United States v. Benzer
| Decision Date | 08 December 2014 |
| Docket Number | Case No.: 2:13-cr-00018-JCM-GWF |
| Court | U.S. District Court — District of Nevada |
| Parties | UNITED STATES OF AMERICA, Plaintiff, v. LEON BENZER, KEITH GREGORY, et al., Defendant. |
This matter is before the Court on Defendant Keith Gregory's Motion to Sever Trial With Co-Defendant Leon Benzer (#328), filed on August 5, 2014. The Government filed its Response to Defendant Gregory's Motion to Sever (#339) on August 22, 2014. Defendant Gregory filed his Reply in Support of his Motion to Sever (#344) on September 5, 2014. The Court conducted a hearing on Defendant's motion to sever on September 16, 2014.
Also before the Court is Defendant's Motion to Allow Defendant Keith Gregory Through and Including September 26, 2014 to File a Motion to Allow the Filing of the Leon Benzer Proffers Under Seal (#356). The Government filed its Response (#359) to that motion on September 19, 2014. Defendant Gregory filed his Reply (#360) on September 25, 2014. Defendant Gregory thereafter filed his Motion to Seal Proffers Made by Leon Benzer (#368) on September 26, 2014. Defendant Gregory further filed a Motion for Leave to File a Supplemental Memorandum in Support of His Motion to Seal the Proffers Made by Leon Benzer (#413) on November 20, 2014. The Government filed its Response (#417) on November 25, 2014 and Defendant Gregory filed his Reply (#421) on November 25, 2014.
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The indictment in this case charges the Defendants with conspiracy to commit mail and wire fraud in violation of 18 U.S.C. § 1349; wire fraud in violation of 18 U.S.C. § 1343; and mail fraud in violation of 18 U.S.C. § 1341. Indictment (#1). The indictment alleges that Defendant Leon Benzer, the owner of Silver Lining Construction Company (SLC), together with an experienced construction defects attorney, now deceased, were the masterminds of a conspiracy whose object was to take control of the boards of directors of various condominium homeowners associations ("HOAs") through the election of directors controlled by the conspirators.1 These controlled directors would then vote to award legal, construction defect and other work for the associations to entities controlled by the conspirators, including SLC. The Government has further summarized the alleged scheme in its response to Defendant Gregory's motion to sever.
The Government alleges that Defendant Benzer and Quon targeted several Las Vegas homeowners associations which had existing or potential construction defect cases. Benzer and Quon allegedly funded the purchase of condominium units at the HOAs in the name of "straw purchasers" or "straw buyers" who used funds supplied by Benzer and his partner to either purchase the condominium units for cash or to obtain bank financing for the purchases. The Government alleges that the straw buyers made material misrepresentations on their loan applications including that they intended to occupy the condominiums and that no part of the purchase prices or down payments were borrowed. The Government alleges that virtually none of the straw buyers occupied the condominiums and that Defendant Benzer rented the condominiums to generate income to cover part of the cost of the fraudulent scheme. The Government also alleges that Benzer agreed to pay the mortgage payments and homeowners association fees for the straw buyers and entered into "investment agreements" with the straw buyers that were hidden from the financial institutions who funded their purchases. The Government also alleges that Benzermaintained control of the condominiums by directing that a percentage of the ownership interest in the condominium purchased by the straw buyer be transferred to a trusted insider so that a straw buyer could not dispose of the condominium without Defendant Benzer's approval.
The Government alleges that the straw buyers agreed for a price to run for election to the homeowners association boards, and that at various times during the conspiracy, Defendant Benzer directed the rigging of board elections to insure that his chosen candidate was elected. The rigging of elections allegedly included sending in forged ballots from nonresident condominium owners. Once elected, the planted board members would receive instructions from Benzer as to what actions to take. Defendant Benzer allegedly directed his captive board members to hire designated property managers, attorneys and contractors. The Government alleges that Defendant Benzer "assembled a large cast of characters to assist him in hijacking the HOA boards." Response (#339), pg. 5. This included real estate agents to locate and facilitate the purchase of condominiums and straw buyers with good credit to qualify for loans and who were willing to run for election to the HOA boards and follow Benzer's instructions. The alleged cast of conspirators also included attorneys hired by the planted board members "to give the boards a patina of legitimacy while following Benzer's instructions"; notaries to facilitate the many transfers between and among straw buyers; and "financial 'bean-counters' who made sure Defendant Benzer's co-conspirators were all paid for their efforts in advancing the scheme." Response (#339), pgs. 5-6.
In addition to Defendants Benzer and Gregory, the remaining Co-Defendants charged in the indictment are Charles McChesney, a private investigator who was allegedly a straw buyer and SLC controlled board member at the Chateau Nouveau HOAs. Indictment (#1), ¶ 14; Barry Levinson, an attorney who allegedly did work for SLC and Benzer, acted as general counsel at the Park Avenue and Pebble Creek HOAs, and at the direction of SLC and Benzer purported to represent an HOA in an effort to secure board positions for SLC and Benzer controlled candidates, ¶ 15; Salvatore Ruvolo who allegedly was a straw buyer and SLC controlled board member at the Park Avenue and Chateau Nouveau HOAs, ¶ 20; David Ball, a real estate agent who allegedly was a straw buyer and SLC controlled board member at the Chateau Nouveau HOA, ¶ 21; and Edith Gillespie, Defendant Benzer's half-sister, who allegedly was a straw buyer at an HOA, and whoallegedly recruited other straw buyers and board candidates on behalf of Defendant Benzer, ¶ 22.
The indictment alleges that Defendant Keith Gregory "was an attorney licensed in Nevada who did work for Benzer and SLC, and who through the actions of SLC controlled boards, was hired and acted as general counsel at the Vistana and Sunset Cliffs HOAs and who, at the direction of SLC and Benzer, purported to represent an SLC and Benzer controlled board candidate in an action against an HOA board that SLC and Benzer were attempting to control." Indictment (#1), ¶ 14. The Government has further described Defendant Gregory's alleged involvement in the conspiracy in its response to his motion to sever. To the extent possible, the Court summarizes the Government's factual allegations against Defendant Gregory, without including the Government's argumentative characterizations.
The Government alleges that prior to 2006, Defendant Gregory represented Defendant Benzer in matters before the Nevada State Contractors Board. Defendant Gregory's participation in the conspiracy allegedly began in September 2006 when Defendant Benzer sent Mr. Gregory an email stating that he had some associates who were trying to run for the HOA board at the Horizon at Seven Hills HOA, but were encountering problems. According to Benzer's email, the builder was resisting turning the HOA over to the residents. Benzer inquired whether Gregory would be interested in filing a motion or legal action for the district court to oversee the HOA election process. Government's Response, Declaration of Charles LaBella, Exhibit 1. The Government alleges that Benzer had already purchased two condominiums at Horizon at Seven Hills in the name of straw buyers and was laying the groundwork for an HOA board takeover. There is no indication in the email that this information was disclosed to Gregory. The Government does not assert that Mr. Gregory actually filed a lawsuit regarding the HOA election at Horizon at Seven Hills or engaged in other activity at Benzer's request in regard to that condominium complex or its homeowners association.
The Government also alleges that Defendant Benzer stated in the email to Mr. Gregory that he had Id., Exhibit 1. Defendant Gregory allegedly responded to this email by stating: Benzer responded that he would have "Ralph or maria forward you some information to get started." Id. The Government alleges that "Ralph" was Ralph Priola, another alleged conspirator. Government's Response (#339), pg. 7.
The Government alleges that Defendant Gregory's first substantive involvement in the conspiracy occurred when Defendant Benzer directed him to sue the Jasmine HOA on behalf of Benzer's straw buyer, Arnie Myers, to facilitate Myers' election to the HOA board of directors. The Government further alleges that Benzer purchased three condominiums in Jasmine in the names of straw buyers. When Jasmine announced three vacancies on its board, Benzer's straw buyers ran for the vacant positions. The attorney for the Jasmine board, who was not controlled by Benzer, became suspicious of these candidates who had never been seen at board meetings. The attorney determined that...
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