HOA fraud investigation may last months


By Jeff German

Published November 15, 2011

Federal prosecutors are in no hurry to wrap up their far-reaching investigation into the unlawful takeover of Las Vegas Valley homeowners associations.

In court this week, Mary Ann McCarthy, a trial attorney with the Justice Department's Fraud Section in Washington, D.C., told U.S. District Judge Gloria Navarro that the closely watched investigation is likely to continue for another eight months.

As a result, Navarro scheduled a July sentencing for Denise Keser, the latest defendant to plead guilty and strike a deal with prosecutors to cooperate in the case. That should allow the judge to consider the extent of Keser's cooperation before determining her sentence.

Prosecutors also filed court papers this week seeking an eight-month delay in the sentencings of the other nine cooperating defendants, including the first defendant to enter a plea, well-known political strategist Steve Wark, who was set to go before Senior U.S. District Judge Lloyd George on Dec. 16.

The delays have become necessary as prosecutors map out their strategy in the coming months to obtain indictments against higher-level players in the massive conspiracy.

"The United States anticipates future pleas, indictments and the possibility of one or more trials of co-conspirators and targets," the Justice Department lawyers wrote in their court papers. "These events may allow the defendants the opportunity to provide further cooperation as witnesses, including the possibility of testifying at trial."

Prosecutors have alleged that the scheme involved stacking homeowners association boards with friendly members who would hand out legal work and construction defect contracts at the expense of the associations and their homeowners.

The complicated investigation has targeted lawyers, judges and former police officers. But so far, only one lawyer, David Amesbury, has been charged. Amesbury pleaded guilty Oct. 24 to rigging homeowners association elections at Chateau Nouveau in southwest Las Vegas and Pebble Creek in the southeast valley.

Since the end of August, when federal prosecutors cranked up the investigation after more than three years of sifting through evidence and identifying as many as 100 co-conspirators, five former homeowners association board members have pleaded guilty. So have four property management company employees.

Court documents unsealed in the case, so far, have bared wrongdoing at half of the dozen homeowners associations dragged into the investigation. Vistana and Sunset Cliffs in the southwest valley, Chateau Versailles in the northwest and Park Avenue in the south also have been identified by prosecutors as victims.

Prosecutors expect to file as many as 15 more plea agreements with cooperating defendants in the coming weeks, as they zero in on the central figures in the scheme.

At some point, the Justice Department lawyers are expected to present evidence to a federal grand jury against the bigger players. That would involve hauling defendants who have struck plea deals before the panel to testify.

Prosecutors have not identified in court documents the construction company owner and the construction defects lawyer behind the scheme.

But some of the latest defendants to plead guilty have alleged in court that former construction company boss Leon Benzer and attorney Nancy Quon pulled the strings.

Neither Benzer nor Quon have been charged in the federal investigation, and there have been courthouse rumblings for weeks that Benzer was being pressured to cooperate. The offices of Benzer and Quon were among those searched in a September 2008 raid conducted by the FBI, Las Vegas police and IRS Criminal Investigation.

In her litigation heyday, Quon, who once reportedly brought in as much as $100 million in construction defect litigation, was friendly with many lawyers and judges at the Regional Justice Center.

She 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.

In court Thursday, Keser alleged that Benzer was gaining control of homeowners association boards around the valley so that Quon could win support to file construction defect lawsuits and Benzer and his company, Silver Lining Construction, could win approval to do the repairs.

Lawyers for Benzer and Quon have declined to comment on the allegations.

According to court documents, the takeover scheme involved finding "straw purchasers" to buy condominiums at various developments and getting them to run for seats on the boards. The straw buyers were elected through classic dirty campaign tactics that included forging ballots and digging up dirt on candidates not supported by the co-conspirators.

Once on the boards, the paid-off members steered business to the co-conspirators, the documents allege. The co-conspirators also hired lawyers to advise the homeowners associations and created property management companies to run them with the sole purpose of looking out for the financial interests of the co-conspirators.