Justice Department prosecutors from Washington have taken over the investigation into allegations of massive fraud within Las Vegas-area homeowners associations.
Attorneys with the Criminal Division's Fraud and Public Integrity Sections have been in Las Vegas for about a month, sources said. Public Integrity is an elite unit that prosecutes political corruption cases nationwide.
Russell Marsh, who heads the local U.S. attorney's criminal division, confirmed Thursday that his office is off the investigation.
The sources said there were complaints from investigators that the local office was slow to move the case forward after it became public in 2008, when FBI agents executed a series of search warrants at law offices and businesses that dealt with several homeowners associations.
Since then, a succession of federal prosecutors have been assigned to work with investigators, reportedly causing lapses of continuity and slowing the case to a snail's pace.
Marsh, however, said removal of the local office had "nothing to do with any delay in the investigation or the potential charging of this case."
Marsh would not say why his office is off the case, but said it is not uncommon for the Justice Department to dispatch prosecutors from Washington.
One potential conflict surfaced during the investigation involving U.S. Attorney Dan Bogden, who owns a condominium in a development under FBI and Las Vegas police scrutiny.
County records show Bogden in November 2003 paid $150,507 for a two-bedroom, 1,155-square-foot condo at Park Avenue, a resort-like development on the southern end of Las Vegas Boulevard.
Bogden could not be reached for comment, but Marsh said Bogden already had removed himself from making any administrative decisions in the case. Until the arrival of the Washington prosecutors, First Assistant U.S. Attorney Steven Myhre was the administrator of the case, Marsh said.
Bogden is in his second stint as U.S. attorney for Nevada. He ran the office from 2001 until 2007, when the Bush administration forced him out as part of a political purge of federal prosecutors around the country.
At the recommendation of Senate Majority Leader Harry Reid, D-Nev., President Barack Obama returned Bogden to the job in October, 2009. The raids associated with the homeowner's association investigation occurred while he was out of office, on Sept. 26, 2008.
Investigators have targeted dozens of people in what they say was a scheme to rig homeowner association board elections to position conspirators -- including some former Las Vegas police officers -- who would push for lawsuits over construction defects.
Legal work and repair contracts then would be funneled to associated lawyers and companies. Millions of dollars were said to be at stake.
Las Vegas FBI spokesman Joe Dickey wouldn't comment on the investigation, which has become increasingly sensitive as it has mushroomed to include lawyers, prominent businessmen and elected officials as potential targets.
No charges have been filed, but one former police officer, Christopher Van Cleef, committed suicide days after the 2008 raids.
Las Vegas police are investigating allegations of a death plot involving the possible suicide of lawyer Nancy Quon, who specialized in construction defect cases and is a central figure in the federal investigation.
Quon, who reportedly brought in $100 million through lawsuits for homeowners associations, has denied planning to take her own life. But last month the Clark County district attorney's office charged her boyfriend of six years, former Las Vegas police officer William Ronald Webb, with conspiring to arrange her death using illegal drugs so her children could get life insurance benefits.
Other key figures in the corruption investigation are said to be cooperating, and police have said federal indictments are forthcoming. In a report on Webb's Nov. 9 arrest, a Las Vegas detective said Quon was motivated to commit suicide because her "indictment was imminent." Just how imminent is unclear.
The newly arrived prosecutors for the Fraud and Public Integrity Sections likely will need time to get familiar with the complex case and its many targets and witnesses. No action is expected before year's end.
Contact Jeff German at email@example.com or 702-380-8135 or read more courts coverage at lvlegalnews.com.