Federal HOA investigation still mired in secrecy

It’s one of the biggest criminal investigations in Nevada history, and yet more than six years after the FBI began looking into allegations of the sweeping scheme to take over valley homeowners associations, the public still doesn’t have the full story of how the scheme unfolded.

The high-profile investigation — which overcame allegations of leaks to defendants and the suicides of a defendant and a key target — remains mired in secrecy.

Justice is also moving slowly in the case.

More than two-dozen defendants who pleaded guilty, many more than two years ago, are still waiting to be sentenced. And a year after former construction company boss Leon Benzer, the accused mastermind of the scheme, and 10 others were indicted, there is no foreseeable trial date.

The case was to go to trial in March, but at a recent status hearing before U.S. Magistrate Judge George Foley, Jr., defense lawyers said they were overwhelmed by the massive amount of evidence and won’t be prepared for trial until well into 2015. Defense lawyers have to undergo training to learn how to retrieve the evidence from a digital repository.

According to court papers filed by prosecutors with the Justice Department’s Fraud Section in Washington, the defense has been supplied electronically with more than three million pages of documents. Prosecutors also have turned over hundreds of audio files, video files and investigative photographs in the long-running investigation, which included an undercover sting.

The investigation, which targeted judges, lawyers and former police officers, became public when FBI agents and Las Vegas police conducted a raid across the valley in September 2008. No judges ended up being charged in the scheme, which involved packing HOA boards to gain lucrative legal and construction defect contracts for the conspirators.

Secrecy is not new to criminal cases in federal court. The Benzer case, like several other high-profile cases, has been operating under a magistrate’s protective order barring both sides from disclosing evidence turned over by the government to anyone, including the media, not directly involved in the case.

Attorneys have also fought to keep additional evidence outside the grasp of the public, and for the most part Foley, who is overseeing the distribution of the evidence, has sanctioned their efforts.

In December, lawyers for one of Benzer’s co-defendants, attorney Keith Gregory, not only filed a motion to seal a government motion seeking to admit new and potentially revealing evidence in the case, but also filed a motion to seal their motion to seal.

Foley granted the latter motion and then held a hearing behind close doors last week on the motion to keep the government’s evidence from being made public. He has yet to rule on the matter.

One defense lawyer is trying to obtain evidence the government doesn’t want to reveal.

Chris Rasmussen, who represents Benzer’s half-sister. Edith Gillespie, filed a motion to force the government to turn over investigative reports of the alleged leaks in the HOA investigation. The Justice Department’s Washington-based Public Integrity Section looked at whether the Nevada U.S. attorney’s office improperly leaked information when it oversaw the HOA investigation.

Rasmussen argued the reports were necessary to Gillespie’s defense to determine whether Nevada prosecutors were reckless and caused other defendants to destroy evidence.

He also contended that the leak investigation prompted the Justice Department’s Fraud Section to take over the investigation and that led to lengthy delays in the case that also hurt his client’s defense.

Prosecutors opposed Rasmussen’s motion and Foley refused to order prosecutors to make public the leak reports. The magistrate agreed with the government’s argument that Rasmussen didn’t present enough facts to show that the reports were relevant to Gillespie’s defense.

Rasmussen has now asked U.S. District Judge James Mahan, who will preside over the Benzer trial, to consider ordering the government to disclose the reports.

The Public Integrity Section dropped the leak investigation in August 2011, just as the Fraud Section prosecutors made public the first plea agreement in the case, a deal with longtime political consultant Steve Wark.

The string of defendants who pleaded guilty are cooperating with prosecutors against Benzer. Prosecutors so far have persuaded judges to continue their sentencings until after the trial on grounds the government needs to determine the extent of their cooperation before they can recommend lighter sentences.

But that is leaving their lives and the lives of the victims in the takeover scheme, the HOA homeowners, in limbo. Prosecutors are seeking a total of $25 million in restitution from the defendants, and the push to retrieve the money can’t begin until the defendants are sentenced.

Benzer and his co-defendants were indicted in January 2013 on charges of defrauding 11 homeowners associations out of millions of dollars between 2003 and 2009.

The indictment alleges Benzer, the late construction defect lawyer Nancy Quon and others funneled more than $8 million through secret bank accounts to land the lucrative legal and construction defect contracts from the homeowners associations.

The conspirators, through election rigging and other means, packed association boards with members who handed out contracts worth millions of dollars at the expense of the homeowners, according to the indictment.

Quon committed suicide March 20, 2012, and was not charged in the case. Attorney David Amesbury, one of the defendants who pleaded guilty, killed himself five days later.

Their deaths, though both ruled suicides, still remain mysteries.

Contact reporter Jeff German at jgerman@reviewjournal.com or 702-380-8135. Follow him on Twitter @JGermanRJ.