Points to be aware of in HOA scandal

The Vistana condominiums at the Las Vegas Beltway and Durango Drive took a hit when, after winning a $19.1 million settlement in a defect lawsuit, the vast majority of the money wasn’t used to correct the defects.

The number of defendants in the criminal case involving HOA corruption could eventually top 50, making this one of the larger criminal schemes in Las Vegas history. But to put things in perspective, there are 2,356 homeowner associations in Clark County and 2,979 statewide, meaning just a small fraction were affected by the scam.

Which condominium complexes were affected?

Lawsuits and federal plea bargains name these developments:

Chateau Versailles, Chateau Nouveau, Horizons at Seven Hills, Jasmine, Mission Pointe, Mission Ridge, Palmilla, Park Avenue, Pebble Creek, Sunset Cliffs, Terrasini and Vistana

Who was harmed?

Attorneys say the scam didn’t affect insurance companies that paid construction defect lawsuit settlements, since the defects were real and lawsuits would have been filed regardless of the scam.

Homeowners in at least one community — the Vistana condominiums – took a hit when, after winning a $19.1 million settlement in a defect lawsuit, the vast majority of the money wasn’t used to correct the defects.

Instead, it went to attorneys and a construction company in on the scam that then made just “nominal and superficial” repairs, claim those pressing the lawsuit.

In a lawsuit against the company, Silver Lining Construction, the Vistana homeowners say the firm received more than $7.25 million but that the value of the work performed was no more than $600,000.

Can it happen again?

During the early and mid 2000s, when the scam was operating, it wasn’t specifically illegal to rig an HOA board election. Attorneys say that’s why most of the guilty pleas so far are for wire and mail fraud.

But in response to the scam, the Legislature has made it a felony to fraudulently alter the results of an HOA election.

Who was involved?

For the most part, the 30-plus people whose names have come up in the investigation aren’t well known to most Las Vegans. They include attorneys, retired police officers and community association managers and employees.

Probably the best known name to surface is that of the late attorney Nancy Quon, once a local success story who boasted of winning more than $100 million of construction defect lawsuit settlements during her career that started in 1996 and continued strong through September 2008, when her office was searched and files seized as part of the corruption investigation.

Quon was known as an aggressive marketer of herself, for a time appearing on a TV show called “Homeowner Talk” in which she, fellow attorney John Leach and guests talked about community association and construction defect law and issues.

Interviews with those who knew and worked with Quon and those who were on the opposite side of litigation with her yielded dramatically different opinions on how deeply she may have been involved in the scam.

At minimum, she and construction company owner Leon Benzer were referring work to each other, lawsuits suggest. But when it comes to whether she was involved in rigging HOA board elections, some say she may have been duped and used by Benzer, others say she had nothing to do with it and others believe she was in on it from the beginning.

Two attorneys familiar with Quon and supportive of her believe that at times she went to law enforcement agencies with concerns about potentially rigged HOA board elections and about competing law firms winning HOA work because of their cozy ties with HOA management companies.

A third attorney familiar with Quon doubts that happened, at least when it comes to suggestions she had presented concerns to the Nevada Attorney General’s office.

Another name that continually pops up in the investigation is that of Benzer, thought to be the key target of the federal probe. He owned the now-closed Silver Lining Construction and a similarly-closed club near the Palms called Benzer’s.

Benzer, now a licensed taxi driver, was born in Long Island and established himself in the construction industry in Las Vegas in the 1990s.

Benzer doesn’t talk to the media, according to his attorney.

But online profiles say that by early 2008 — a few months before the FBI raids — he had launched his own brand of tequila, ‘’Benzila,’’ made from the agave plant at his farm in Baja, Mexico. He also had started a charity called the Benzer Autism Foundation, online profiles say.

Steve Wark, who has pleaded guilty, is known in political circles as a Republican campaign strategist and for hosting radio shows. He and his family developed a business called Revage Medical Spa.

Other alleged key players in the HOA scheme, who have been hit with criminal charges or have faced civil lawsuits, include community association managers Lisa Kim and Mary Ann Watts, the late attorney David Amesbury, disbarred attorney Jeanne Winkler and three retired Metro police officers. They are the late Lt. Christopher Van Cleef, Lt. Morris Mattingly and Capt. Frank Sutton.

Kim and her husband Ben Kim, a retired Metro lieutenant, and Amesbury separately pleaded guilty in the scam at the Courthouse Café. Ben Kim, Amesbury and Benzer were partners in the café.



Previous Discussion:

Discussion 5 comments

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  1. Who was harmed? Homeowners in HOA communities are harmed every day by the capricious and wicked actions of their HOAs. It's not just the big conspiracies that hurt people. Little crimes occur constantly, that cost a few hundred dollars here and and there, and homeowners simply pay and pay, because there is no alternative. You can't take your HOA to small claims court. You can't get satisfaction from the Ombudsman. There is no help for homeowners at all. When you are are targeted by a corrupt HOA, all you can do is bite the bullet and pay the fine, and hope you can stay under the radar in the future.
    Can it happen again? Of course it can! Just because the legislature passed a new law doesn't mean anything is going to change. When there is a profit motive, there are always going to be sharpies who will take advantage of their neighbors, whether their actions are illegal or simply immoral.

  2. I would like to dispute the statement, "Attorneys say the scam didn't affect insurance companies that paid construction defect lawsuit settlements, since the defects were real and lawsuits would have been filed regardless of the scam."
    I believe that the construction defect lawsuits were directed at every supplier and contractor involved in a project rather than those that had performed defective work. The defense costs for these innocent contractors and suppliers were huge and ultimately drove many of them out of business even though they did nothing wrong. The plaintiff's attorneys in these lawsuits are in a can't lose situation. The building industry was viewed as a personal ATM for the construction defect attorneys, the HOAs and the "repair" contractors.

  3. Part 1

    Sadly, the story above is simply a "cover story" which neatly packs away the economic corruption at 12 homeowners associations, so that other 'corrupt' homeowners associations and their sophisticatedly devious management companies can go their merry way and the abuse of homeowners and their pocket books can continue unabated in Nevada. Attorneys from the Dept. of Justice in Washington could stay in Las Vegas FOREVER, prosecuting HOA managers' and Directors' self-dealing, and never finish the job, because the crooks are continuously learning from what the DOJ lawyers are doing and because homeowners are barred, by Nevada law, from taking matters into their own hands in terms of filing litigation against HOA Directors and managers for wrongdoing.

    First, shame on you Steve Green and the Las Vegas Sun for quoting the President of CAI (Community Associations Institute) branch here in Nevada, without disclosing that CAI as it operates here in Nevada is a first and foremost and only a lobbying organization for HOA managers, management companies and entrenched Board of Directors members. One need only read the minutes of Nevada Legislature committees dealing with HOAs, year after year, to see that CAI always lobbies to maximize the powers of HOA Boards of Directors and their management companies, and always lobbies against new provisions in state law which would protect individual homeowners from abuse by their HOAs. In Nevada, CAI is NOT an organization which protects the rights of individual homeowners.

    Second, it's important to note that there are roughly 5 land developer-controlled HOAs in Las Vegas, "regulating" huge master planned communities, where by clever drafting of CC&Rs and in some cases by not-so-clever lying by the developer's employees who serve as Directors on those HOA Boards, the actual homeowners in these master planned communities probably NEVER will get control of their own HOA Boards of Directors, and never be rid of management companies cozy with or outright controlled by the master planned community developer. (When the management company for Summerlin was one of hundreds of companies controlled by Rouse which was put into Chapter 11 bankruptcy, the Las Vegas print press never covered the story and Nevada's Real Estate Division did nothing publicly to protect the HOAs the bankrupt management company "managed".)

    Third, it's useful to note that managers of HOAs and lawyers representing HOA Boards of Directors are carefully watching this Federal prosecution as a means of learning how they should maneuver to avoid prosecution or civil litigation for what they are doing.

  4. Part 2

    Fourth, until the Nevada Legislature abolishes the Ombudsman program, abolishes statutorily mandated arbitration and invalidates any CC&R required arbitration, many Nevada homeowners will continue to be denied their rights to equal protection, due process and access to the courts for redress of their grievances. Until those repeals of anti-homeowner laws happens, each and every homeowner living in an HOA should know that their State Senator and Assemblyman are not working in their best interest, and instead are working in cahoots with CAI and the sophisticatedly self-serving HOA managers and management companies. HOA management companies and managers know they are above the law, advise HOA Boards of Directors that they too are above the law, and that no aggrieved or abused or lied-to homeowner has any meaningful or economically feasible way to seek redress of their grievances.
    In short, the HOA managers and Directors know they can stick-it-to dissident homeowners and they do it all the time, with impunity.

    Fifth, the CAI/HOA manager community have undue influence over the Nevada Real Estate Division, and until that stops nothing will change in terms of manipulative and corrupt HOA managers. A complete sea change in who the Nevada Real Estate Division wants to protect will not happen unless Governor Brian Sandoval changes both the state employees on the executive level of NRED and the identity of the appointees to the "Commission" managed by NRED which is supposed to oversee and discipline HOA managers.

    Sixth, the legislative history of the requirement for homeowners complaints against their HOA Boards of Directors and HOA managers is directly traceable, through minutes of Nevada Legislature committes, to former Sen. Mike Schneider who has billed himself to the press "as the homeowners advocate". The reality about Sen. Schneider is that the legislative committee meeting minutes for the year the mandatory arbitration was imposed on Nevada homeowners show that it was Sen Schneider who justified that mandatory arbitration provision by saying, to his committees, 'There are too many lawsuits being filed by homeowners against their HOA Boards and management companies'.

  5. Part 3

    Bottom line, these criminal prosecutions relating to 12 homeowners associations change absolutely nothing for the benefit of the average homeowner living in an HOA in Nevada.

    Instead, the entire legislative scheme in Nevada is rigged to insulate HOA managers from their own wrongdoing, incompetence and waste and is rigged to protect HOA Board of Directors from their own lack of attention to and lack of supervision of what their managers are doing (as is required under the principal/agent common law.) The entire legislative scheme in Nevada is also rigged to protect the HOA Directors from consequences for stupidity or outright venality.

    Until each and every homeowner in a Nevada HOA has the right to go directly to District Court, to seek "redress of grievances", nothing will change. Shame on you Sen. Schneider and Nevada Legislators for affirmatively denying Nevada homeowners their rights to due process and equal protection in a court of law.