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CORRUPTION INVESTIGATION: Votes bring owners to tears

Homeowners association elections, ousters follow raids

As Barbara Soto watched her fellow homeowners tear open ballots at the Park Avenue condominiums Wednesday morning, tears welled up in her eyes and her lip quivered.

She and other homeowners believed the occasion marked the first honest election at the complex in at least a year, and the counting of the ballots signified an end to months of battling to take control of their board.


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  • "I am so happy to see this happening today," said Soto, the board's president. "It's the second time I've almost cried today."

    This past week marked a step toward normalcy for Soto and homeowners at two other condominium complexes in the valley at the heart of a federal corruption investigation.

    "It was like a big relief. Our day in court. Justice," said Linda Carter, a homeowner at Pebble Creek Village, where an election Wednesday night officially ended the battle to remove three people from its board.

    The relief of the residents came a month after law enforcement agencies raided the offices of a property management firm, an attorney and a construction company associated with homeowners associations.

    Their pleas to law enforcement and the Nevada Real Estate Board's ombudsman's office, unheard for months and even years, were finally being answered.

    Pebble Creek Village, Park Avenue, Sunset Cliffs and Chateau Versailles are among seven condominium complexes at the heart of an investigation into possible collusion among homeowners boards, construction defect attorneys and construction companies.

    The FBI, with the assistance of Las Vegas police, is conducting what a law enforcement source has described as an investigation into whether individuals on homeowners association boards illegally directed business stemming from construction defect lawsuits to select companies.

    Construction defect litigation has been big business in the Las Vegas Valley, with attorneys and construction companies taking a huge slice of multimillion-dollar settlements with builders.

    But some homeowners have been left bemoaning shoddy or nonexistent repairs.

    "Everyone's making money," said state Sen. Mike Schneider, D-Las Vegas, a real estate developer and a leader on homeowners association issues in the Legislature.

    "Property managers are getting kickbacks. Even if you have a legitimate HOA attorney in there, he's getting kickbacks. The CD (construction defect) attorneys, defense attorneys, insurance companies ... they don't want this to go away."

    BOARD MEMBERS OUSTED

    All of those recalled last week were named in a federal search warrant requesting documentation, correspondence and notes as part of an investigation.

    Owners at Park Avenue, on the far south end of Las Vegas Boulevard, successfully recalled Ed Lugo, who worked as a property manager for the Chateau Versailles condominiums, and former Las Vegas police Capt. Frank Sutton. An election will be held early next month to select their replacements.

    Sunset Cliffs owners chose to replace Darryl Scott Nichols, who also serves on the board at Chateau Versailles, records show.

    And at the Pebble Creek Village condominiums in the southeast valley, a Wednesday night election officially ended a battle with Sutton, former Las Vegas police Lt. Chris Van Cleef and Ralph Priola, who is linked through property records to a current Chateau Versailles board member.

    The three had refused to step down from the board of Pebble Creek Village after being recalled in July. Earlier this month, they dropped a lawsuit alleging the recall election was unfair.

    Lugo did not return calls seeking comment.

    Nichols and Priola declined to comment.

    Sutton could not be reached for comment.

    Van Cleef shot and killed himself Sept. 30 near his Henderson home.

    Being named in the warrant does not mean that individuals are under investigation or involved in wrongdoing.

    Authorities raided nine sites in the valley in September, including the headquarters of Silver Lining Construction, owned by Leon Benzer. His company has done work on several of the condominium complexes named in the warrant.

    Last week, an FBI special agent and a Metropolitan Police Department official were present at the Park Avenue and Sunset Cliffs elections and took the ballots after the results of the elections were announced.

    At Pebble Creek Village, the Wednesday night election felt more like a reunion than a homeowners association meeting, said Carter, who was elected president to a temporary board that will serve until full elections can be held in March.

    "One person baked all these cookies and somebody brought soda pop," she said. "Another guy brought fruit trays and vegetable trays. It was a good feeling."

    Homeowners might be regaining control of their boards because of the focus on the people at the center of the investigation, Schneider said.

    "There's heat on them now," Schneider said. "And I think the people aren't getting bullied by board members, managers and attorneys like they were."

    ELECTION ERROR

    Last week's elections weren't without problems.

    Attorney Ben Childs oversaw the election at Sunset Cliffs, in which "four or five" or "six or seven" mailed-in ballots accidentally were opened by his secretary before the meeting where the ballots would be counted.

    Childs is running for a District Court 6 judgeship.

    "That shouldn't be," Schneider said about the error. "If those envelopes were opened, they should have been held to the end. They're tampered ballots."

    Childs, who had never handled a homeowners association election before, was asked by Platinum Community Management to oversee the election.

    Platinum's office was among those raided by authorities last month. The husband of Lisa Kim, the company's owner, owns a cafe at the Regional Justice Center with Benzer.

    Homeowners expressed concerns about how the ballots were handled.

    Richard Noel showed e-mails from out-of-state owners claiming they never received ballots.

    Others were confused by ballots that originally had left out one of the candidates.

    Some communities are just beginning the recall process.

    At Chateau Versailles, homeowner Nick Parino said he wants to start a recall election to remove the three members on his association's board.

    One of the board members appears to have a personal relationship with Benzer, while another is linked through property records to Priola.

    The third board member, Nichols, shares a property at Chateau Versailles with a man who used to work for Benzer.

    Although Parino said he didn't know of any wrongdoing that had occurred, the board members' associations, and the fact that Platinum manages the association, raises suspicions.

    "I refer to it as questionable coincidences about these relationships," Parino said. "But why should we as homeowners deal with them and the management company that has a cloud over them?"

    Contact reporter Lawrence Mower at lmower@reviewjournal.com or 702-383-0440.

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    Report abuse

    thelittlebird wrote on October 31, 2008 08:30 AM: I agree with the comments posted by little bird. At our most recent HOA meeting we had homeowners asking just what thier HOA assessments pay for. And many more were asking questions about our previous management company PCS LLC. They were disgusted to hear how many times that company dropped the ball on things that they should have done, and didn't do. All the things that they did with thier own agenda in mind, not in the best interest of the community that they were being paid to manage. We are so very grateful to be done with them.


    Report abuse

    terrencehm@aol.com wrote on October 30, 2008 10:12 PM: Put these crooked Lawyers in the Carson City Penn along with the others.

    District Attorney Rogers is not involved so he won't be able to plea them out.

    Too bad it took the Feds to come in and do this.

    Like the Whiplash Willies in this town of crooked members of the Bar concerning their real crooked Doctor friends who get kick backs and all the phony injurys from car wrecks they blackmail people into paying.

    Thank Goodness for the Feds.


    Report abuse

    kimo wrote on October 27, 2008 08:06 PM: Senator Schnieder has been a champion agaisnt these construction defect lawyers for many years but unfortunately he has been hushed by the rest of the Neveada legislators who are all in the tank for these lawyers. he is NOT looking for votes as some have said. the fact is that these lawyers are all set up with their own so called experts, their inside associates in these management companies, their own shills that they get elected to these HOA boards and then begin the law suits unabated. there are even a few judges who have allowed these shake down artists to continue their " legalized insurance fraud " better known as construction defect litigation. This team of participants have been crafted to bring in millions of dollars to plaintiffs lawyers and to defense lawyers who practice in this arena without ANY oversight whatsoever. It has been going on in Las Vegas for many years and it was prevelant in California prior to their move to Nevada where they now reside. California finally changed their laws to limit these suits but only after EVERY condo site in SoCal was already sued. You might be surprised to know that one of Nevada's supreme court justices was in the tank with these plaintiffs attorneys before she became a member of that court. The lawyers & their experts trump up these claims with frivolous extrapolation math in their efforts to get a large settlement. All of these attorneys get at least 30-45% of these settlements without ever having to go to trial since the insurers simply lay down and pay them out of court. there will be many more of these scam lawsuits exposed in the near future, count on it !!


    Report abuse

    Happy HOA Board Member wrote on October 27, 2008 07:29 PM: Not inside propoganda - We had one of the management companies in the mix of things and replaced them. Against the advise of that management company, I took it upon myself to know and understand my governing documents and applicable laws. Everyone should take it upon themselves to find out the facts about living in an HOA. Nobody, not a manager, not an attorney bullied this HOA board member.

    Just telling you - get an education, beyond what you may read in the comments section of the newspaper.


    Report abuse

    If this isn't.... wrote on October 27, 2008 07:23 PM: Inside propaganda.......Happy HOA Board Member


    Report abuse

    Happy HOA Board Member wrote on October 27, 2008 07:16 PM: Would you please look at this story like business people! HOAs are Nevada Corporations; the Boards of Directors are the Corporate Officers. The Board makes the decisions. Any Board who fails their duty of loyalty by using their position to take unfair advantage of the association should be recalled.

    Board members owe a duty of undivided loyalty to the association. They may not make decisions for the association that benefit their own interests at the expense of the association and its members. For example, the board breaches the duty of loyalty if they sign a contract with a company in which a board member has a material financial interest and the contract price is unfair to the association.

    If board members act in good faith and have a rational basis for their decision, a court will probably not interfere with the decision. This principle is referred to as the business judgment rule.

    HOA managers complain when Board Members become educated, but I think that everyone is happier when everyone understands the rules, not just the managers and not just so called Senators. Schneider has once again blown this out of proportion with his “everyone is getting kick-backs”. He needs to frighten everyone in to voting him back into office. He needs to take responsibility for creating a Ombudsman’s Department with ineffective investigators. The one good thing that is coming out of this is education! Everyone is getting a good education, and everyone should take it upon themselves to find out the facts about living in an HOA. Nobody, not a manager, not an attorney bullied this HOA board member. The only bully, is Schneider stepping into the mess and claiming to be a hero.


    Report abuse

    dottie wrote on October 27, 2008 06:58 PM: There appears to be a cherry on top of more than one can of worms. What is he, the hatchet man for the inner circle; AND vested interest?

    Please don't forget to investigate "Clean Face", while you are at it.


    Report abuse

    Barack's my BOY!! wrote on October 27, 2008 04:30 PM: Dennis1944,

    Can't wait to see my boy in the white house. I love your reasons for not voting for him. Nothing about the issues that face us, just the same rants we've heard for months now.

    Get on board, McCain lost the election when he picked a trophy VP.


    Report abuse

    TheTruth wrote on October 27, 2008 03:29 PM: Dennis1944, you forgot #11, or your real #1....


    Report abuse

    Desert Dust wrote on October 27, 2008 01:22 PM: It seems that more and more of us are wondering why Diane R. Wild owner of Castle Managment has not been charged with all of her misdeeds. She is going into territory that she is unfamiliar with. Does she realize that retirerees are in most cases,are well educated, very experience in their own field, and more capable of seeing through her corrupt ways. She may be good at getting constuction default cases won for her advantage, but she forgets that she still needs those same three bids for everything. For example, when there is a settlement won, the monies must be deposited somewhere. Wouldn't a normal manager get three bids from commercial institution for the deposit of those funds? Maybe the banks she is working with should be included in this investigation. It is amazing how many "friends" she can dig up, more paybacks for her maybe? Also, now she goes into unincorporated areas thinking she can bluff them. Unincorporated areas have CC&R's, bylaws and all documents the same as Las Vegas. What they don't have are city laws, now this may look good to someone of a Diane Wild mindset, but anyone of knowledge knows that other laws are also involved such as zoning and county laws that very strongly apply. Another benefit of unincorporated land is that she thinks she can buffalo these people even more. How sad, could this be one more step to her downfall yet? She does not know any of the documents that deal with these properties, she relies on John Leach's word, that is who she says is the attorney for Castle Managment. Where does it end?


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