Full Text of Sample Construction Defect Law and Litigation Articles

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1 Full Text of Sample Construction Defect Law and Litigation Articles Benzer pleads guilty in massive Las Vegas Valley HOA scheme Jeff German Las Vegas Review-Journal, January 23, 2105 Pages 2-3 The king of scandals; Legislature should address HOA laws, add more clarity, accountability Sun Editorial Las Vegas Sun, June 10, 2012 Pages 4-5 1

2 Benzer pleads guilty in massive Las Vegas Valley HOA scheme Jeff German Las Vegas Review-Journal, January 23, 2105 Former construction company boss Leon Benzer pleaded guilty Friday in the massive scheme to take over and defraud homeowners associations in the Las Vegas area. Benzer, 48, who prosecutors say was the mastermind of the corruption scheme, entered guilty pleas to a total of 19 conspiracy, fraud and tax evasion counts in two separate federal indictments. In his hastily prepared plea agreement with prosecutors, which came together in recent days, Benzer provides a lengthy explanation of his leadership role in the multimillion-dollar scheme. But his agreement does not call for him to testify against the remaining defendants charged in the HOA conspiracy, which prosecutors allege occurred at 11 HOAs across the valley between 2003 and U.S. District Judge James Mahan set an Aug. 3 sentencing date for Benzer, who is free on his own recognizance. Prosecutors are recommending a reduction in prison time for Benzer because of his acceptance of responsibility for his crimes, but Justice Department lawyer Charles La Bella said there is no agreement on how much time behind bars Benzer should serve. That will be left to Mahan and his assessment of the federal sentencing guidelines in Benzer s case. Defendants to stand trial on Feb. 23 include attorney Keith Gregory, Benzer s half-sister Edith Gillespie and bail bondsman Charles McChesney. A sixth defendant, Stephanie Markham, is being tried separately on charges of lying about her role in the scheme to the FBI and to a federal grand jury. Benzer, who once owned Silver Lining Construction Company, and 10 others were indicted in the scheme in January He was indicted again several months later on charges of evading $1.2 million in personal and company taxes. The charges relate to more than $7 million Benzer and his company obtained through a fraudulent contract with the Vistana condominium development to do construction defect work. Five of the 10 defendants charged in the first indictment with Benzer, including attorney Barry Levinson, previously pleaded guilty and are waiting to be sentenced. The sweeping investigation that led to the indictments, spearheaded by the Justice Department s Fraud Section in Washington, is thought to be the largest public corruption case federal authorities have brought in Southern Nevada. The FBI, Las Vegas police and IRS all played key roles in the long-running investigation. In all, 36 defendants have pleaded guilty since August Most are cooperating and waiting to be sentenced after the trial. [continued on next page ] I-2 2

3 One defendant, attorney David Amesbury, committed suicide in March 2012, days after a key target of the investigation, construction defect lawyer Nancy Quon, took her own life before being charged. Two defendants, Arnold Myers and Darryl Scott Nichols, died of natural causes after striking plea deals with the government. Prosecutors are seeking nearly $25 million in restitution for the HOAs and lending institutions defrauded in the takeover scheme. In his plea agreement, Benzer admitted that he developed the scheme with Quon, who loaned him $2 million to get it going. The goal was to gain control of the HOA boards and then steer construction defect litigation contracts to Quon s law office, the agreement said. Quon was to give Benzer 10 percent of any defect judgments she won. Benzer also would obtain construction defect repair contracts from the corrupted HOA boards. According to prosecutors, Benzer, Quon and others funneled more than $8 million through secret bank accounts to help them land the lucrative contracts. Benzer in his plea agreement admits he had the scheme covered from all angles, including setting up straw buyers to infiltrate HOA communities and get elected to their boards. Members loyal to Benzer were elected through ballot stuffing, bribery and other dirty tricks, the plea agreement said. Attorneys on Benzer s payroll were hired to provide legal advice to the boards and to oversee the election rigging, and Benzer-friendly community management firms were put in place to run the daily affairs of the HOAs. Prosecutors have identified 11 condominium associations as victims of the scheme: Vistana, Park Avenue, Chateau Versailles, Chateau Nouveau, Jasmine, Sunset Cliffs, Palmilla, Pebble Creek, Mission Ridge, Mission Pointe and Horizons at Seven Hills. The conspirators gained control of half of those HOA boards and were working on the others when authorities broke up the scheme in 2008 with raids across the valley. ### I-3 3

4 The king of scandals; Legislature should address HOA laws, add more clarity, accountability Sun Editorial Las Vegas Sun, June 10, 2012 Homeowners associations are ubiquitous in Southern Nevada, so the unfolding HOA scandal has garnered plenty of attention. It s troubling. So far, more than 25 people have pleaded guilty in a case that has been stunning for the brazenness and scope of the crimes, and prosecutors expect to indict more people in their federal corruption probe. The investigation centers on an attorney and a contractor who allegedly referred work to each other in construction defect cases. But as Steve Green reported in the Sun last week, the allegations blossom from there. Prosecutors have outlined a major scheme to control HOAs and line the pockets of those involved. Bloomberg Businessweek last year called it The king of all Vegas real estate scams, and that s not an overstatement. The facts that have been revealed so far are almost too much to believe. For several years, HOA boards were allegedly stacked through dubious means, including fraudulent ballots and straw purchases so those buyers could be elected to the boards to benefit those involved. Some management companies even went along with it all as the HOAs were overbilled for repairs and sometimes charged for work that didn t get done. Before anyone turns this scandal into something bigger than it is, there is no evidence that this type of behavior is pervasive. Court documents name just 12 of the 2,356 HOAs in Southern Nevada, so this case shouldn t be used to tarnish the many upstanding associations and management companies. However, this case is important not only because of the breadth of the conspiracy but also because of those who pulled it off. Although there are a few high-profile people involved, the indictments largely target people who could have been your next door neighbor and in many cases purportedly were. They include attorneys, management company employees and three retired police officers a captain and two lieutenants. It is shameful that those involved targeted average homeowners who had entrusted them to run their HOAs. They have upended the concept of a common interest community. It s notable that the case was broken open due to the persistence of some condo owners who suspected and then rooted out the problems. Some residents knew there were serious problems, but they had a difficult time getting the authorities attention. [continued on next page ] I-4 4

5 In 2008, after the investigation by the FBI and Metro Police became public, condo owner Wanda Murray told Sun columnist Jon Ralston that originally the FBI wouldn t even talk to us. They said it was a civil matter, she said. 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 s to every state official we could find. We begged and pleaded all the way to the legislators, and nothing happened. Thankfully, something finally changed and law enforcement took the matter seriously as it should have. This case reminds us that too often, HOAs aren t often taken seriously enough. The laws governing HOAs have been widely criticized by both advocates and detractors as being ineffective and complex, and it s time to see that change. The Legislature should work next session to clarify and simplify the law. HOAs should have the ability to carry out their work, but there should also be more transparency and accountability. As well, homeowners should have a clear way to address problems, and hopefully after this, authorities will listen to their complaints. ### I-5 5