For morePoints to be aware of in HOA scandal
In 2006, condominium owners in Las Vegas’ Vistana community were accused by a lawyer of dreaming up wild, Oliver Stone-like conspiracy theories as they complained about corruption in their community association.
After six years, more than two dozen guilty plea deals and four untimely deaths among witnesses or participants, the Vistana owners say they have been vindicated in their suspicions that their community association board had been hijacked so that lucrative legal work and repairs involving construction defects would be steered to particular individuals.
As it turns out, unknown to the Vistana condo owners when they first started investigating suspicious activity in 2003, the same thing was happening around town at other condo developments involving the same cast of allegedly rogue attorneys, HOA property managers, and a construction company owner and his underlings.
What’s transpired isn’t on the level of an Oliver Stone movie, but it is a local mystery focusing on who may plead guilty next or whether there could be more untimely deaths.
Donna Toussaint, a longtime Las Vegas homeowner association industry insider, said she and others in the HOA field were shocked at how large the conspiracy turned out to be. Twenty-seven people have pleaded guilty in cases involving a dozen HOAs, and that number likely will grow.
Since 2008, when the criminal probe of HOA board hijackings became public, she and other HOA industry insiders have watched the fraud investigation unfold so slowly that she calls it “Chinese water torture.”
“I had no idea of the scope. I don’t think anyone could have. It’s just incomprehensible,” said Toussaint, president-elect of a local association for HOAs called the Community Associations Institute. “I’m shocked every time I read a new story in the paper about it.”
Four figures in probe have died
- September 2008: Metro Lt. Christopher Van Cleef, 50, shoots and kills himself in Henderson six days after search warrants had been served in the HOA probe.
Van Cleef and Frank Sutton, a retired Metro captain, had invested in condominiums in several of the communities where construction defect attorney Nancy Quon, construction company executive Leon Benzer and community association manager Lisa Kim were involved.
- Summer 2010: Robbi Michael Castro, a former Vistana condo owner and board member, dies of a drug overdose at age 30. Circle Technologies Inc., his family’s construction company based in Carson City, had done work at Vistana. It’s not known whether that contract had anything to do with him becoming a board member.
Castro certainly knew of the federal criminal investigation involving Vistana made public almost two years earlier, and he had been questioned in the probe, though it’s not known if he was suspected of wrongdoing or whether the probe had anything to do with his death.
- March 2012: Nancy Quon, 51, is found dead in her Henderson condominium March 20.
Foul play is not suspected, police said, and friends say they’re confident her death will be ruled accidental or related to a medical incident and potentially could involve prescription drugs or alcohol.
Her death followed a series of bizarre events in 2010, after she had lost much of her construction defect work after publicity about the September 2008 FBI raid on her office.
In the 2010 incidents, she survived a house fire at her home and she and her boyfriend were later arrested on drug charges.
Prosecutors said the fire was an arson in a Quon suicide plot and — after that failed — the drug incident related to a planned second suicide attempt in which her boyfriend would have assisted her by providing the drugs.
Quon denied these assertions.
- March 2012: David Amesbury, 57, dies in what is reported to be a suicide by hanging.
He pleaded guilty in October to conspiracy to commit mail and wire fraud and to conspiracy to commit bank fraud for his role in both the HOA election-rigging scheme and a related crime in which false information was provided to a bank for a loan for the Courthouse Cafe. Amesbury’s partners in the cafe were Benzer and retired Metro Lt. Ben Kim, Lisa Kim’s husband.
Less than a month after pleading guilty, Amesbury was found severely beaten on a Henderson street — “knee-capped” during an altercation in a neighborhood where he had apparently gone to meet someone, two insiders said.
There have been four known deaths involving people linked to the probe of corruption in Las Vegas homeowners associations dating to 2008 or earlier.
— Steve Green
HOA scam 101: How it worked
Some details of the scam remain hidden, but so far it has focused on construction company owner Leon Benzer and Nancy Quon, an attorney who specialized in construction defect lawsuits who was found dead in her Henderson condominium in March. The cause of death is unknown, but foul play is not suspected.
The accusers in lawsuits against Benzer and Quon’s estate allege the scheme boiled down to Benzer being given repair work — and attorneys being given legal work — at condominium complexes, not through competitive bidding, but by cheating.
To win the work for himself and his attorney friends, Benzer made sure the condo homeowners association boards that awarded the bids were controlled by his cronies, say those behind the lawsuits.
They say he stacked the boards with friends and employees of his construction company through fraudulent means involving phony or suspicious condominium purchases, making his pals eligible to run for the boards. Without revealing their ties to Benzer, the conspirators would then win board elections that were rigged by crooked HOA management companies and attorneys.
Once elected, the litigants say, Benzer’s pals would hire attorneys friendly with Benzer for legal work representing the HOAs.
Much of this work went to Quon, whose practice revolved around suing builders of condominiums and homes for construction defects. After she won multimillion-dollar settlements from the builders and took hefty cuts for herself for legal fees, the boards would then turn most of the remaining settlement money over to Benzer in the form of repair contracts.
At least in Vistana’s case, it’s alleged that Benzer and his coconspirators then pocketed most of the money instead of using it to fix the condos, which lawsuits alleged had defective waterproofing and plumbing leading to leaks and mold. The suits also alleged problems with landscaping, drainage, foundation, framing, roofing, electrical, stucco, window, door, floor and drywall assemblies and systems.
Prosecutors haven’t revealed how much money the scam netted the perpetrators, but the 732-unit Vistana community claims it was harmed to the tune of $6.65 million by Benzer. That’s how much it claims to have paid Benzer’s company for work that was never performed. On top of that, Vistana homeowners claim Quon and other attorneys in the lawsuit kept $11 million for themselves in “grossly exaggerated” fees and costs.
Several of the guilty pleas obtained by prosecutors so far confirm this is the way the scheme worked, but it’s important to note prosecutors have not charged Benzer, who denies wrongdoing. He is known to be a key target of their ongoing probe.
More details likely will be revealed this summer with additional guilty pleas and indictments.
As far as what’s known to have occurred, perhaps the most unusual part of the story is that the scammers operated brazenly — hiding in plain sight — for five years.
Until FBI and Metro Police raids shut down the scam in September 2008, there was no known effort by state regulators or law enforcement to expose the scammers and crack down on them in a consolidated fashion.
It could have been done: Between 2003 and 2008, several groups of homeowners at the affected communities knew they were being victimized, and they fought back with lawsuits involving public court hearings and complaints to state regulators and law enforcement officials.
“In this case, there were some red flags and people (in authority) just didn’t see them,” Toussaint said.
“What’s curious is that it’s my understanding some of the homeowners at Vistana delivered this information to the state Attorney General’s Office and nothing really came of that. It wasn’t until the FBI became involved that we really started seeing activity,” said attorney Paul Terry Jr., who believes his law firm was among the first to be victimized in the scheme.
The scam — at least what’s known of it — was easily detected by affected homeowners.
For one thing, it relied on HOA board and recall elections in which suspicious homeowners could compare the returned ballots to condo ownership records to see who exactly voted and where the ballots were mailed from.
In one case from 2008, involving the Park Avenue community, suspicious owners discovered that the scammers had mailed ballots from owners in Florida and all over California.
The fraud was uncovered when it was noticed that the returned envelopes all had a Long Beach postmark and were sent in two bulk mailings, with postmarks covering just two days.
By 2008, lawyers hired by victimized homeowners and HOAs were so familiar with the alleged scammers that, in a lawsuit that year involving an election at the Pebble Creek Village community, they dubbed a group of them “The Three.”
That was because of their ties to Benzer and because two of them, as HOA board members or candidates, kept showing up in lawsuits over disputed HOA elections in other communities.
“The Three” were retired Metro Police Lt. Christopher Van Cleef, who committed suicide later that year after the FBI and Metro moved to shut down the scam; fellow retired Metro Capt. Frank Sutton of the vice/narcotics squad, who has pleaded guilty for his role in the scam; and Benzer employee Ralph Priola.
“This is not the first time that Sutton or Van Cleef have been accused of false ballots and questionable conduct,” the attorneys in the Pebble Creek case said of the former officers, citing their activities at Park Avenue as well as the High Noon and Mission Ridge developments. “This is also not the first time that other homeowners have discovered such wrongful actions and voted against Sutton and Van Cleef.”
The scam typically relied on condominium purchases by “straw buyers” who would then try to get elected to HOA boards.
Straw buyers are individuals purchasing property in name only and on behalf of a hidden investor. In these cases, the straw buyers were typically friends with, or people who worked with, Benzer and property management company bosses.
Their purchases created an extensive paper trail, much of it public, involving such land records as mortgage documents. Homeowners used the election and property records in several lawsuits initiated in the 2000s to reverse the results of crooked elections or to block efforts by candidates tied to Benzer to get elected.
Although Quon, before her death in March, maintained her innocence and Benzer has vowed to fight allegations of wrongdoing, property owners between 2003 and 2008 were able to connect the dots linking them to apparent takeover attempts of their HOA boards.
“We knew there was fraud and corruption going on,” Vistana condo owner Wanda Murray told Sun columnist Jon Ralston in 2008 after the conspiracy was made public with FBI and Metro raids of the alleged participants’ offices. “They (the FBI) wouldn’t even talk to us. They said it was a civil matter. They said go to the district attorney. So we went to the district attorney. We were turned away. They said, ‘We don’t want it.’
“We called and talked and sent messages and emails to every state official we could find. We begged and pleaded all the way to the legislators, and nothing happened.”
For reasons that haven’t been disclosed, opinions appeared to change in law enforcement, probably in 2007. After what was likely a covert investigation that lasted for months, in September 2008, Metro Police and the FBI initiated their raids.
Terry represented what he believed to be the legitimately elected Vistana HOA board in 2003 when the alleged scammers launched their first apparent effort to interfere with the business of an HOA — Vistana’s — so that the HOA would award work to Quon and Benzer.
That alleged effort involved real estate agent and property manager Dennis Green, who tried to remove the Vistana HOA board. It’s unknown if Green knew of the alleged scam or if he was duped into participating by Benzer, Quon or both.
Green’s involvement appeared to stem from his term as president of the HOA board at the Pacific Legends Green Valley condominium community in Henderson, where a construction defects case led to the board hiring Benzer’s company, Silver Lining Construction, to make repairs.
In 2003 — the same year that Silver Lining was selected for the Pacific Legends job — Green and Benzer arranged a deal in which Benzer sold him, with no money down, one of the condominiums at the newly built Vistana condo development at Durango Drive and the Las Vegas Beltway.
Attorneys at the time noted it was curious that Benzer purchased the condo just three days before selling it to Green for $126,000. Even more curious was that a few days before Benzer bought the unit and sold it Green, Green as a non-owner and his attorney had shown up at an association meeting where potential construction defect legislation was discussed.
“Nancy Quon, Dennis Green, Mark Kulla (attorney for both Benzer and Quon) and Leon Benzer are all connected. You can draw your own conclusions regarding the motivation Mr. Green has in acquiring a condominium in Vistana, hiring an attorney for the July 23 meeting (before even Benzer acquired the property, much less Mr. Green); and orchestrating an effort to replace your board of directors,” said a letter from the Vistana board to condo owners.
Once Green became a Vistana homeowner, attorneys for the HOA board complained he had obviously been planted there by Benzer and Quon, who had sued Vistana’s developer for construction defects on behalf of a group of homeowners.
Her suit was competing with another construction defect suit filed by Terry’s firm. Terry’s suit was filed on behalf of the HOA as opposed to individual homeowners. Green’s apparent mission was to stop the Terry lawsuit so Quon’s could proceed — and that likely would be followed by Green trying to get on the HOA board so he could award work to his friend Benzer, Terry claimed at the time.
Green even sued the Vistana HOA board in hopes of blocking Terry’s lawsuit. The suit didn’t disclose his ties to Benzer or that Green was part of a Benzer-created group called Safe Homes Nevada that was lobbying the Nevada Legislature for construction defect legislation friendly to plaintiff’s attorneys, like Quon.
HOA attorneys noted that at the time, one of Benzer’s long-time attorneys, Kulla, also was representing Quon as Quon fought efforts by the Vistana board to force her to drop her construction defect suit.
Green’s suit also didn’t disclose his ties to Quon, which were confirmed when Green complained about the way Quon was being treated at Vistana after he sent her to the community, lawsuit records show.
His suit was unsuccessful. Green declined comment.
Green at some point also connected and worked with community association manager Lisa Kim, a key player in the HOA election-rigging conspiracy who has pleaded guilty. She was involved in multiple HOAs that hired Quon and Benzer, and she admitted to knowingly participating in or covering up rigged elections.
Other issues may be resolved as scandal unfolds
- • Some clarification may be forthcoming on whether the scandal was related to the beating of attorney David Amesbury prior to his death by suicide as well as three other untimely deaths.
Some potential witnesses are at minimum feeling intimidated, sources say, and some are terrified.
“People are scared,” said attorney Matthew Callister, who has launched a class-action lawsuit on behalf of homeowners against alleged participants in the conspiracy and has been talking to potential plaintiffs.
- • The number of HOAs affected by the criminal conspiracy may grow as more guilty pleas and indictments come in. For instance, attorneys say a blatant election-rigging scheme at the High Noon at Boulder Ranch community in Henderson was detected and stopped in 2006, but it hasn’t yet shown up in federal plea bargain agreements.
- • It wouldn’t be surprising to see incidents in Reno and as far away as Florida show up in lawsuits and criminal cases. That’s because Nancy Quon had been involved in construction defect lawsuits in Washoe County and Florida and because Las Vegas property manager Lisa Kim, who has agreed to plead guilty in the Las Vegas case, also operated in Florida.
- • Before the collapse of her business amid bad publicity tied to the FBI raid of her office and other locations, Quon and her firm had borrowed millions of dollars to finance her lawsuits. Her firm was unable to pay back the loans after its collapse and ultimately was taken over by a receiver. The receiver has already sued one HOA to recover money on behalf of the lenders. Look for this issue to heat up as HOAs will argue they were defrauded by Quon and owe her nothing.
- • Before her death, Quon had denied wrongdoing in the HOA corruption scandal. Now that her estate is being sued by aggrieved homeowners, its attorneys will have to decide whether to settle or to fight by trying to prove her innocence.
As the Las Vegas HOA corruption scandal unfolds this year and through 2013, attorneys and real estate industry insiders say they’ll be watching for movement on the following related issues:
— Steve Green
Hiding the ties?
Generally, prosecutors say, community managers participated in the scheme by recommending straw buyers for HOA board elections and then making sure they were elected through fraudulent means ranging from forged ballots to delivering ballots to corrupt attorneys serving as supposedly neutral election masters. The attorneys would then count the ballots in ways to ensure Benzer cronies were elected.
HOAs and homeowners now suing Benzer and the Quon estate say the success of the conspiracy relied on participants hiding their ties to the ringleaders — Quon and Benzer, in their view.
In an active racketeering lawsuit against Benzer, Quon’s estate and others, for instance, Vistana alleges former board members hid their ties to Benzer.
Despite the failure of Green’s lawsuit, Quon eventually took over the Vistana construction defect lawsuit.
That was after candidates, who prosecutors say were planted by the ringleaders of the scam, won election or appointment to the Vistana board, taking it over, and then fired Terry’s firm, ending his role in the construction defect suit.
Quon and attorneys allied with her, Kulla of the firm Spilotro & Kulla and Eckley (Marty) Keach, then filed a new lawsuit against the builder of Vistana over the defects.
Condo owners later sued the allegedly Benzer-controlled board, saying they had to turn to the court because efforts to get the state Real Estate Division, which regulates HOAs, to intervene had been fruitless.
“They didn’t even investigate, so there was nothing done,” Murray testified during a hearing in December 2005. “They just said the case was closed. One week, the investigation was done and closed.”
Court records show the Real Estate Division fielded complaints about election problems from homeowners at multiple HOAs affected by the scam over the years and in some instances assisted with advice on how to conduct new elections or recall elections.
One factor that apparently tied the hands of regulators is that, at the time, there was nothing in Nevada law specifically outlawing the rigging of HOA elections. This is why most of the federal guilty pleas so far in the scam are for mail and wire fraud. The Nevada Legislature, in response to the problems at Vistana and elsewhere, has now made such tampering a felony.
A Real Estate Division spokeswoman said the division had no comment on Vistana, where homeowners were the most active in seeking help from state and local agencies, legislators and the FBI.
When collusion is suspected in HOA matters, such cases are turned over to law enforcement, the spokeswoman said while declining comment on whether that happened with Vistana.
The first known law enforcement activity involving Vistana occurred in 2008, when the FBI and Metro served search warrants on the offices of Quon, Benzer and Kim.
Asked about assertions by Quon supporters that Quon had taken concerns about HOA board election irregularities to the Nevada Attorney General’s Office, an attorney general spokeswoman’s only comment was that all the files on the matter had been turned over to another law enforcement agency. That agency is likely the FBI, which has been leading the investigation.
With the homeowners’ case against the allegedly Benzer-controlled Vistana board under way in January 2006, an attorney in Quon’s firm, James Christensen, said in court that “we keep on getting mud thrown on the board” and that the lawsuit was about “this alleged Oliver Stone-like conspiracy that the plaintiffs always complain about.”
Despite the homeowners’ lawsuit, plea-bargain records show Benzer cronies remained in control of the board thanks partly to a rigged election run by attorney Brian Jones of the now-disbanded law firm Kummer Kaempfer Bonner Renshaw & Ferrario. Jones has pleaded guilty for his role in the scheme.
Quon went on to settle the Vistana construction defect lawsuit in June 2007 for $19.1 million.
Five years later, the Vistana HOA is pursuing its racketeering lawsuit against Quon’s estate; Benzer; Silver Lining Construction; attorneys who worked with Quon, including now-disbarred attorney Jeanne Winkler, Kulla and his firm, Spilotro & Kulla; Kim; and a host of other defendants.
The suit alleging racketeering says that of the $19.1 million, nearly all of it went to Benzer, the attorneys and the other defendants and that just $600,000 of repair work was performed.
A separate class-action lawsuit representing homeowners at Vistana and several other communities has been filed by attorney Matthew Callister. It names some of the same defendants, particularly the estate of Quon, Benzer, Kim and Winkler.
Kim and Winkler have pleaded guilty for their roles in the HOA scam. Kim and her husband, Ben Kim, a former Metro Police lieutenant, have also pleaded guilty in a bank fraud case involving Ben Kim’s partnership with Benzer and others in the Courthouse Cafe in downtown Las Vegas.
A request for comment was placed with Kulla and his attorney.
As for Benzer, he declined comment through his attorney except to say he would vigorously fight the allegations against him.
In Benzer’s view, Vistana owes his company some $750,000 for unpaid construction invoices. That’s what he claimed in a lawsuit filed in 2008, a few months after the FBI raids shut down the alleged HOA board-rigging conspiracy. That suit is still active.
Sutton hasn’t been sued, but he pleaded guilty in the criminal probe. He couldn’t be reached for comment.
In a lawsuit deposition in 2007, Sutton said he had worked for Benzer in “consulting, security, management, various things that he’s got going.” Asked if had talked to Benzer about buying a specific property, Sutton said “possibly.”
Sutton was also asked why he had served or tried to serve on multiple HOA boards. He said that besides his home, he had bought six other properties around town as investments.
“I like to have a say-so on the properties that I buy, and I just want to keep the values as high as I can because they’re mostly investments,” he said. “I figure if I’m going to purchase the property, I want to have the best opportunity to have my say-so within the community and to protect people in the valley and keep the area safe and keep values up.”
As for Quon, attorneys fighting her in construction defect suits were suspicious of her ties to Benzer for years.
In hopes of disproving there were any inappropriate ties, her law firm in 2007 reported that Silver Lining Construction was one of five construction companies in Las Vegas providing reconstruction services to homeowners associations.
Quon had used Benzer’s firm for destructive testing in less than 15 percent of her construction defect cases and his firm had done repair work for less than 15 percent of the associations represented by Quon, her law firm said at the time.
Court records for the 27 people who have pleaded guilty in the HOA fraud and a parallel investigation involving the Courthouse Café spell out a simple motivation for their crimes: money.
A plea deal signed by political operative and Benzer business partner Steven Wark, who served on the Vistana board, says: “Defendant was given cash payments and received an interest in the Vistana condominium by or on behalf of his co-conspirators for his assistance in purchasing the property, obtaining HOA membership status, using his position to manipulate the HOA’s business and to further the goals of the conspiracy, and to enrich the co-conspirators at the expense of the HOA and the bona fide homeowners.”
The defendants so far have pleaded guilty to conspiracy to commit mail and wire fraud, which carries a maximum 30-year prison sentence. Prosecutors haven’t indicated what their sentencing recommendation will be, but plea agreements indicate that defendants face much shorter prison terms given their lack of criminal records and their agreements to cooperate in the ongoing investigation.