzer straw buyers, Salvatore Ruvolo and Arnold Myers.

Another cooperating witness, former Benzer employee Angela Esparza, also testified how she helped stuff ballots for her boss at HOA elections at Park Avenue, Vistana, Chateau Versailles and Chateau Nouveau between 2007 and 2008.

The dirty politics at Park Avenue gave Benzer four of the five board members and led to a vote to approve a first right of refusal contract for construction defect work for his company, Silver Lining Construction, Lugo said. Lugo and another defendant who pleaded guilty, former Las Vegas police officer Frank Sutton, were the other two board members on Benzer’s payroll.

But the election ultimately was overturned by a court order after Park Avenue residents sued the corrupt board members, and the contract was voided, Lugo said. Lugo and Sutton were then removed in a recall election.

Ruvolo, 87, is one of four remaining defendants standing trial in federal court in the scheme, which prosecutors allege occurred between 2003 and 2009 and cost local HOAs millions of dollars. Myers, who pleaded guilty in 2012, died last year without being sentenced.

The goal of the scheme, according to Lugo and other government witnesses, was to acquire properties at the larger condominium developments and then pack their HOA boards so that Benzer and Silver Lining Construction could obtain lucrative construction defect contracts. As many as 11 HOAs were targeted.

The other defendants on trial in the courtroom of U.S. District Judge James Mahan are former Benzer lawyer Keith Gregory, Benzer’s half-sister Edith Gillespie, a ballet teacher who prosecutors say was a straw buyer and recruiter in the scheme, and David Ball, a real estate agent Benzer is alleged to have gotten elected to the Chateau Nouveau board.

Defense lawyers contend the four defendants were not part of the scheme and consider themselves victims of Benzer.

Since August 2011, prosecutors have obtained guilty plea agreements for 37 people, including Benzer and his right-hand man, Ralph Priola.

Lugo, who lives in Los Angeles, testified that Priola sent him the phony Park Avenue ballots, and he mailed them back to Platinum Community Services, the firm that managed the Park Avenue HOA, at various sites in Southern California. The fake ballots were presented as coming from Southern California residents who owned condominiums at Park Avenue.

Esparza, who is Priola’s niece, testified about a different way of stuffing ballots.

She said she and her co-conspirators used steam to open the envelopes containing the legitimate ballots, replaced them with votes for the Benzer-backed candidates and then resealed the envelopes.

The conspirators gained access to the legitimate ballots either at Platinum Community Services, where she also worked, or the law offices of Benzer-paid attorneys David Amesbury and Brian Jones, who represented the HOAs, Esparza said.

Amesbury pleaded guilty in the scheme in October 2011, admitting he participated in election rigging at Chateau Nouveau and Pebble Creek. He later committed suicide. Jones in his 2012 guilty plea agreement admitted to election rigging at Chateau Nouveau and Vistana.

Under questioning from Charles La Bella, the lead Justice Department prosecutor, Lugo testified about his other key duties in the scheme.

Lugo, who has a master’s degree in business administration, said he was regarded as the “money man,” or bookkeeper, handling mortgage payments and HOA fees on 23 condominiums bought in the names of the straw buyers. He said another 20 condominiums were acquired through other financial means unknown to him.

The “Bill Payment Program,” as it was known to the conspirators, was run through a company set up by Lugo called Strategic One, Lugo testified. Benzer wired money to the company’s bank account, and Lugo would then make the payments.

According to a PowerPoint presentation Lugo helped put together for Benzer’s unidentified investors, the scheme had gained control of 33 board seats at nine HOAs around the valley by the end of May 2006.

Benzer previously has admitted that he struck a deal with the late construction defect lawyer Nancy Quon to get $2 million in loans to launch the scheme. Quon was not charged and committed suicide in March 2012.