Condominium owners file lawsuit

New York retirees Amy and Frank Taddeo moved to Henderson in 2006, debt-free, with funds to spare.

Today the Taddeos are raiding their savings to shore up a sagging Las Vegas real estate investment they made that same year at the upscale Meridian condominium property just east of the Strip.

A "swindle" is what Amy Taddeo now calls the deal.

Along with 15 other Meridian owners, the Taddeos have sued the property's developer and operator, alleging fraud, conspiracy and wrongful taking of furniture and funds.

On Friday, attorney Michael Mushkin filed a complaint in state court on behalf of 16 owners against 14 named defendants -- including American Invsco, which bills itself as the nation's leader in condo conversions -- as well as other defendants yet to be identified.

Plaintiffs are seeking an injunction, punitive and other damages and the rescinding of their purchase contracts. In the short term, their lawsuit seeks an accounting for $5.9 million in homeowner association money and furniture plaintiffs claim is missing.

The Taddeos' purchase contract with lease-back agreement guaranteed them $4,000 a month in rental income for three years, whether Meridian management kept their condo empty or full.

"If they did not offer me $4,000 a month plus incentives ... I would have walked away" from the purchase, Frank Taddeo says.

Like other Meridian owners in the lease-back pool, the Taddeos haven't received a rent check since June. He and his wife are current on their unit's mortgage, despite the loss of promised income, but won't say how long they can afford to keep on paying.

"Our view is, this is an orchestrated fraud perpetuated by a group of very sophisticated real estate people," Mushkin said. "I will not initially file it as a class, because I want to seek some extraordinary relief, right away. Furniture has to stop disappearing. People have to stop making threats."

Defendants in the lawsuit include four individuals and 10 businesses associated with the Meridian, 250 E. Flamingo Road.

"I didn't know I'd be individually named," Rebekah DeSmet, one defendant, said Friday. She is project manager of the Meridian for American Invsco, and owns a unit.

Another defendant is Michael Mackenzie, who did not return phone messages Friday asking for comment. Mackenzie has never owned a Meridian unit, but is a vice president of American Invsco, and served on the Meridian homeowners association board until he was voted off in August.

The defendant businesses are described in the complaint as a web of entities that work with each other, but failed to disclose crucial information to Meridian buyers.

They have controlled functions such as the sale of units, leasing of units, furnishing of units, collecting and spending of homeowner membership dues.

Besides American Invsco Corp., defendants include American Invsco Realty, Condominium Rental Services, Meridian Private Residences and Executive Locations.

American Invsco officials did not respond to requests for comment.

None of Mushkin's clients was told at purchase that the lease-back program would entail overnight stays. A commercial overnight rental property would not have qualified for the lower interest rates of a residential mortgage, the lawyer said, implying mortgage fraud.

His clients claim Meridian sales staff told them they had to use the appraiser, title companies and lenders designated by the defendants.

Two plaintiffs have a March 2006 letter from DeSmet in which she denied a hotel operation existed.

"Resort style marketing has led some to believe we are running a condo hotel, which is absolutely false," she wrote.

The couple requested the letter after a nonpreferred lender denied them a mortgage because it considered the Meridian a condo hotel, rather than a conventional condo project.

Trouble at the 678-unit Meridian has been public since June, when the Review-Journal reported an illegal hotel operation, which Clark County shut down in July.

The county is investigating how much the Meridian owes in room taxes for summer 2007 to summer 2008. Plaintiffs also are seeking protection from having to pay any taxes incurred by management's decision to open a hotel.

Funds unaccounted for are significant. The homeowners association has approximately $35,000, a staffer said at an August meeting. But it should have $960,000 in reserves and be able to account for an operating budget of $4.9 million in the last two years, according to Mushkin's calculations of dues that should have been collected.

Some "plaintiffs have inspected their ... units and found them devoid and stripped of the furniture and appliances they had paid for," according to the complaint.

Others, such as Mary and Victor Heldt, paid $26,000 for specified furnishings to join the rental pool, but recently discovered an unauthorized switch.

"My teak patio center is now aluminum Target furniture," Mary Heldt said.

Las Vegas Businesss Press reporter Valerie Miller contributed to this report. Contact reporter Joan Whitely at jwhitely @reviewjournal.com or 702-383-0268. Contact reporter Valerie Miller at vmiller @lvbusinesspress.com or 702-387-5286.