John L. Smith

HOA member calls response of state ombudsman's office 'inept'

In the glorified regulatory storefront operation called Nevada, Park Avenue condominium dwellers found they had a place to complain after they identified examples of apparent election fraud on their homeowners' association board.

It's a part of the Real Estate Division called the Office of the Ombudsman For Owners In Common-Interest Communities And Condominium Hotels. Surely that title alone strikes fear in the hearts of scofflaws.

By definition an ombudsman is an official appointed to investigate citizens' complaints. The independent voice for the little guy, that's an ombudsman.

At least, that's the idea.

With condominium associations across Southern Nevada reporting suspicious activity involving HOA board elections and the amazing ability of the Silver Lining Construction Co. and select litigators to gain access to millions of dollars in construction defect claims, the brewing trouble wasn't exactly a secret. When attorneys scored a $19 million settlement from Rhodes Homes in a construction defect case at Vistaña this year, the suspicions reached new heights.

In Park Avenue's case, the state office of the ombudsman rode to the rescue like the rocking horse cavalry.

On May 29, former board President Lee Lahargoue filed a fact-filled affidavit with the ombudsman calling for an intervention after apparent voter fraud was found in the April 24 HOA board election. In a letter dated July 29, Compliance/Audit Investigator II Steve Urbanetti delivered a response:

"The Division has completed the investigation on the above referenced case and has taken the action it feels is appropriate.

"Thank you for your assistance in investigating these matters. Should you have any questions, please do not hesitate to contact me."

Attempts by concerned Park Avenue homeowners to find what, if any, "action" the ombudsman's office thought was "appropriate" thus far have been unsuccessful.

But, hey, it's only October.

Now that the FBI and Metro have served search warrants in their investigation of possible election rigging and kickbacks involving construction defect contractors and litigators, the Park Avenue homeowners' concerns are departing the civil and entering the criminal realm. The ombudsman can relax in the grandstands.

Just what did Lahargoue and his fellow homeowners discover?

For one, a sudden and remarkable interest in the April HOA board election by absentee homeowners. At Park Avenue, the HOA is managed by Platinum Community Services LLC, which is also mentioned in law enforcement documents.

"Elections in the past got maybe 100, 110 votes," resident Tom Seablom said. "This past one had over 300."

On April 15, 11 ballots from homeowners living in cities such as San Francisco, Los Angeles, Modesto and Melbourne, Fla., arrived with a Long Beach postmark. On April 21, 11 more ballots from homeowners living in Los Angeles, Beverly Hills and even South Lake Tahoe arrived at the Platinum offices with that same Long Beach postmark.

On April 22, at least 66 envelopes were mailed to Platinum from local homeowners postmarked from the same Las Vegas post office.

A check of 10 absentee ballots revealed a disturbing trend: None of the out-of-state owners interviewed recalled casting a ballot.

"If you have any documentation that either of us have voted," absentee condo owner Barbara Lieberman wrote Lahargoue, "then that was done without our knowledge or consent."

Evidence of ballot stuffing was overwhelming. At least one of the board members elected that day, former Metro Capt. Frank Sutton, has just a 1 percent stake in a condo unit and has direct ties to a central figure in the investigation, Silver Lining Construction owner Leon Benzer.

So far, concerned board members and homeowners have managed to keep Silver Lining from doing repair work on the property despite the efforts of the company's allies. Homeowners obtained a temporary restraining order and are attempting to remove Sutton and HOA president Edward Lugo of Los Angeles from the HOA board. The controversy didn't prevent a Silver Lining representative from attempting to enter the development Wednesday, HOA Vice President Barbara Noto said.

Meanwhile, Department of Business and Industry spokeswoman Elisabeth Shurtleff on Friday cited confidentiality laws in declining to elaborate about what, if any, action was taken.

"Although a complainant may not know what action was taken, it does not mean that no action was taken by the Real Estate Division," she said.

Lahargoue and friends aren't buying it.

"If we had gone with the ombudsman, Silver Lining would have been in here," Lahargoue said. "We would have been in the same state that Vistaña's in. The ombudsman is totally inept in all this."

John L. Smith's column appears Sunday, Tuesday, Wednesday and Friday. E-mail him at Smith@reviewjournal.com or call (702) 383-0295.

Comments

Note: Comments made by reporters and editors of the Las Vegas Review-Journal are presented with a yellow background.

1. bruce.baxter Oct. 22, 2008 | 8:31 a.m. Report Abuse

   Another homeowner:
   
   I agree with your analysis. At least the current FBI investigtion has put the spotlight of the media upon the situation. Once the arrests start taking place it will regain its prominence in the media. However these investigations can take a long time.
   
   A lobbying effort is the only thing I can think of. Sadly, in this state it appears that federal intervention is required to fight corruption. Local and state government isn't up to the task.
   
   We need a grass roots organization. Unfortunately, the big money, most politicians and lawyers will be on the other side.

2. bruce.baxter Oct. 22, 2008 | 8:10 a.m. Report Abuse

   Anthem Homeowner:
   
   Earlier this morning I read Bob Frank's intervention affidavit recently filed with the Ombudsman's office that is posted on the Anthem Voice web-site. Wow! If you believe that the majority of your board is not serving the interest of the community, then in my humble opinion YOUR BOARD, AND NOT YOU, HAVE THE RIGHT ATTORNEY!!!
   
   It took me a couple of years to piece this puzzle together and certainly this is only a small portion of it. You have excellent contacts and it sounds like you were able to learn in a few days what took me a few years to begin to understand. Please keep digging, we are serving the greater good.

3. Concerned Homeowner Oct. 21, 2008 | 10:19 p.m. Report Abuse

   John Doe & Anthem Homeowner:
   
   The question is WHO could/would investigate the Real Estate Division for all of its apparent corruption?
   
   1. The Attorney General? Not likely. The AJ refuses to get involved in HOA matters.
   
   2. The Governor? Small chance--that would be bad politics for his party and create friction with the developers, CAI, HOA attorneys and real estate lobbyists. In addition, now that Mindy Elliott works in the Governor's office, and she has a high tolerance level for the Real Estate Division's misconduct.
   
   3. The Legislature? Not likely--with one or two exceptions. Re-election money from developers, construction companies, HOA attorneys and real estate companies dominate the policies and neglect to enforce the laws.
   
   4. FBI? Unlikely--due to low staffing and not unless there was political pressure to pursue RICO elements.
   
   5. US Attorney for Nevada? Maybe--if the State was powerless to clean up its own corruption in this area.
   
   We must remember that 500,000 NV citizens live in 3,000 HOAs. That is a big impact on tens of thousands of ELDERS! And, the current financial disaster is turning the "inconveniences" of unfair HOA governance into serious impacts on many elders.
   
   Maybe someone's elderly parents are getting bullied by the Division's misconduct (and worse) and someone in "high authority| will finally say "enough"!
   
   Who could lead the charge?
   
   Where is the homeowner champion?

4. bruce.baxter Oct. 21, 2008 | 7:50 p.m. Report Abuse

   Anthem Homeowner:
   
   I have had two attorneys that specialize in HOA law tell me that the Real Estate Division is simply in over their heads. They have also told me that the ombudsman job doesn't pay enough to attract the right kind of person. As a former employer, I have always felt that you get what you pay for.
   
   The Commission for Common-interest Communities meets monthly, by reading their minutes you would believe that they are doing a wonderful job. I am not sure that our elected officials want the Real Estate Division to do a good job.
   
   Notice how quiet things have become recently. Hopefully the FBI will make some arrests soon and refocus the attention of the media upon the problem. Enough bad publicity may force the governor to clean house and rebuild a more professional and capable Real Estate Division.
   
   One thing to keep in mind. The FBI today spends almost all of its resources on counter-terrorism and any more almost nothing is devouted to corruption--I obtained that little jewel from the highest level of the FBI. It may take some time, but odds are this will be a very big case with lots of arrests.
   
   Anthem homeowner, I am going to give you a heads up. Keep a close eye on your HOA's attorney and keep asking yourself whose interests he actually represents. I just wish that the business judgement rule applied to attorneys.

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